WeeklySA_AdminPOSITION: DA’s view on black economic empowerment ‘shaky and backwards’
By Sandile Swana
The entry point of the Democratic Alliance into the abolition of the Broad-Based Black Economic (B-BBEE) Empowerment Act is through section 217 of the Constitution.
The DA would seek to say that any racially based criteria for economic empowerment must be abolished and the B-BBEE) score card replaced with the 17 United Nations’ Sustainable Development Goals. Sections 217 (1) and (3) of the Constitution say nothing about race or those who have been historically discriminated against.
But s217(2) goes directly to the heart of the matter by prescribing that certain sections of procurement be set aside for certain groups originally identified by apartheid for economic exclusion.
It also calls for the protection and/or advancement of certain groups who have historically been disadvantaged by unfair discrimination.
The Constitution provides for intentional favourable discrimination for the people who have historically been disadvantaged by apartheid. The Constitution states:
• When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective (s217).
• Subsection (1) does not prevent the organs of state or institutions referred to in the subsection from implementing a procurement policy providing for—
(a) categories of preference in the allocation of contracts; and
(b) the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.
• National legislation must prescribe a framework within which the policy referred to in subsection (2) must be implemented.
The supply chains of both the private and public sector, and especially the procurement aspect, force private companies and the state to only procure from companies that pass the elements prescribed in the B-BBEE score card.
In essence those who buy from companies that do not meet at an acceptable level the requirements of the B-BBEE scorecard lose points when they tender for business in both the public and private sector.
The key scoring points are – ownership, management control, skills development, enterprise and supplier development, and socio-economic development. The principal object is to ensure equality and equity in all aspects of business organisations is maintained.
Additionally, that black and white people should enjoy the same benefits regarding shareholding, directorship, senior management – and that this must be achieved across all levels including artisanship, technicians, engineering, including all professional and administrative skills.
From around 1977 onwards big business led by Harry Oppernheimer of the Anglo-American and De Beers Consolidated Mines, and Anton Rupert, founder of Remgro, and the US activists led by the Reverend Leon Sullivan, started tangible projects to make black South Africans to experience bounties of capitalism and free markets.
Sullivan published the principles of equality, equalisation of standard of living and quality of life among all races in South Africa. He also prescribed guidelines for investors to negate the deleterious effects of apartheid in 1977.
Economic apartheid remains intact in South Africa, and is now reproducing itself across several generations. The black empowerment project in its initial stages from 1977 to 2003 was designed as a pressure valve to forestall the ultimate consequences of the 1976 riots and the resurgent ANC/UDF by financially empowering certain influential leaders of the liberation movement.
The black empowerment economic programmes from 1977 to 2003 were driven by the private sector, which chose whomsoever it wished to make wealthy, especially those who had influence over the state. Those with no political influence were not attractive to the private sector as business partners.
In 2003 the B-BBEE Act was promulgated by the ANC-led government to make certain that all organisations do BEE in the same way, and that the black masses also benefit in the various elements of the B-BBEE scorecard.
However, after 2003 companies continued to select a few chosen and well-connected ANC leaders for board directorships and shareholdings, while not doing as well as they should in the other elements of the B-BBEE scorecard.
After 2007, the year that heralded the commencement of another version of state capture, with the acceleration of state contracts by new entrants not aligned to traditional big business nor recognised as top guns of the ANC.
Western multi-national and other white-owned local big businesses began muscling state tenders away from the pre-2003 economic crown princes.
The Gupta family became the lighting rod for the anger of the economic and political establishment.
Many others such as Cat Matlala, Hangwani Maumela, were also identified in the later rounds of state capture “projects” as key embezzlers and extortionists. The new entrants began to supplant the original economic mafia bred by the laissez faire BEE gang of the 1977 to about 2003.
There is no version of BEE past and present that has been able to address the central question of making sure the ownership and decision-making structures of the South African economy and business fairly represented the true demographics of the country’s population in terms of language, culture, and race.
All ethnic groups previously disadvantaged by apartheid have their own BEE kingpins such as the likes of Vivian Reddy, Cyril Ramaphosa, Mani Dipeco, Patrice Motsepe, Irene Charnley, Marcel Golding, Mike Teke, Robert Gumede, and many more. It must be clear that apartheid system identified its victims as Asiatic, ‘coloureds’ and Africans.
In our law those who were excluded from white privilege were classified as black and those who ancestrally benefitted from apartheid as white.
Many Western Asians such as Lebanese, Hebrews, Iranians, Syrians, Arabs, and Japanese, et cetera, are classified as whites.
But that is not the case with Chinese, Pakistanis, Malays, and Indians, among others.
The DA today ignores the reports of Kenneth Brown, former chief procurement officer of the South African Treasury which signal that in all categories of state procurement, between 15% and 40% of procurement spending is non-value adding.
The larger portion of that spending goes to large telephone companies.
The GNU is not correcting this either.
About R9bn per month is lost through non-value adding procurement, which needs professional skills and ethical political leadership to resolve.
The DA does not address itself to that well-researched advice and blames BEE for the abuse of state resources, regardless of empirical research at National Treasury.
If procurement was corrected the positive multiplier effects in the economy could be about 2.5 to 3.5 times the R1-trillion of procurement spend annually. That would trigger massive job and wealth creation.
The DA ignores the fact that all government planning and reporting already incorporates all 17 Sustainable Development Goals (SDGs).
President Cyril Ramaphosa reports on that, and in fact, all new legislators and public sector boards are advised during their induction to prepare their strategic plans factorings SDGs, AU Agenda 2063, and the National Development Programme (NDP), among other documents.
SDGS cannot be realised for as long as the core business of the state is corrupt, non-performing, and incompetent. State budgets are inherently designed to deliver SDGs, but incompetence is covered up through calls for austerity, not increased efficiency and higher return on investment in all state operations and projects.
Similarly, the BBBE Act, Public Finance Management Act (PFMA), and all South African laws and budgets will work once the rule of law returns to South Africa.
The DA in seeking to abolish B-BBEE does not table a credible roadmap how the entire economy at all levels will represent the true demographics of the country where all languages, cultures and religions, are represented fairly, equally, equitably at shareholder level, in all boards of directors, in all trades and professions, and that the average South African regardless of skin, colour, or creed, enjoys the same standard of living.
The DA’s scheme will not give all black families full financial and economic independence, which is what we need. In reality, we need political and economic leaders who openly call us to achieve first world standard of living without further economic apartheid in South Africa.
We must insist on good governance, the rule of law, and a call for the installation of a more ambitious and patriotic leadership to take all of us to true economic freedom and independence, not more sophisticated soup kitchens.
• Sabelo Swana is a political and governance analyst for local and international media, independent consultant on governance, leadership and strategy
