There is a business case for black economic empowerment (BEE) that will benefit all stakeholders, the South African Supplier Diversity Council believes.
It works to grow business linkages, relationships and transactions among its members and certified suppliers, "in a way that contributes measurably to their competitiveness and image, and to inclusive economic growth", its website says. "Our vision is to be the leading corporate-driven council in SA dedicated to promoting sustainable supplier diversity through targeted procurement and black supplier development."
CEO Gary Joseph says the council was "a product in the making" from 2008. "It was then already that I bought into the vision of there being such an organisation," he says.
The council was formally established in 2011.
"I was working at De Beers at the time and got involved in the economic linkages initiative that the National Business Initiative was implementing under the USAID-funded South African International Business Linkages partnership," he says.
— "We all need to recognise that there is a business case for BEE that stands to benefit all stakeholders."
Joseph spent most of his time at De Beers driving preferential procurement and small business development initiatives.
Now he is convinced that the South African Supplier Diversity Council is the ideal platform for supporting South African businesses with sustainable solutions for integrating black-owned enterprises into their procurement environments.
"The unique business linkages ecosystem that we have created is based upon creating optimal circumstances for our corporate members and certified suppliers to engage with each other and establish relationships that will translate into the flow of procurement transactions between the two parties," he says.
"Gaining access to procurement opportunities within any corporate can be a lengthy and tedious process.
"We are pleased with the endurance and persistence of many of our suppliers that are on the brink of securing substantial contract opportunities with several of our corporates."
Joseph believes that SA’s economic potential was stymied by the racial exclusion policies of the apartheid era and is still somewhat trapped there today. As a result, he is a strong supporter of, and advocate for, BEE.
Joseph views BEE as an enabler and catalyst for unleashing SA’s potential, as long as the spirit of tackling it through substance and not form is entrenched in public and private sector policy responses.
"The removal of systemic and cultural barriers that continue to keep the majority of our population — that is, black people — out of the mainstream economy will result in a more competitive, innovative and prosperous South African economy," he says.
"It is in the interest of all South Africans to contribute towards unlocking this potential because the long-term benefits thereof far outweigh the short-term discomfort and perceived costs that are fuelling the resistance to inevitable change."
He believes there are many reasons why BEE is not working now. It has been implemented as a quick-fix aimed at achieving compliance and pulled in different directions in efforts to drive the policy. The measurement of the intended effect using the B-BBEE Codes of Good Practice has resulted in BEE becoming a tick-box exercise with not enough substantive and sustainable outcomes being realised. BEE is still viewed as a political and not an economic issue.
"All parties – public and private sector, organised labour and civil society – need to do some introspection and reflection on what has been achieved thus far," Joseph says.
"We all need to recognise that there is a business case for BEE that stands to benefit all stakeholders. There needs to be better collaboration and leveraging of resources to support efforts and deliver better effect.
"BEE should be moved from being a compliance and governance issue to being a business imperative that is integrated into all aspects of organisational strategy and performance measurement."
The council aims to be the market leader in facilitating sustainable and mutually beneficial business relationships between competitive black businesses and corporate SA. It wants to be the forerunner in creating a competitive and inclusive economy that benefits all through its growth and sustainable job creation.
Joseph believes that achieving supplier diversity requires a different way of thinking and a challenge to the paradigm of current business models.
Negative perceptions about BEE and the compliance-driven responses by many stakeholders are driving short-sighted, day-to-day organisational decisions. It is difficult to change old habits and to challenge existing supplier relationships. "We are tackling the challenge by changing the traditional perception of B-BBEE and demonstrating that it entails building better businesses that empower everyone," Joseph says.
— "What started for many as a compliance issue is turning into a transformational approach."
"We have identified and engaged with several strategic partners to work together on initiatives and interventions that advocate for a different and more sustainable approach to addressing BEE, particularly in the area of procurement reform. Fundamental to this approach is delivering tangible results that demonstrate the business case, value and impact of strategies such as supplier diversity."
In line with its memorandum of understanding with the Department of Trade and Industry, the council is engaging several stakeholders to help identify specific and effective initiatives that they will implement in partnership over the next three years.
The council has also launched an aggressive communication campaign to create awareness about its work. These initiatives will be supported by the council’s capacity-building products.
"The environment for growing your businesses is now more conducive than ever before," Joseph says.
"But being a black-owned business is in itself not a competitive advantage. The onus is up to you to take advantage of this situation by differentiating your value proposition in a way that positions your business to access and service such opportunities ahead of your competitors including other black businesses. Be careful not to overpromise and underdeliver since your success is the reference point for the success of many other promising black businesses," he says.
The council has 25 corporate members and 335 certified suppliers, with total procurement spending at the end of 2014 of R171m.
Buhle Moyo of The Hope Factory, an enterprise and supplier development nonprofit company, says: "At the core of B-BBEE is an acknowledgement that all sectors of the economy can and need to work together to address the economic challenges of unemployment, extreme poverty and high levels of inequality that exist as a result of our past.
"BEE provides one such platform where the government has provided a framework on how all companies, irrespective of size and turnover, can interact to stimulate economic activity and growth to the benefit of all citizens."
But when BEE first emerged, it received criticism for benefiting only a few elite individuals with political connections. Moyo cites a few instances where BEE has not gone well — top of mind being "fronting issues" and instances in which black people are appointed as senior executives, given fancy offices and benefits but little authority.
"On the review of this legislation, an effort was made to have broader impact on black communities and organisations at various levels, and ‘preferential’ community segments and groupings were identified as priority," she says.
"Many black-owned businesses now have an opportunity to be developed into sustainable businesses through enterprise development interventions coming off a BEE platform."
Many communities now receive broad and positive effect through initiatives such as skills development for youth. This is because companies use their socioeconomic development programmes, often part of their corporate social responsibility efforts, to achieve more than just BEE points.
"What started for many as a compliance issue is turning into a transformational approach, where we are seeing greater concern for impact on communities and job creation." Moyo says.
"Utilising BEE as a platform, progressive companies are now in a position to monitor, measure, and evaluate their interventions on communities they impact.
"This speaks to their good corporate citizenry and sustainable development goals."
Quote: "What started for many as a compliance issue is turning into a transformational approach."
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.