In 1994 the ANC went into the election with a blueprint called the Reconstruction & Development Plan (RDP). The RDP said: “The domination of business activities by white business and the exclusion of black people and women from the mainstream of economic activity are causes for great concern for the reconstruction and development process. A central objective of the RDP is to deracialise the economy completely, through focused policies of black economic empowerment.”
Most black people agreed with the ANC, and Vodacom chair Saki Macozoma explained the rationale for BEE policies in a recent interview on radio 702.
“We understood that we could not have a group of people of a certain hue holding political power, and another group of people of a different hue holding economic power. That’s a recipe for disaster. Until we have reached a certain equilibrium between those two forces in society we will always have a tumultuous time. The fact of the matter is that we need to have redress. We have not done it to the extent that we should have.”
Thirty-one years later, BEE is under attack, with some people on the right calling for it to be scrapped. BEE has been associated with state capture and corruption. But the Gupta family was not black. Corruption is corruption and the law must deal with it. We must not conflate issues. As Macozoma said, BEE was never going to address the entire issue of economic redress. It was meant to address a particular issue of “how companies deal with deracialisation”.
The BEE codes are a uniquely SA system of social accounting, which enables companies to measure their progress in deracialising their operations. Most large companies are implementing empowerment policies and are reporting on their BEE status. The reality that the DA and Solidarity do not understand is that many companies have found ways to game the system. BEE is now like an exam that is too easy to pass, and most companies are not complaining.
People who say BEE has a cost should remember that environmental, social and governance (ESG) reporting requirements, which hundreds of global listed companies embrace, are more onerous and include some indicators that are similar to broad-based BEE. The Employment Equity Act is a cut-and-paste from a Canadian law that has the same name.
Diversity and inclusion is a global movement to diversify workplaces and supply chains. Recently I was reading Standard Bank’s annual report and found that for every enterprise and supplier development (ESD) initiative in SA there are similar projects in all other African countries. That is how the bank gets its licence to operate.
It is difficult to understand how providing shares to workers and communities, employing more black people in management, diversifying supply chains, investing in black companies through ESD and empowering communities through the socioeconomic development initiatives that precede BEE can be bad for the economy. It is difficult to understand how tapping from a limited talent pool of white males who account for more than half of people in top management, and excluding African women, the most marginalised group in corporate SA, is good for the economy.
Many companies that are committed to transformation have implemented their second and third BEE transactions. They believe it is the most sustainable way to grow their businesses and the economy. If we scrap BEE, will companies have to stop all these initiatives that are contributing towards social cohesion and nation-building?
The time has come for more beneficiaries of BEE to defend transformation policies and make proposals on how to improve them.
• Gqubule is an adviser on economic development and transformation.
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