JOHN DLUDLU: Let’s talk about strengthening BEE

Last week President Cyril Ramaphosa was at pains trying to defend BEE. He should stiffen his spine on this issue, and not cave in. 

The policy, which he helped write into law after leaving politics, has been given a bad name. It has been called racist, corrupt and benefiting a few. 

Much of the criticism is misplaced and misinformed. For example, BEE cannot be blamed for SA’s worsening poverty, inequality and joblessness. Resolving these issues was never its primary objective. 

The first BEE transactions happened without a proper framework or legislative guidelines. They were mostly driven by fear of legislation, and by self-interest. The involvement of the high-profile political class helped fuel cynicism and criticism. 

However, once the broad-based BEE Act was passed, the shape and form of the transactions changed manifestly. The involvement of communities, trade union investment companies and employees achieved the goal of making the transactions more broad-based, even though high-profile individuals were often involved. 

Critics of BEE unfairly label the role of these individuals as fronting. This underestimates the role of these big names in raising funding, organising disparate groupings, mediating constant wrangling among consortium elements and, importantly, the thankless task of dealing with politicians. 

A transaction that best captures the “broad-based” side of BEE is that of Exxaro. After years of haggling with politicians over the composition of the deal, the founders finally sealed it. Since inception the company has been run by black CEOs and it has paid billions in dividends. This has allowed the shareholders’ debt to be settled and founding shareholders have supported good causes in poor communities.

What opponents of BEE have not done is look into the good the
so-called black oligarchs are doing with their wealth.

These big names have been shamed for their wealth, flashy cars, posh homes, comfortable lifestyles and pet projects. What opponents of BEE have not done is look into the good the

so-called black oligarchs are doing with their wealth.

Three examples are Patrice Motsepe, Ramaphosa and Saki Macozoma. Through his family foundation Motsepe spends millions on charitable causes. Macozoma and Ramaphosa are similarly spending millions supporting education.

Many other black oligarchs are doing good deeds too, though out of the media limelight. The persistent negative press over the years has made them shy of talking about the good they do for their country. 

Black professionals who have been beneficiaries of the country’s employment equity laws are also ploughing back to uplift their communities. 

They have largely remained silent as BEE was attacked. When anti-BEE forces took the government to court none stood with the government as a friend of the court. An example is AfriForum’s challenge of the Tourism Transformation Fund during Covid-19. Black executives could — and should — have either joined as friends of the court or supported advocacy groups such as the Black Management Forum.

With their silence, including the government’s apologetic approach, they have allowed the narrative that criminalises BEE and transformation to gain traction and undue credibility.

Not helping their cause is that they often still compete to participate in BEE deals. The first phase of BEE entailed transactions in mining, and most now have lucrative assets in mining. Yet they still compete. 

There is a depressing story about two black oligarchs meeting to talk about collaboration and consolidating their assets. The meeting ended when one said: “Get your people to talk to my people”, when they could have clinched the deal among themselves there and then. 

The Competition Commission should have granted block exemptions to such co-operation, as it has with small businesses. Some collaboration is occurring, albeit at the infancy stage and mostly transactional.

When returning to politics in 2012, Ramaphosa sold his mining assets to another black oligarch, Phuthuma Nhleko, and last month Macozoma sold his manganese assets to Exxaro.

What is missing is the family offices of these black oligarchs harnessing their large balance sheets to build black wealth. 

The discussion around the Transformation Fund, which the president sought to defend, is an opportune time to have a conversation about strengthening BEE.

• Dludlu, a former editor of Sowetan, is CEO of the Small Business Institute.