Top black business leaders have blasted the slow pace of economic transformation, saying there is still too much wealth concentrated in white hands almost 30 years into democracy.
Speaking this week at a Black Management Forum (BMF) seminar on reimagining black economic empowerment, businessman Reuel Khoza singled out Stellenbosch.
“We probably have the densest concentration of billionaires in Stellenbosch; it is not by accident, it is by absolute design. They [Afrikaners] laid the foundation legislatively in a manner that was not open to misinterpretation; they meant business.”
Khoza, who is chair of Discovery Bank and insurance firm Assupol, said it was unjustifiable that so few black billionaires have been produced since 1994. The same legislative framework that underpinned the economic successes of Afrikaners should be repurposed for black South Africans if the economic playing field is to be levelled, he said.
“To produce something like two, three or four but less than 10 billionaires in close to close 30 years, it cannot be justified.”
Khoza said South Africa should carve its own path to inclusive economic success instead of acting like an outpost of Europe.
I will be happy if we disbanded the BEE legislation the way it is structured today because it is not working. It works for the guys who are at the top
— BMF founder Eric Mafuna
“If you look at us as a political economy of today, we come across as very much like an outpost, not as a country in Africa. That cannot be corrected by culture, it cannot be corrected by begging, it cannot be corrected by limp-wristed legislation.”
He said South Africa was not an emerging but a submerging economy, as it cannot produce enough of the basics such as water and electricity to cater for all its people.
His remarks came in the same week Gareth Ackerman, chair of the Pick n Pay group, lambasted the Employment Equity Amendment Act, which he said was probably unconstitutional and threatened private employers if their workforce failed to mirror racial demographics..
“This would have the effect of making large numbers of qualified people unemployed and substituting them with unqualified people. It is very probably unconstitutional and could ruin many productive companies and foreign investments on which the economy depends.
“I cannot understand why our government has not caught up with the times. The act tries to force on business by decree an outcome that most large corporates are already doing their best to achieve. Not because they’ve been instructed to do so, but because of the growing recognition that a diverse workforce and leadership is a strategic asset,” Ackerman said.
At the BMF seminar, founding president Eric Mafuna was critical of BEE legislation, saying it had only benefited a few people at the top.
“I will be happy if we disbanded the BEE legislation the way it is structured today because it is not working. It works for the guys who are at the top. A lot of them were preaching BEE, they got their share and have forgotten there are other people. They open the door for you to come in and say 'lock the door please'.”
Economist Duma Gqubule said BEE had not worked given there were no majority black-owned companies in the JSE Top 50. Black ownership of South African assets stood at 6.9% and was valued at R245bn or 1.7% of the bourse. He said there was no correlation between what is in the scorecards where companies by law have to disclose their black shareholding, and actual black ownership of those entities.
“South Africa needs political will to confront powerful corporate interests in mines and banks and reverse policy impediments.”
He said South Africa needed to rebrand BEE which had unfairly been tainted by corruption and state capture.
Former Exxaro CEO Sipho Nkosi, who now leads an office set up by the Presidency to cut red tape for small businesses, said while economic empowerment had made a dent in the economy it required further scrutiny to assess its effectiveness.
“Black economic empowerment has done very well for us; we may criticise it in whatever form, but it is there. What is required is serious interrogation of it and the willingness of our leaders to accept that what is needed going forward is not expediency.”
A report compiled by Sanlam in conjunction with market research firm Intellidex, which tracks transformation using ownership, management control, skills development and enterprise and supplier development data, found there was a slight improvement from 2022 in terms of companies meeting their transformation targets.
South Africa needs political will to confront powerful corporate interests in mines and banks and reverse policy impediments
The third annual Sanlam Transformation Gauge, based on B-BBEE scores of 14,542 companies across 10 sectors, found that while scores had improved across the board — except for socioeconomic development — there was a strong sense from those interviewed that transformation was not as advanced as the scorecard suggested.
According to the report, 51% of B-BBEE verification agencies surveyed said corporate South Africa was resistant to seeing black people in leadership, mainly due to racism.
“Looking at ownership, for example, many people would probably raise their eyebrows at the 80.81% of the target it achieved nationally, considering it too high. This doesn’t mean that nearly 81% of the economy is in black hands — far from it, the target itself is 25% voting rights in a company for black people,” the report noted.
Speaking at the launch on Tuesday, Sanlam chair Elias Masilela said South Africa was still ticking boxes and paying lip service to transformation.
“Let us not deal with the symptoms, let us deal with the causes or the sources of the problems that bring us where we are. Let us not blame the design, but the manner in which we implement and the conviction with which we implement. Do not throw away the baby with the bath water. Replace the water and make sure it is cleaner and properly soaked.”
Tabea Kabinde, chair of the Commission for Employment Equity, said there was growing opposition to economic empowerment, and those with money were going to court to challenge it.
She was critical of companies bringing in foreign executives to occupy top management posts, saying that in terms of legislation these arrangements had to be for a short period where there were skills gaps, but this was not being adhered to.
“They are given work permits that are supposed to last for a certain period, but the reality is it keeps getting extended and my question is why? Why is it that as a country we are not getting to a place where we say skills development has to get to work for us, and we are not getting to a place where we say we need you as much as you need us, and therefore, we are both going to make it work? I think we need to get to a point where we take the bull by the horns,” said Kabinde.
Litha Kutta, co-chair of the Enterprise and Supplier Development Community of Practice, said the patronage system in supply chain systems of big firms was still a problem.
“So, protecting the patronage system is fundamental to not dismantle the supply chain by bringing in people you do not know. That is where the defence mechanism comes from to protect the interest based on the network built over years based on the patronage system that runs in procurement divisions, which you find is deep rooted in management.”
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