It was refreshing to participate in an honest, robust dialogue about the future of SA’s much-maligned BEE policy and law. It has actually been a good few months for advocates of BEE, but far more needs to be done to save the policy.
The law has come under persistent attacks. The attackers are loud, like alternative facts and are better organised than the proponents and beneficiaries of the socioeconomic redress policy.
On October 7 at JJ Tabane’s Frank Dialogues, Sandile Zungu, founder of Zungu Investments Company, used his address not to promote his company but to defend BEE using Seriti Resources, one of his investee companies, to demonstrate a success story.
Seriti, primarily a coal miner, owes its existence to a conspiracy of factors. Two are worth mentioning here: first, in the past decade coal has become a dirty commodity and, second, SA’s government directed that power utility Eskom would source coal from mines that were 51% black-owned.
These two events unleashed much uncertainty on millions of livelihoods. Banks were ready to ditch coal assets in favour of funding renewables. For these and a variety of other reasons some established mining houses decided to exit the industry.
The most controversial case was Glencore’s dispute with Eskom. This led to the sale — backed by a prepayment backstopped by a bank guarantee — of Optimum Mine to the Gupta family. This transaction dominated headlines for years.
Coal, Eskom and the rise of new BEE players
Simultaneously another story was unfolding. This was the story of Seriti, which owes its existence to Anglo American’s exit from coal in SA. Anglo ran a competitive bidding process to dispose of these assets. This is a distinction from first-generation BEE transactions. In those earlier transactions the seller typically identified its preferred buyer and sourced funding.
In his speech, Zungu elaborated on the concept of shared prosperity, or what some would call enlightened capitalism. Not only have the new shareholders been making money, but Seriti’s other stakeholders, especially host communities, have also benefited over the years.
In recent months BEE policy has also received welcome support from leading figures. At least three cases are worth citing.
First, Saki Macozoma’s BEE outfit, Tshipi é Ntle, agreed to sell its manganese assets to Exxaro, one of the successful second-wave BEE companies, for nearly R10bn. The latter is an emblem of broad-based BEE, which became a trend after the first wave.
Other smaller BEE-to-BEE transactions have occurred. Even though the wealth of family offices has been grossly exaggerated, it’s not insignificant. However, trading among each other hasn’t been the norm.
Soon after the transaction’s announcement Macozoma mounted a spirited defence of the policy and its continuance.
Second, as well as defence of BEE there has been sobering introspection by its architects. Writing in the Sunday Times, business person Peter Vundla, one of the policy writers, revealed his disappointment at the diluted version of the finalised BEE law.
In his soon-to-be published memoir, Call Me David, David Moshapalo, a BEE commissioner, echoes Vundla’s disappointment: “The commission’s objective was on blacks in general and Africans in particular, but the legislators brought in white women and Chinese to it, which resulted in the watered-down version of the original objective.”
And third, from the C-suite, BEE has found a consistent supporter in Sim Tshabalala, CEO of Standard Bank.
This weekend he told the Financial Times that “given that SA remains profoundly unequal, and that race remains a large driver of inequality, black empowerment and affirmative action remain absolutely necessary to make the SA economy more competitive”.
Even with this support the road ahead is treacherous. More of the black oligarchs ought to come out in defence of the policy. A few anecdotes help, but they will not win the argument. The anecdotes need to be backed up by empirical evidence of “what can go right”, as Zungu framed it, and proper advocacy.
• Dludlu, a former editor of Sowetan, is CEO of the Small Business Institute.
