Has Government’s Commitment To Empowerment Worked?
Statistics South Africa (Stats SA) has announced that the country’s official unemployment rate for the first quarter of 2019, has gone up to 27.6 per cent and that a staggering 55.2 per cent of the country’s youth are jobless, again calling into question government’s ability to stem the jobs bloodbath as its citizens suffer.
Stats SA further shares that an estimated 237 000 people lost their jobs in the first quarter of 2019, with the overall number of unemployed people in the country now standing at over 6.2 million.
Advocate Dali Mpofu, national chairperson of the Economic Freedom Fighters (EFF), says government’s empowerment policies have been a complete failure. “Government’s black economic empowerment (BEE) approach is nonsensical. You can’t empower millions by giving a few a share,” says Mpofu.
“Real empowerment is based on workers getting a share in the profits of the companies they work for. Government’s empowerment policies have created a black elite that joins the white elite. Inequality is inequality, whether it’s black or white inequality,” Mpofu adds.
It’s this notion that saw government move its approach from narrow-based empowerment, seen to be benefitting only a few, to “broad-based” empowerment. While there have been some successes, much still needs to be done as the alarming unemployment statistics indicate. While acknowledging that unemployment levels remain alarmingly unacceptable, Minister of Economic Development Ebrahim Patel, in his last budget speech in the former administration, said the output of the South African economy was at R4.7-trillion last year and that nearly 16.2 million people were employed.
Patel alluded to the fact that government was doing everything in its power to stimulate greater economic development and more inclusion of black people in the mainstream economy. At the time, he said that some of the practical steps government was engaged with was to, for instance, get Coca-Cola South Africa to buy more local grapes for its Grapetiser brand of drinks and more local glass bottles for its beverages, thereby creating jobs in supplier industries.
Patel also pointed out that rival buyers merging to buy the Caltex business from Chevron with greater black representation was another success, as was major construction company Murray & Roberts becoming 100 per cent black-owned. He added that another significant empowerment highlight was government’s engagement with insurance giant Old Mutual to bring the company “back home” from London and to use the Johannesburg Securities Exchange for its primary stock exchange listing, while taking its BEE shareholding levels to best-in-class industry standards.
President of the Black Business Council (BBC) Sandile Zungu acknowledges that while the efficacy of black economic empowerment “leaves much to be desired”, it is nevertheless unjustly hauled out as a soft target for criticism whenever damning unemployment figures are released.
“In terms of the current situation regarding the ownership and management of the economy, it remains lily white. This state of affairs is like a wart on the face of our democracy and needs to be corrected. Quite clearly, black people have political power. Through sheer force of numbers, they can influence who their government will be, but at an economic level, they remain powerless,” says Zungu, whose BBC is the overarching body representing black professionals, business associates and chambers in lobbying government on policy matters to ensure greater black participation in the mainstream economy.
Zungu maintains, however, that the government’s strict broad-based black economic empowerment (B-bBEE) policies are the correct approach to transform the economy, but the implementation needs to be more genuinely and sincerely embraced by business. “The government has a suite of empowerment policies in place meant to drive B-bBEE. Empowerment is an orderly process, the alternative for which is full, brutal expropriation of big business into black hands, which would be counter-productive. Empowerment is aimed at dealing with the ownership and management of the economy. Yes, it has admittedly not benefitted as many people as it was intended to, but most black people who are well-to-do today will tell you they have achieved that without benefitting from empowerment policies. What is encouraging, however, is that big business and major corporates are taking the B-bBEE codes very seriously now and saying to companies ‘you will lose the opportunity of doing business with us if you do not abide by the codes’. That forces companies to up their game on empowerment if they want to do business with government, or even if they want to do business with each other,” Zungu told Empowerment in an interview.
THE SPIRIT OF TRUE EMPOWERMENT
Zungu agrees with Minister of Trade and Industry in the previous administration, Rob Davies, that fronting is still a challenge to true economic transformation and needs to be “ruthlessly” eradicated.
Davies said recently at the B-bBEE Commission’s annual conference that it is equally important to “identify, support and value those who are doing the right thing” by implementing B-bBEE in the spirit in which it is intended.
“It’s true that some businesses want to take shortcuts,” says Zungu, adding “there are companies who do not believe in true empowerment, but who want to tick a box. True empowerment is promoting deserving black men and women to the upper echelons of leadership and ownership of companies. What’s lacking in business is the spirit of Mandela, which is being thrown away at the altar of expediency, with companies taking shortcuts to get to level one of the B-bBEE scorecard, without really believing in the spirit and letter of the law and ensuring true empowerment”.
Davies said the more black people are able to exercise true business ownership powers, the more economic transformation will take hold in South Africa. He said at the conference that the value of the B-bBEE transactions reported in 2017 and 2018 was around R115-billion, but that much more could still be done.
“In South Africa, too much black ownership is not real economic ownership; too often it is only legal ownership,” said Davies.
The governnment was aggressively cracking down on fronting, which has been made a criminal offence through the B-bBEE Amendment Act of 2013, but which was becoming more sophisticated and complex as entities such as the B-bBEE Commission crack down on it. In echoing Zungu, Davies said black people only experience real ownership of a business entity when they are involved in major decision-making and day-to-day operations.
EMPOWERMENT OF WOMEN A CORE FOCUS
And how does empowerment relate to women, who will make up 45 per cent of South Africa’s sixth parliament? A bold new voice that has entered South Africa’s political fray is the Women Forward (WF) political party, which contested the national elections.
“In terms of black economic empowerment, our core focus is true empowerment of women, which resonates with women who remain left out of the country’s economic pie,” says WF’s assistant national co-ordinator Lindiwe Khoza.
“We’ve seen these gravy trains mushrooming from afar, where the B-bBEE system is still built to benefit a few golden boys or companies.
“But empowerment does not benefit women or reach down to the communities where it is most needed. Most companies still relegate black businesses to minor services and to mere administrative roles, while white males still dominate the boardrooms,” adds Khoza.
She called for greater representation of women in senior leadership positions in business, saying “often we find women are the only black woman on a major board, but still truly do not feel they belong or add value.
“As women, we too need to organise ourselves and have real conversations about what the lived experiences and challenges of women in business are. The leadership of women is consistently undermined in the companies they represent,” says Khoza.
“Our message is that if we put more women in leadership positions, they have the right heart to transform the lives of poor people. Even when there’s no money in the home, women put food on the table. They somehow make a plan.
“Women don’t only make their own homes warm, they make their streets warm, they make their communities warm. Some women do not see themselves as leaders, but they are. We want women to make our country feel like home, whether it’s at community level, or in politics and also in the economy,” says Khoza.
GREATER INVESTMENT IN THE TOWNSHIP ECONOMY REQUIRED
Zungu says bringing industries and opportunities closer to home for the country’s majority was absolutely critical in creating empowerment and employment. “I would like to see the new administration of the country investing a lot more resources in developing and promoting the township economy.
“Government has spent billions of rands in building RDP houses, but the same people who are the beneficiaries of those houses still have to walk to taxi ranks and train stations and travel over an hour to get to work.
“Everyone wants to live in Sandton, Umhlanga or the V&A Waterfront because there are jobs and industries there, but no one wants to live in Kwa-Mashu. The equity in black hands does not rise in value because there’s no basis for it to rise,” says Zungu.
“Government must take this issue more seriously, the township economy is not a ‘social experiment’, it is an absolutely critical way to empower those entities that are supposed to expand, advance capital and create the kind of empowerment and jobs government is looking to create.
“If you want to empower people, bring large-scale, world-class infrastructure close to where they live. The bulk services, water and electricity, are already there, add large-scale industries and opportunities and give our young people big data in their communities and we can empower our people on a sustainable long-term basis.
The President must also appoint ministers who know how to create economic value and lead ministries in a business-like fashion. We have to hit the ground running,” he says.