IS CORPORATE SOUTH AFRICA EMBRACING CHANGE, BEE?

Heartlines, a mass-media initiative aimed at sparking a national conversation on values, kicked off this week. The first value up for discussion is acceptance. In SA’s rapidly changing corporate landscape, Stuart Graham looks at how business is faring. Earlier this year Archbishop Desmond Tutu sparked a major controversy when he said that white South Africans did not fully appreciate the sacrifices made by black victims in forgiving past wrongs.

Radio stations were inundated with calls and for weeks afterwards newspapers’ letters pages were filled with angry letters, mostly from whites, berating Tutu for his comments. “By and large, the white community does not seem to have shown an appreciation for the incredible magnanimity of those who were the major victims of a system from which the (the whites) benefited so much,” Tutu said in an interview with the BBC. Even former state president FW de Klerk got involved in the argument, saying that blacks should recognise the sacrifices made by whites to establish an all-race democracy and the courage they showed in ceding power.

Recently Frederik van Zyl Slabbert, who led the liberal Progressive Federal Party in the 1980s and was one of the first Afrikaners to talk with the then-banned African National Congress told a trade union forum in Pretoria that black economic empowerment (BEE) and affirmative action reflected a racial mindset similar to that of apartheid. Slabbert, who is now a political analyst and author, said black empowerment, as it is structured, favoured rich blacks and predicted the effort would be brought down by corruption and legal challenges.

“If you make yourself hostage to a racist past you can plan on a racist future,” he said. Slabbert said the government should use socio-economic status rather than race as its yardstick when addressing inequalities. But are these arguments signs that the white population is still struggling to accept empowerment and affirmative action? Colin Reddy, an empowerment specialist at the BusinessMap organisation, says that attitudes at the corporate level are becoming more accepting of empowerment.

“People are becoming more accepting now that companies are growing and the economy thriving,” he says. “Most companies have realised that you can only depend on a small group of skilled white people for so long. At some point you need to draw on people from the broader population.” Reddy says the problem lies with small businesses and individuals, many of who dislike BEE. “This could be because BEE is often misinterpreted as simply selling off shares to a group of individuals,” Reddy says.

“But BEE is more than that. It involves corporate social investment, enterprise investments, procurement and skills development. There are many other elements aside from ownership.”

Reddy says a lot of business people who are viewed as empowerment candidates are in their positions because of merit.
“Lots of guys are there because they have studies and got the post through the employment equity type of policy,” he says.
“Those guys would have worked for five to ten years already and as a result are now in a position to buy assets. Many people don’t see this and therefore don’t accept BEE.” Foreigners too seem to have had “issues” with BEE. A survey by US based Heritage Foundation found recently that empowerment remained a problem for foreign investors. Many multinational and local firms are still hesitant about being forced to sell shares in their South African subsidiaries.

The nervousness of investors became apparent after the leak in 2002 of the “draft” mining charter that called for more black ownership in the industry. In the six months after the charter’s leak there was a net foreign capital outflow of R11 billion, compared to an average foreign capital inflows of R19 billion in the previous seven years.

“Investors were reacting to what they perceived to be an environment that was becoming hostile to them,” De Beers chairman Nicky Oppenheimer said at the time. “They realised there was uncertainty about what businesses would be asked to achieve and were concerned about the future value of their investments.” Even local companies have shown concern about empowerment. In 2003, for instance, Sasol categorised BEE as a risk factor in a disclosure to the New York Stock Exchange.

Reddy says the government has realised that it has to balance the empowerment needs with the need to attract investment and changes to the current empowerment policy are in the pipeline. One proposal is to let foreign companies off form having to sell ownership. “Policy makers are very aware of need to balance investment against need for socio economic change in South Africa,” Reddy says. SACOB empowerment specialist Bill Lacey says BEE is a unique philosophy that many still have to get used to. “BEE is a fairly unusual,” he says. “It is not a run of the mill policy. It is unique to South Africa.” On the face of it, progress is being made with BEE.

In a survey of 298 companies on the transformation of business auditing firm KPMG found that 80 percent of South Africa’s companies have a BEE strategy in place. “Over 80% of companies indicated that a member of the Board of Directors is responsible for driving BEE transformation within the company and BEE transformation is often linked to performance and bonus measures for executives and managers,” KPMG chairman Moses Kgosana said.

But despite the changing attitudes and economic progress, big business is still seen as white. SA Communist Party chairman Blade Nzimande says that the marginalisation and exploitation of the black majority continues to be reproduced daily, despite major legislative transformation of the labour market since 1994.

The type of BEE practiced during much of the first decade of our freedom has essentially been elitist, benefiting a tiny minority of the black population without any substantive impact on the overwhelming majority of our people,” Nzimande says. He says the white capitalist class – with its huge economic muscle – is interested only in promoting an elite.

“The white captains of industry and finance much prefer the short-termism of lending an aspirant, upwardly mobile elite the membership fees to the country club and the keys to the Porsche, than taking on the more challenging tasks of labour-intensive investment, skills development, or ensuring that poor communities enjoy universal access to essential goods and services,” Nzimande says.

“Empowerment is reduced to quotas, to scorecards, to ticking boxes.” Stellenbosch economics professor Sampie Terreblanche said in Cape Town recently that the policy of empowerment had elevated about eight million blacks to middle-class status. He added however, that the poorer 20 million blacks remained impoverished.
“The government’s BEE policy can, therefore, be regarded as a new version of apartheid between the black ‘insiders’ and the black ‘outsiders’,” he said.

Projects such as the one by wine farmer Beyers Truter have tried to get poorer workers involved in the empowerment of their businesses. Truter and Jan Hendriks, the founder of the Stellenbosch Farm Workers Association, structured a R10 million deal in which 60 individuals from 39 families have become part owners in the Bouwland Estate near Stellenbosch.

The 60 individuals of the empowered 39 families formed the Bouwland Deelnemingstrust and own 74% of the shares in Bouwland Estate. “Many of the trustees are people who literally grew up on prime wine farms and are specialists in vineyard cultivation,” Truter says.

The evidence shows that most South African firms have accepted BEE as a necessity for the social and economic survival of the country. Progress however, is slow. Tutu warns that something urgently needs has to be done to uplift the poor majority. “I have warned, and I am not the only one who has, that we are sitting on a powder keg. It is the obligation of all of us to be trying to do something about it.”

The problem is finding the right way to do it. – Heartlines Features.

Heartlines
Written by Heartlines

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