Broad-based black economic empowerment in South Africa is moving in the right direction, but too slowly.
That’s the word from Zodwa Ntuli, acting commissioner of the Broad-Based Black Economic Empowerment Commission (B-BBEE Commission), who adds the commission is confident that the pace of broad-based black economic empowerment in South Africa will soon accelerate.
“The whole purpose of B-BBEE is to provide an integrated programme, a framework pointed at moving South Africa towards a transformed, inclusive economy,” Ntuli says.
Since its inception in 2016, the B-BBEE Commission has made issued 55 preliminary and 14 final findings from complaints received, says Joseph Melodi, the B-BBEE Commission’s acting Senior Manager: Investigation and Enforcement.
Melodi says the B-BBEE Commission had found that most entities that had findings against them opted to comply with the Commission’s recommended remedial action. Only three cases had been referred to the South African Police Service or the National Prosecuting Authority for criminal investigation.
Approximately 10 cases had been referred to other regulatory entities, including the Companies and IP Commission. More than R100-million has been paid in redress to black people found to have been disadvantaged by misaligned B-BBEE deals, Melodi adds.
Ntuli says: “We are comforted by the fact that most entities have taken up the opportunity to correct their transformation deals and transactions, so people are willing. We are going in the right direction as a country.”
Ntuli adds that broad-based black economic empowerment had previously been hampered because many government entities had been unaware that B-BBEE legislation pertained to them too; the legislation’s proposed beneficiaries – black people – were often unaware of their rights under the Broad-Based Black Economic Empowerment Act (2013); the private sector often received poor advice from B-BBEE advisers; and, in some instances, there had been an element of mendacity within the private sector.
An entity that is found to have violated the Act can be fined up to 10% of its annual turnover, while individuals found to have violated it face a fine, imprisonment of up to 10 years, or both.
“If we implement B-BBEE the way it is intended, we’ll be able to create more jobs and integrate more graduates into the economy,” Ntuli says.
Fronting is still a hurdle to South Africa’s economic transformation, she says. Under the Act fronting is any action that undermines the letter or spirit of the B-BBEE legislation.
In the 2016/17 financial year, the B-BBEE Commission received 191 complaints of fronting, 14 of faulty B-BBEE certificates, 10 complaints regarding contracts and two of misleading advertisements. In that period, five complaints were marked under “other”.
In the 2017/18 financial year, complaints of fronting dropped to 92, there were 14 complaints of faulty B-BBEE certificates, four contractual complaints, one about a misleading advertisement and one “other”.
So far in the 2018/19 financial year, to the end of August, the B-BBEE Commission had received 125 complaints of fronting, six regarding faulty B-BBEE certificates and nine contractual complaints.