Until black people have enough faith in their fellows to employ them as service providers, black economic transformation (BEE) will not become entrenched.
This is the word from BEE Advisory Council member Dr Thami Mazwai, speaking at Friday’s Broad-Based Black Economic Empowerment (B-BBEE) Commission-hosted roundtable session on black ownership, and how to grow, develop and transform South Africa’s township and rural economies.
The roundtable session was called after the B-BBEE Commission and members of the BEE Advisory Council identified ownership as one of its key focus areas in terms of improving business and public awareness of the importance of transforming the economy.
The two entities have also observed various ownership models being implemented in South Africa, and have debated ways in which black ownership can be broadened to revitalise township and rural economies, and increase participation in the economy among the poor and the working class through the ownership of productive economic assets.
BEE Advisory Council convener Koko Khumalo reminded the audience that the B-BBEE Act is aimed at developing a stable, prosperous economy for all South Africans, regardless of race, and that the economy is stagnant.
“We are all very worried,” she says. “Research has shown that a diverse [business] leadership team produces better results.”
According to Chantyl Mulder, another BEE Advisory Council member, work is under way to bring to life a proposal that the Companies Act regulations be amended to require that the Companies and Intellectual Property Commission (CIPC) records data tracking black ownership, broken down by race and gender.
CIPC commissioner Rory Voller says the commission has started to amend its registration forms so that it can gather race and gender information when companies are registered. Already this information has been gathered from 6 000 of South Africa’s larger businesses.
Voller says he expects amendments to the Companies Act in this regard to be promulgated in South Africa’s next presidential term, which will begin in May, after the general elections.
Focus needs to be on the impact of transformation, Mulder said. B-BBEE Commission commissioner Zodwa Ntuli agreed.
Access to finance emerged as a real hurdle to direct, meaningful ownership that gives black people input into the daily operations of a business. This was raised by Ipeleng Mkhari, CEO of Motseng Investment Holdings and president of the South African Property Owners Association, Black Business Council CEO Kganki Matabane, and others.
There was also discussion around the abuse of trusts to keep black people at arm’s length from real, operational ownership of a business.
Matabane says that, to encourage black people’s involvement in the economy, the Competition Commission’s efforts to broaden access to markets needs support. South Africa is an economy too often dominated by large players, leaving emerging black businesses competing for a small slice of that particular market.
Matabane says another avenue through which black businesses could be encouraged is by increasing South African funders’ appetite for risk financing. Too often small black businesses rely on international funders who demand a controlling stake in their business to cover the risk, he said.
Business expert Terry Moore of Wits Business School says the world is moving away from a focus purely on giving shareholders as much income as possible, to a more broad-based focus on doing business that benefits all.
Pure equity investment has proved to be a fickle means of enrichment that has eviscerated the American middle class, Moore said. Working to benefit the communities in which a company does business has proven to make “good business sense.