Robert Dalton CEO of BEE Consultex looks at the BEE journey and the future involvement of Black business.
During the 1990’s the continued domination of business activities by white business and the exclusion of black people and especially black women from the mainstream of our economy was a concern for many commentators. To this end the South African government introduced Broad Based Black Economic Empowerment (BBBEE), a program to redress inherited socio-economic challenges by giving previously disadvantaged groups (black Africans, Coloureds and Indians) economic opportunities previously not available to them.
On the 9 February 2007 the muddy waters of broad-based black economic empowerment (BBBEE) were cleared with the gazetting of Codes of Good Practice for BBBEE. These codes ensured that the days of high-profile black business people representing faceless members of “broad-based” groups in empowerment deals were numbered. Today a BEE Certificate and BEE Scorecard are a business imperative.
Dalton suggests that while White owned (50+ white shareholding) business have headed the call to comply with BEE by obtaining a BEE Scorecard and BEE certificate, it appears that large numbers of black owned businesses, in particular businesses with a 100% black shareholding, remain cautious. So what are some of the underlying reasons for this wait-and-see approach? Some black business owners have amassed their wealth against all odds during the Apartheid era and they feel that they earned every cent without preferential government policies.
In addition Dalton adds, a culture of socio-economic development and human capital development is inherent in most black businesses. Giving back and upliftment is inherent in their business approach. More recently, the rise of tenderpreneurship – individuals who are politically well-connected and got rich through government tendering systems – have further added to the hesitancy of many black businesses to obtain a BEE scorecard and BEE certificate.
Dalton further suggests that BEE has added value to a number of role-players in the South African society. For instance, BEE deals have helped lawyers who have drafted agreements. Accountants gained business through working out the accounting implications of BEE transactions. Banks were able to lend money to effect these BEE deals with quite generous returns, while minimising their risk exposure by making the company bear most of the risk. Existing investors in companies that implemented BEE deals were given an opportunity to get their companies valued and so forth. Dalton asks, if you track how much of that value has actually gone into the pockets of black people, how much would you come up with? The sad reality is that only a fraction was captured by black people, although they were the catalyst for such value creation.
So can we blame some black business owners who have earned their wealth through hard work, who continues to see how mainly white individuals reap the value of BEE in all professions, who observe “cronyism” in tendering and who see that the intended beneficiaries of BBBEE in its current format remains economically disadvantaged?
Notwithstanding these sentiments BEE continues to underpin the legislative environment in South Africa. The BEE Certificate and BEE Scorecard have become an essential tool which contributes to the success of your business.
1st February 2010 was a landmark day in the history of B-BBEE in South Africa. It was from that date onwards that only certificates issued by accredited verification agencies such as BEE Empowered who are currently represented by BEE Consultex, were valid.
In addition, says Dalton the government published the Draft Preferential Procurement Regulations in 2009 to realign the Preferential Procurement Policy Framework Act, 2000, (Act No. 5 of 2000) to the Broad-Based Black Economic Empowerment Act, 2003. Once approved Dalton adds, all government departments will have to insist on BEE certificates and Scorecards in awarding tenders. Then even the most resistant Black owned business will have no alternative other than to appoint an accredited BBBEE Verification Agency to verify their business and obtain a BEE certificate and BEE Scorecard.
Finally the playing fields will be leveled.
