Back to the drawing board: How to make BEE work

It has been over two decades of broad-based black economic empowerment (B-BBEE) strategies in one form or another and one thing we can all admit is that broadly, black people have hardly been empowered by it.

Frankly, it was always an idiotic goal. One can’t focus policy on upper echelons of business in an ailing economy and expect it to broadly empower 80% of the population.

Even if you could, the policy lends itself to amassing wealth among a select few with no real further steps to making that wealth go a long way. Actually, it probably does go a long way but not in the way one may hope.

Rather it goes a long way to fill the coffers of German carmakers, Italian designers and Scottish distillers.
There’s been a bit of talk lately about ending B-BBEE claiming that it hasn’t worked and I find that simplistic.

B-BBEE, to a degree, has worked but not nearly as effectively as intended. Though we could speculate on what the real intention may have been.

It’s not a stretch to claim that some, if not most, beneficiaries of the policy would not have had wealth had it not been for B-BBEE.

Whether deservedly or not is a different story but it does show that B-BBEE has shifted wealth to more black people than may have been the case in its absence.

As a whole though, black people don’t seem to be better off because of it. Sure, a few do. You gotta ask yourself then whether we are okay with a couple of black people having wealth at the expense of the rest.

If you are, then there’s really little difference to most black South Africans between some white people having all the wealth and some white and black people having all the wealth.

After all, if one is struggling to eat, I find it difficult to believe they’d be applauding a fat cat because they are “one of them”. Then again, former president Jacob Zuma has collected a lot of poor support so I could be wrong.

The point remains though that if you believe that B-BBEE did not open doors to black executives and business people, you’re mistaken.

Similarly, if you think B-BBEE is going to have any significant further of wealth redistribution, you’re wrong and our alarming unemployment and poverty rates kinda prove that.

So facing hard truths is a must. If we’re going to concentrate on the current form of B-BBEE, we’ll have to admit that to pull more beneficiaries into corporate positions, we need a stronger corporate sector and for that we’ll need a stronger economy.

We also need to admit that it’s super unlikely that 99% of shack-dwelling, downtrodden and forgotten South Africans are going to see any benefit from B-BBEE. Thus, it’s blindingly obvious that BEE needs to be supplemented with additional policy to be more effective.

Of course, we can’t exactly say that all B-BBEE appointees should be prohibited from spending money abroad or compel an additional tax to uplift poor communities.

ALSO READ: It’s probably time for a radical rethink of BEE policy

That would be cool if we assumed that every black individual in a corporate position or owner of a business is there as a result of B-BBEE but that’s certainly not the case, and it would be pretty racist to impose some taxes and restrictions specifically on black people.

What’s amazing is that the biggest item on the scorecard is based on enterprise and supplier development. All that means, in reality, is directors get to set up companies to do business with themselves and enrich themselves further.

If you want companies to help drive economic growth through wealth redistribution, you’ve got to get them invested in long-term strategies.

• I’d care more about the number of black directors a company has that were sourced from a school that that company-funded rather than simply the number of black directors.

• I’d care more about interventions to start businesses and how many black people they employ at a decent salary, rather than the number of black directors.

• I’d be more interested in the provision of skills with an obligation to employ x% rather than hosting a workshop, calling it skills development and letting the class go back into unemployment.

If we’re going to be serious about B-BBEE becoming effective, it’s time we stopped looking only at the top. Sure, look at the top all you want but don’t expect amazing results just from that.

If we want B-BBEE to be effective, it’s time to leverage the private sector and incentivise real skin in the game. The focus needs to change.

Sure, ownership and management control are important considerations but they cannot be so focal at the expense of those really in need of the true potential power of B-BBEE.

We need to look at the bottom half of the B-BBEE scorecard and the building blocks are there; skills development, enterprise and supplier development and socio-economic development.

Those things, by the way, collectively make up most of the scorecard but companies have been allowed to creatively dance around them.

If you want to fix B-BBEE, you need to revisit not only how you define things like skills development but, more importantly, how you incentivise it that it’s not just a box-ticking exercise.

Give companies points on what comes out, rather than what goes in and you’ll see an immediate reaction and, in time, change.

NOW READ: To empower the poor, we need to end BEE (and other bad ideas)