African, Indian, Coloured BBBEE formula is misplaced: BMF

The Black Management Forum (BMF) has proposed a smart solution around the sensitive issue of breaking down representation within different black population groups for the purpose of affirmative action.

The proposed solution is carried in the BMF’s submission to the process of amending the BBBEE codes of good practice. The BMF proposals on how to treat the issue of differentiation between African, Coloured and Indian groups could go a long way to mending cracks in the BBBEE discourse.

Reacting to a view that Africans continue to be heavily underrepresented in the economy while the representation of Coloureds has recorded some progress and that of Indians has recorded remarkable success, government had proposed a knit picking formula to address the situation. This can be a politically explosive issue as witnessed in the Jimmy Manyi affair. In a proposal that focuses on outcomes, the BMF has made a politically intelligent proposal.

In its submission the BMF said “The government should note that the formula for calculating the targets for Africans, Coloured and Indians (ACI targets) is incorrect (in the proposed codes amendments). Such targets will introduce complexity but not affect the scores of corporates or change their behavior”.

“We note that the proposed formula for calculating ACI targets is incorrect. According to our research, South Africans of mixed descent are under-represented at top, senior and middle management. They are slightly over-represented at junior management level (13% compared with an EAP of 11%). Therefore, they will have no impact on the formula”.

“Essentially the formula is there to address over-representation of South Africans of Indian descent who are significantly over-represented at all levels of management. However, this group only accounts for 45 883 people (8.7%) of the people in management. Since South Africans of Indian descent are still a small percentage of all people in management (despite their overrepresentation) the formula (as it should work) will result in a marginal difference in the scores (for black targets compared with ACI targets) for the average company using the latest CEE survey as a proxy. The differences in scores are: 0.2 for top management: 0.2 for senior management; and 0.1 for junior management. The ACI targets introduce significant complexity, but will have marginal impact on the actual scores of companies. Therefore, the ACI targets are unlikely to change corporate behavior”.

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