Organised Business: Economic transformation/BEE has been slow

Minority black equity ownership has generally been insufficient to exert direct influence on the strategic direction of investee companies and is limited to a concentrated number of established businesses which have access to capital.

Ujuh Reporter

The pace and depth of inclusive economic transformation in the post 1994 South Africa has been insufficient and urgent steps must be taken to improve the situation, says Business Unity South Africa (BUSA) in a new report.

BUSA launched what it calls a “comprehensive approach to black economic transformation for inclusive growth.”

Jabu Mabuza, BUSA’s President, says a greater commitment by all role players is needed to usher in the level of change required. “The time for talking is over. It is our wish to cooperate comprehensively with government, labour and other social partners to achieve the accelerated de-racialisation of the economy,” says Mabuza.

The BUSA approach identifies urgent steps to be taken by business in collaboration with government, organised labour and civil society to boost growth and engender change that will deracialise the economy and benefit the majority of South Africans.

“We recognise that apartheid systematically engineered significant aspects of the economy and society in favour of the white population. Addressing the systemic impact, therefore, calls for significant, fundamental structural shifts to address the historical legacy and grow the economy in an inclusive manner. Business is committed to accelerating this process and working together with government, and key social partners including organised labour.” states BUSA Chief Executive Officer Tanya Cohen.

The approach is underpinned by the need to explore, with government, mechanisms to comprehensively and consistently measure economic transformation.

BUSA said it has critically evaluated transformation policies and found that they are not achieving the desired transformation results. BUSA argues that ownership has largely failed to deliver meaningful control and value to black people.

Minority black equity ownership has generally been insufficient to exert direct influence on the strategic direction of investee companies and is limited to a concentrated number of established businesses which have access to capital.

B-BBEE ownership transactions should instead be structured to stimulate value generation in a cost-effective manner. Similarly, BUSA observes that well intended transformation policy has driven a compliance, rather than transformational culture.

Constraints to Economic and Inclusive Growth

BUSA identifies the challenges facing economic activity that constitute constraints to making meaningful progress to achieving the vision of a deracialised and inclusive South African economy. In South Africa, small businesses contribute only 65% to employment, relative to a worldwide average of 95%. The potential to add many small and growing businesses owned and controlled by black people is, therefore, an obvious avenue through which to activate inclusive growth.

BUSA indicates that there is significant scope to improve the co-ordination and effectiveness of public and private support of emerging enterprises. Among its recommendations, BUSA believes business must partner with government to introduce specific considerations in the socio-economic regulatory impact assessments process and ease barriers to doing business – particularly for small emerging businesses. Growing black business requires addressing regulatory barriers; opening up market opportunities; bringing down the cost, and increasing the access to infrastructure and services. Importantly it requires that decisive steps be taken to address corruption and maladministration which undermine economic transformation efforts.

Critical Enablers to the Deracialise the Economy

Critical enablers to deracialise the South African economy, positively impact inclusive growth and contribute to social cohesion are identified by BUSA under four elements that will activate and accelerate transformation:

  • Enable a transformative culture in business
  • Demand led skills development
  • Enterprise development support
  • Employment promotion – particularly of youth

 

“Enabling a transformation culture in business through systemic initiatives, enterprise development support via industry development programmes, skills development for current and future business needs and employment – particularly for the youth – are among the keys to success,” says Cohen.

 

The basic education system and post-school education requires serious attention to address the apartheid legacy that persists. Businesses can actively participate at a business, sector, and national level in driving a more demand led approach to skills development.

 

BUSA proposes, for example, that business partners with government to:

  • Provide greater efficiencies, support and coordination of enterprise development initiatives, including supporting the Black Industrialists Programme, in identified sectors and regions
  • Support sector development strategies including: training, skills and mentorship development interventions; industrial support in supply chains; job creation projects; and clearing regulatory and trade barriers
  • Champion local, yet scalable initiatives particularly in township economies, outlying areas and growth nodes
  • Seek greater alignment between the Amended B-BBEE Codes and government’s procurement policy
  • Decisively deal with fraudulent use or maladministration of enterprise development funding through the criminal justice system

 BUSA recognises that more needs to be done to transform the economy and put it on a higher growth trajectory.

news@ujuh.co.za

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