Its Time To Stop Equating Ownership With Economic Empowerment

Economic empowerment, according to The Organisation for Economic Co-operation and Development (OECD), is “the capacity of women and men to participate in, contribute to and benefit from growth processes in ways that recognise the value of their contributions, respect their dignity and make it possible to negotiate a fairer distribution of the benefits of growth.” True economic empowerment should therefore allow access to the resources (education, skills, jobs, etc.) required to enable people and communities to progress beyond mere survival in order to transcend the endless cycle of poverty and actively improve their social and economic opportunities.

The South African government first introduced B-BBEE legislation in 2003, with ostensibly noble intentions: to level the playing fields and allow equal access to the economy for ALL South Africans. However, a closer look at the many subsequent changes to the codes since their inception, coupled with the ever-growing list of woes currently facing the country (including the dismal state of our education system, a precarious political environment, rampant corruption, crumbling SOEs, a growing informal economy as well as, most importantly, the steady decline in job opportunities) reveals a shifting focus. According to Beth Cook, CEO of Progression, it requires a re-think. “I think it is safe to say that the original purpose and spirit of B-BBEE has been lost. In fact, I am tempted to propose that we have been hoodwinked and tricked into buying into a false promise.”

Let’s consider a few noteworthy aspects of the outcomes of the current scorecard:

  • The Equity Ownership element accounts for 20%, the Preferential Procurement element contributes another 20% with a further 15% allocated to Enterprise Development – a total of 55%, all focused on ownership.
  • Employers generally do not buy into Skills Development for unemployed South Africans and mostly engage in learnerships and other training initiatives as a box-ticking exercise in order to capitalise on the B-BBEE points.  For the most part, learners are continuously rotated onto a succession of learnerships with little consideration for their needs.
  • The unemployed learner becomes disillusioned, no longer has any hope of securing permanent employment and now views Skills Development initiatives purely as a short term method of receiving some money, instead of a career path opportunity.
  • Fulfilling the requirements of the Ownership element often leads to inflated prices, fronting and lost opportunities for “real” SMMEs, as has been proven by the Zondo Commission and various other reports.

When our BEE Commissioner reports back on transformation and only discusses the ownership element, ownership fronting, insufficient JSE ownership representation, etc. with little to no mention of the standard of education, effective skills development and job creation, one has to ask whether she is genuinely concerned about true economic transformation. Surely her priorities are misplaced.

The very first step in the transformation process should be to tackle the inadequacies in the education system and to boost Skills Development. From this essential foundation, the subsequent steps can flow in the following order: creating jobs, providing access to employment opportunities, supporting SMMEs and giving equal opportunity for educated and motivated individuals to earn their way into management and ownership positions. The ownership requirement will ensue naturally with a skilled and educated population.

As long as the success of economic empowerment is measured in terms of ownership and the masses in South Africa are marginalised, ignored and treated as if they don’t exist, we will never transform our economy.

The big question therefore is, does the current B-BBEE Scorecard provide the right solution for transforming the South African economy?

For more information please email bethcook@progression.co.za

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