The implementation of a proposed law to ensure that a minimum of 30% of public- and private-sector procurement spend is awarded to black businesses would discourage competitive behaviour and exacerbate corruption, financial services firm Lion of Africa Insurance CEO Adam Samie has said.

In response to a recent statement by the Black Business Council (BBC) that it would launch a Constitutional Court hearing to have the empowerment policy set-asides made into law, Samie told Engineering News Online that, while black-owned businesses should be prioritised during the awarding of public and private contracts, this should not be done in isolation from the broader economy.

Set-asides refer to policy stipulations that dictate that certain components of a government contract be allocated to a particular population group.

“What we have seen thus far is the limited use of black skills on the periphery of economic activity, which has led to corruption and no real sustainability in the true development of black skills,” he stated.

A mechanism that encouraged the growth and development of skills through experience in a contemporary economy that encouraged competition and was removed from the monopolised nature of the apartheid economy was required, asserted Samie.

He added that, to ensure the emergence of transparent business opportunities for black companies, government should stipulate clear guidelines for the use of the broad-based black economic-empowerment scorecard.

“Where black and white partnerships are created, these should be regulated so that the real transfer of skills takes place and the partners are rewarded for creating sustainable relationships, rather than establishing partnerships for convenience,” he said.

Further, Samie challenged the perception that black business should emerge from existing white entities as passive partners and believed that the implementation of the set-asides in the current market environment would lead to further fronting.

“These proposals favour the notion that black South Africans can’t do it by themselves – that somehow they can only produce on the margins and must learn from their former masters. Only if we accept that black business can rise to this challenge, will we free our society from this malaise,” he noted.

He added that South Africa could never expect to have a developed and integrated business sector if black citizens were consistently relegated to a secondary role.

The BBC could not be reached for comment.