The Broad-Based Black Economic Empowerment (BBBEE) Advisory Council last week conceded that the generic 25% black ownership target across industries should be inclusive of active participation of the beneficiaries and not passive involvement.
The council met with Trade and Industry Minister Dr Rob Davies on April 12 to provide strategic direction and share insights for the contemporary discourse on BBBEE and broader transformation in South Africa.
The meeting participants recognised that a lot has been achieved over the last five years in the economic transformation space using BBBEE policy.
These achievements include the implementation of the Black Industrialists Programme (of which 138 beneficiaries have been supported by the Department of Trade and Industry (DTI)); the hosting of the National BBBEE Township and Rural Economies Summit; the establishment of the BBBEE Commission to monitor transformation implementation; and the prioritisation of supplier development and procurement in the BBBEE policy to strengthen the participation of black businesses in the mainstream economy.
However, the council also discussed issues that affect the implementation of BBBEE policy, including the significance of the role of development finance institutions in supporting empowerment – the council found that clear directives and policy are needed for BBBEE funding specifically.
Additionally, the role of these institutions should be complemented by the broader financial sector to intensity funding for BBBEE as per the commitment by the Financial Services Charter. The council stated that focus should be on financing small, medium-sized and microenterprises (SMMEs) and black industrialists, especially those in the productive sectors.
Further, the council acknowledged that the country’s procurement laws need to be strengthened to embed BBBEE compliance in their content.
The council emphasised the need to intensify efforts to ensure that SMMEs get markets to sell their wares, and also appreciated the significance of public and private sector partnerships in this regard, while the council also mulled the appropriate way to use the 30% as contained in procurement policies to empower SMMEs in local communities.
The council raised concerns about the use of broad-based ownership schemes and trusts that do not meet the ownership requirements, the abuse of the third party for enterprise development, supplier development and skills development, and the nonparticipation of black shareholders and directors in 51% black-owned structures.
“Acknowledging that fronting is becoming more sophisticated, aided by consultants and verification agencies in the market, the advisory council urged government to finalise the development of regulation for verification agencies and BBBEE practitioners to complement the work of the BBBEE Commission and South African National Accreditation System,” the DTI said in a release published on Sunday.
Recent developments such as the collaboration between the BBBEE Commission and the Auditor-General of South Africa on the consideration of BBBEE compliance by the public sector were shared by the collective.
“There was consensus at the meeting that there is a need to declare a Transformation Week in the country to showcase best BBBEE practice, create awareness and educate, with a platform to share progress and introspect regarding economic transformation,” the DTI stated.