By Zodwa Ntuli, commissioner at the B-BBEE Commission

On 13 February 2019 Statistics South Africa published fourth quarter economic growth statistics. These statistics indicate that South Africa’s economy grew by 1.4% in the fourth quarter of 2018, contributing to an overall growth rate of 0.8% for the entire year. Further, the statistics indicated that the unemployment rate decreased by 0.4 of a percentage point to 27.1% and that the working-age population increased by 149 000 in the fourth quarter of 2018 compared to the third quarter of the same year.

The figures on the national state of transformation for 2017 released by the Broad-Based Black Economic Empowerment Commission (B-BBEE Commission) inform us that we have regressed from 32.75% to 27% black ownership as far as public listed companies on the Johannesburg Stock Exchange concerned, and on average companies are not fully meeting the targets for management control, skills development and enterprise and supplier development.

It remains a fact that our economy is still not inclusive and the vast majority of the population do not partake in the mainstream economy, the landscape that the B-BBEE policy seeks to change. This is done through changing ownership patterns, skills development, increasing black management control, enterprise and supplier development and other socio-economic interventions, which is an integrated process.

Assessment of these figures shows that the gap of social and economic inequality continues, with little prospect of real and meaningful growth, and the number of unemployed persons is still high – the majority of them are black people or black youth. We call upon entities to provide skills to young black people to be employable and provide the necessary support to black entrepreneurs to run their own businesses and increase employment levels.

The real growth of South Africa’s economy will be measured by its ability to absorb South Africans of employable age and ending the cycle of poverty. These outcomes require active citizenry through skills development for both employment and entrepreneurship for creating and running own businesses, with proper access to markets for their goods and services.

B-BBEE is a win-win for all South Africans – it will mean greater economic growth because more people will be participating in the economy.

The democratic Government of South Africa introduced the B-BBEE concept with a view to achieving certain objectives, as broadly outlined below. Specifically, the strategy was in pursuit of nine objectives, as follows:

  • The empowerment of more black people as owners and managers of enterprises. A black-owned enterprise was defined as one that has 51% ownership by black people, with substantial management control of the business.
  • Achievement of a substantial change in the racial composition of ownership and management structures as well as in the skilled occupations of existing and new enterprises.
  • Promotion of access to finance to fuel black economic empowerment.
  • The empowerment of rural and local communities through enabling access to economic activities, land, infrastructure, ownership and skills.
  • Promotion of human resource development of black people through mentorships, learnerships and internships.
  • An increase of the extent to which communities, workers, co-operatives and other collective enterprises own and manage existing and new enterprises, including an increase of their access to economic activities, infrastructure and skills.
  • Creation of an environment that ensures that black-owned enterprises benefit from the government’s preferential procurement policies.
  • Development of the operational and financial capacity of B-BBEE enterprises, especially small, medium and micro enterprises (SMMEs) and black-owned enterprises.
  • An increase in the extent to which black women own and manage existing and new enterprises, and facilitate their access to economic activities, infrastructure and skills training.

  • Sadly, many businesses ignored it as much as they could, while others adopted a tick-box approach without true and meaningful economic transformation. That is the reason why the 2013 Amendment Act criminalised fronting and established the B-BBEE Commission, which is tasked with monitoring the gap that existed since 2003 and to make sure that economic empowerment really does take place and that it benefits South African citizens – in particular black people. This is a redress mechanism and promotes inclusivity with regard to economic participation, while we avoid the injustices caused by the past.

    The Codes of Good Practice (the Codes) aligned to the B-BBEE Act set out five areas of measurement: ownership, management control, skills development, enterprise and supplier development and socio-economic development. The Codes require that all entities operating in the South African economy make a contribution towards the objectives of B-BBEE.

    The aim of the introduction of the Codes was to provide a standard framework for the measurement of B-BBEE across all sectors of the economy. In particular, the Codes seek to facilitate proper transformation of the economy, and if properly implemented, the ownership of the economy will reflect the demographics of the country. That is why the B-BBEE Act also focuses on changing ownership patterns.

    Real economic transformation will result in the visible, tangible inclusion of black people in the mainstream economy, across all sectors. That, in turn, will mean greater economic growth that will benefit all South Africans.

    With adequate funding and support from government, we should be able to get this country to the next level of economic empowerment and in the process eradicate the unscrupulous companies and practitioners that make a mockery of this much needed empowerment tool.

    The B-BBEE Commission offers advisory services to assist companies to properly implement the B-BBEE Act and are encouraged to use these services which are offered at no cost.