Food for thought Turn the B-BBEE Scorecard on its Head

During the dark week of 9th July 2021, South Africa

experienced the worst riots since 1994. Statistics paint a

horrendous picture of the destruction:

> 150,000 jobs were put at risk;

> Approximately 3,000 retail stores were looted;

> 161 malls were extensively damaged;

> Approximately 50,000 informal traders were affected;

> More than 90 pharmacies were destroyed;

> More than 50 schools were damaged in KwaZulu Natal;

> The impact on GDP is estimated to be R50b.

Numerous views have been expressed as to what triggered the

riots and looting. It is a complex matter with no one specific

cause. Some reasons cited that may have contributed include

former President Zuma’s arrest, unemployment, poverty,

inequality, crime and corruption.

To comprehend such destruction, we need to understand it

in the South African context. The reality is that South Africa

has the highest disparity in wealth distribution globally, as

measured by our Gini index of 0.63 (source: World Bank). In

simple terms, this means that in South Africa there is a sizeable

gap in wealth and earnings between rich and poor people.

Consequently, due to this disparity, there is a high potential for

conflict between the ‘haves’ and the ‘have-nots’. As a solution,

B-BBEE was designed to address and reduce the disparity of

wealth indirectly by creating opportunities.

According to the Quarterly Labour Force Survey for quarter

1 of 2021, South Africa’s official unemployment rate stands

at 32.6%, which is amongst the world’s highest. The official

unemployment rate among our Youth, those aged between

14 and 35, is 46.3%. For Youth that are graduates the ratio

is 9.3%. In contrast, Rwanda’s unemployment rate is 1%,

Burundi is 1.4%, the United Kingdom is 4.1%, Australia is

4.9%, and New Zealand is 4.7%.

Recognising that B-BBEE was developed as a strategic

framework to address the past imbalances and create an

economically inclusive society, one has to ponder whether

B-BBEE is best placed to rebuild and reshape our country

going forward, in its current form.

Unfortunately, South Africa has become more disparate in

wealth since 1994. One might question whether it is as a result

of a flaw in the design of B-BBEE. Or perhaps it is the lack

of effectiveness due to the way organisations implement it.

Yet, on the other hand, is our current situation our path for the

future no matter what policies or frameworks are in place?

The design of B-BBEE is often criticised by the

naysayers, who consequently do not embrace its

intent and the implementation thereof. However, even

the best-laid plans will fail if the implementation is not

effective.

At this time of upheaval, I would like to turn the B-BBEE

Scorecard on its head by adapting it to the intrinsic

needs of society today.

The Socio-Economic Development element recognises

contributions made with the “specific objective of

facilitating income-generating activities” and “sustainable

access to the economy” for Beneficiaries. Typical Socio Economic Development initiatives include healthcare,

education, development and skills intervention

programmes.

The criteria for ‘income-generating activities’ was

gazetted in the Amended Codes of Good Practice

(Codes). The introduction of these criteria is to ‘tighten’

the flow of contributions, focusing on teaching a

Beneficiary to fish rather than giving them one.

Technically, the Codes do not accommodate soup

kitchens, hospices or shelters. It is, however, challenging

for a child to concentrate at school if they are hungry

and worrying where they will sleep tonight.

Arguably, the Socio-Economic Development element

is one of the most essential elements on a B-BBEE

Scorecard, given the high unemployment rate and

taking into account the highest disparity of wealth

and earnings in the world. On the Generic Scorecard,

only five of the 111 B-BBEE Weighting Points are

allocated to Socio-Economic Development, making it

the stepchild of all the B-BBEE elements. Now, in the

aftermath of the riots and the looting, it may be a good

time to re-visit the B-BBEE Scorecard by allocating

more points towards Socio-Economic Development.

For example, the scorecard could accommodate

charitable non-income generating activities as a

contribution. The extra Weighting Points could well

encourage contributions to assist with a basic level of

healthcare and comfort, which would put beneficiaries

in a better position to embrace ‘income-generating

contributions’ like education. Perhaps ‘monitoring and

evaluation’ criteria could be used to measure the impact

to ascertain achievements, instead of counting input

and throwing money at the problem.

Another stepchild of the B-BBEE Scorecard is Enterprise Development, which receives five Weighting

Points on the Generic Scorecard. Enterprise Development encourages contributions towards the

development, sustainability, as well as financial and operational independence of a business that is not

a supplier of a business. In many cases, organisations are ‘writing cheques’ in exchange for the five

Weighting Points on offer. Not enough is being done to support grass-roots enterprises that are often a

product of Socio-Economic Development. B-BBEE policy makers should set additional qualitative

criteria for Enterprise Development programmes and initiatives to meet the objectives thereof. Monitoring

and evaluation should be mandatory to ensure that Beneficiary businesses achieve the desired impact

and outcomes.

COVID-19 and the damage caused to more than 50 schools by the riots do not bode well for

disadvantaged children. Whilst most privileged children simply moved from the classroom to a Google

Classroom, many disadvantaged children receive no education during the strict lockdown and even more

so when the rioters targeted schools.

The Skills Development element is effective, considering its design. On the Generic Scorecard it carries

20 Weighting Points, plus five additional Bonus Points, which is significant. As of 1st December 2019,

the scorecard was revised where four points were allocated to fund bursaries for ‘Black’ Students at

Higher Education Institutions. However, this leaves a gap for much needed basic education. The Sector

Codes are lagging behind, as they still need to align with the Generic Codes on this issue. The Amended

Generic Codes, gazetted on 11th October 2013, allowed non-employee ‘Black’ People to be eligible

recipients of Skills Development, thereby extending the element’s reach. Another focus area of the Skills

Development element is implementing competence-based learnerships, apprenticeships and internships,

which enjoys six Weighting Points. The category promotes much needed practical competence and

capability. If implemented effectively, Skills Development will go a long way towards addressing South

Africa’s challenges. However, the focus should shift towards implementing monitoring and evaluation

mechanisms, not only to reward inputs but to illustrate the impact and outcomes.

During a week in July 2021 many looters took ownership of many different things, ranging from televisions

and fridges to frozen chicken, shoes and medicine. In the process many businesses that had been built

up by their owners over years were destroyed. The looted assets may not be around for long as they

are depleting and are not being sustained. True ownership is achieved through conceptualising, building,

nurturing and caring. The most prized possessions are the ones that took blood, sweat and tears to build.

The B-BBEE scorecard should be turned on its head and the ‘blood, sweat and tears’ elements on the

scorecard should be elevated as a foundation for building true ownership