BUSINESS LIVE / 31 MAY 2019 - 05:06 / YOLANDA CUBA
Ramaphosa’s war-room must urgently implement a revised version of black economic empowerment that catalyses development
One of the more exciting developments coming out of the 2019 elections is the news that President Cyril Ramaphosa will be establishing a war-room and advisory team to urgently look at government’s policy framework. There is no doubt that this is a much-needed intervention, particularly for clarity on SA’s overarching macroeconomic policy. This is necessary to ensure sustainable economic growth and job creation, to speed up economic inclusion, and to increase the appetite of potential international investors.
I’ve just returned to SA after three years working in other parts of the continent, and the geographical distance has made me well aware of the gaps in our overall policy framework. It’s also clear that some key policy issues need to be rapidly brought in line with developments in other parts of the world — for example, to embrace and take advantage of the fourth industrial revolution, which could enable huge leaps in the use of technology and change the entire dynamic of our economy if handled correctly.
Of course, this reshaping of policy must happen in a way that builds in an inclusive economy and fundamentally changes the way black people, in particular, take part in — and begin to truly lead — SA’s economic growth. But here’s the rub: for any economic policy process to make a real contribution to economic inclusion I firmly believe we need a fundamental overhaul of the framework that governs broad-based black economic empowerment (BEE). And it needs to take place within the context of macroeconomic policy development, driven from the presidency and cascading into the entire economic cluster of government departments. It also needs to bring to the centre the excellent work being done by the Broad-Based BEE Advisory Council — in particular, its attempts to strengthen the participation of black businesses in the mainstream economy.
The council has clearly outlined the need to overhaul the BEE framework and provide a more enabling environment for black business. Now its work needs to move to the core of government economic policy and planning. In line with this, I would argue that the president’s war-room and advisory team needs to put specific emphasis on BEE, mainstream the work of the advisory council, and treat an overhaul of BEE as central to macroeconomic policy and sustainable and inclusive economic growth. It is not a “nice to have”. It is a “must”.
But it must be done properly. I say this in part because of my own experience in building black-owned businesses. These range from the formation of Mvelaphanda Holdings and its transformation into the Mvela Group, which was listed on the JSE; the construction of the Absa Batho Bonke deal, which gave many black groups and individuals a stake in one of Africa’s largest banks; and other BEE deals.
The golden thread in all these transactions was the fact that they had limited impact beyond the individuals involved. They changed the complexion (and, sometimes, gender) of those at the boardroom table. But that was often where the impact ended.
So, although some of SA’s most notable BEE transactions have generated exceptional financial returns for the people at the centre of those deals, they have done little — if anything — to change the economic landscape or contribute to fundamental economic inclusion. There are countless studies of the “failure” of BEE, and of the shortcomings that resulted from policies that were introduced soon after the advent of democracy. Although the intention was good, one could argue that the results often had a very narrow impact beyond providing a financial platform for a handful of people to amass wealth.
A new economic policy framework cannot allow this to continue. A new approach – let’s call it BEE 2.0 is needed. It must not only be punitive by outlawing fronting and limiting financial growth to narrow groups of beneficiaries. It must be progressive, a stimulus package that brings a large number of people into the economy and provides a meaningful stake in existing and new businesses.
For this, we will need a cadre of what I like to call BEE catalysts — people who have experience in the current BEE framework, who have seen its limitations and are prepared to put forward ideas and business ventures that have a catalytic effect on individual businesses, on specific economic sectors, and on the economy as a whole. These BEE catalysts should be able to identify areas of opportunity based on their own understanding of specific sectors, and develop and pilot new ventures alongside other people with relevant experience and ideas.
These ventures should be grounded on existing initiatives where necessary, for example, the recent commitments made during the president’s jobs summit and the investment summit, as well as the work of the BEE Advisory Council. They should be aligned to the growth areas outlined in key policy documents such as the Industrial Policy Action Plan and the National Development Plan, at the same time as these documents are updated in line with a new macroeconomic policy framework.
These interventions must be premised on putting BEE at the heart of economic growth. They must apply to how government regulates — some would say overregulates — the small, medium-sized and micro-enterprises sector. They must apply new initiatives linked to the fourth industrial revolution. And, in particular, they must be integral to any plans that emerge to rescue our ailing state-owned entities.
• Cuba is Vodacom chief officer: strategy, mergers & acquisitions and business development.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER