BEE not at the expense of meritocracy should be part of recovery, says Zungu
ENGINEERING NEWS / 10 SEPTEMBER 2020 - 12/24 / MARLENY ARNOLDI - CREAMER MEDIA ONLINE WRITER
Black Business Council (BBC) president Sandile Zungu on September 10 said black economic empowerment (BEE) had a role to play in turning the economy around.
During a webinar hosted by the Covid Business Rescue Assistance task team, Zungu discussed how the implementation of economic recovery plans, which needed to be coupled with the economic redress that had been necessary before the pandemic, would need to align with the suggestions of all social partners.
“South Africa is always awash with plans, to fight corruption, to stop gender-based violence and even to send a man to the moon.
“Government has the legislature, executive and judiciary arms, but there remains a clear lack of capacity to make laws for digital migration and the allocation of spectrum, for example, which speaks to the capability of the State to implement plans,” Zungu explained.
He also remarked about the South African government's tendency for cadre deployment and nepotism. “Meritocracy is something that we definitely have to move single-mindedly towards. We need to appoint deserving people in leadership positions, who want to, and can, do the job.
“We need to abandon corrosive practices that take our country backwards. I do not agree with the sentiment many have that those corrosive practices are inherent in BEE necessarily. Cadre deployment and unmerited appointments will [happen] regardless of BEE reforms.
“BEE and meritocracy can exist alongside each other; it’s biggest enemy is not BEE, but people being employed in positions where they do not belong.”
Zungu added that the world was not waiting for South Africa to get back on its feet and that opportunities were "flying past" that South African could have taken advantage of, but because the State was still struggling to accept that private sector business could play a role in development, including mobilising skills and capital, coupled with the lack of plan implementation, meant the country was missing out.
Zungu noted that the private sector, too, could not embark on infrastructure development for economic growth alone.
“Even the most strong-willed, single-minded private sector player encounters hazards and obstacles related to regulation along the way. There are always licences, permits or rights that need to be obtained or impact assessments that need to be done, and these can take years without government helping to fast-track these requirements.”
Zungu acknowledged that a lot of companies regard BEE as one of these stifling parts of the regulatory framework that prevented new businesses from starting up.
However, he did not believe BEE was an impediment to investment in the economy. “Black people were prevented from playing a part in business, not because they were not offered access to capital, but they were prevented by law, they were prevented to become members of pension funds and made to become perpetual beggars.
“The need to have economic redress is fundamental to our democratic order, we cannot leave it to chance and hope. There is need for using orderly and legal ways to steam this train in the right direction. We cannot wish away empowerment and hope to remain in peaceful order.
“BEE is not just about entitlement, but fostering enterprises that can sustain themselves and change the culture of inclusion in South Africa. Thirty years of democracy, thirty years of having a black President is not enough for true reform and transformation,” Zungu stated.
This rings true in an example that Schindlers Attorneys partner Maurice Crespi pointed out about the history of slavery in the US.
Even though these practices ended more than 100 years ago, according to research done by the Institute for Policy Studies and the Corporation for Economic Development, it would still take 228 years for black families to accumulate the same amount of wealth now, compared with white families, in the US.
Zungu highlighted that the BBC did not want to lock any race out of the economy, but rather for everyone to see past issues of race; the only way to surpass that is to take hands as a nation and achieve an equitable society where all races feel that the country is working for them.
Moreover, Zungu called on people and small businesses to join organisations that have access to government, and use all platforms available, to put pressure on government to effect short-term actions and implementation of plans.
He said government was amenable to pressure and that social partners needed to continue telling it, with frankness, what needs to be done.
Zungu mentioned that stakeholders managed to pull in the same direction and enjoy government support leading up to the 2010 World Cup and its preparations and that this could be done again.
Further, Zungu said government was also still not effectual in creating access to market for the critical small businesses that have the potential to solve the unemployment crisis if supported well.
He noted that government still tended to opt for multinational procurement of goods and services, because they can do it cheaper with their economies of scale.
“Government has to adopt a very deliberate strategy to support local manufacturers. Support for these companies will not just happen because they have good technology or advanced business knowledge, there are certain structural issues that can only be resolved if big businesses and government decide to deliberately support these companies.”
Additionally, Zungu said he believed small businesses continued to be hampered by commercial banks that did not have the “developing economy” mindset. He stated that commercial banks prefered to extend credit to big corporations and entities underpinned by National Treasury guarantees. We also need to put pressure on commercial banks to change their ways.
“We can nitpick and look at specific regulations that prevent the roll-out of small businesses, but as long as banks do not do things differently, this economy will not develop.”
In response, Absa special asset management head Peter Gordon said banks were very conservative and risk-averse in South Africa, and that the Covid-19 pandemic has contributed to the cautious disbursement of funds. He explained that bad debt provisioning had increased for banks during the pandemic, but they managed to withstand this because of robust business models in place.
Zungu suggested that banks become less conservative and keep in mind the need for small businesses to emerge for the economy to not only recover, but grow into the future. “It is through a thriving small enterprise sector that you will see people being employed, even the less skilled.”
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER