Jeremy Maggs | 30 March 2023
Picture: 123RF/ROMAN MOTIZOV
New proposals are aimed at achieving a substantial change in the racial composition of ownership and management.
Continuing lack of access to market share and capital is one of the key motivations behind new proposals put forward by the marketing, advertising and communication (MAC) charter sector code that is out for public comment.
The code affects the BEE scores of agencies that form part of the R30bn sector.
According to research by the Sanlam Gauge, the BEE Commission and the Interactive Advertising Bureau South Africa that was presented to parliament, transformation targets set out in the 2016 sector code were “minimal and easily achieved”.
The MAC council is made up of a number of industry bodies, including the Association for Communication & Advertising, the Marketing Association of South Africa, the Advertising Regulatory Board and the Public Relations Institute of Southern Africa.
Several key proposals have been made, including those relating to voting rights by black people in the entity being raised to 75% from the current 50% to achieve five scorecard points. Additionally, voting rights by black women in the entity are raised to 51% from a current 15% to achieve three points.
In the preamble to the proposal, the MAC council says a limited number of medium-sized businesses — let alone large businesses — are owned and controlled by black people in the sector.
The document says most black entrepreneurs have indicated that access to market and capital has been the main challenge in acquiring equity in businesses or start-ups.
The new proposals are aimed at achieving a substantial change in the racial composition of ownership and management, increasing effective economic participation for black-owned and black-managed enterprises and advancing the meaningful participation of black people in the mainstream economy.
It’s also proposed that economic interest in an entity to which black people are entitled be raised to 51% from 30% to achieve four points and to 40% from a current 15% to be awarded three points.
There are proposals that relate to supplier development, for example that broad-based BEE (BBBEE) procurement spend be raised to 80% from the current 15% to achieve five points on the scorecard.
The proposals will no doubt we welcomed by the recently formed Black Agencies Network Association (Bana), created in the wake of calls to transform the industry by the South African Human Rights Commission, which conducted an inquiry into the sector.
At the time, Bana chairperson Groovin Nchabeleng told the FM it was critical that unheard black voices in the industry be heard.
The FM has reached out to several agencies for their reaction to the proposals and the effect they will have on business if they are activated. Most agencies declined, with some offering the traditional response of the proposals being studied carefully.
Thabang Skwambane, CEO of Nahana Communications Group, which houses the big FCB agency, told industry website MarkLives: “We understand the viewpoints that have been raised by small up-and-coming agencies that it can be difficult to break into the market. We also recognise that this is especially the case for 100% black-owned entrepreneurs. We strongly believe that there needs to be significantly more successful 100% black South African-owned businesses in the marketplace.”
Media strategist Gordon Muller believes advertiser BEE status needs to be measured based on the final transaction — “the place where I pay for the audience”. He says: “If the money doesn’t include the genuine small media owners or culturally aligned content creators, the whole thing is a farce. You can get your BBBEE status approved on 5% of your budget and I can give the other 95% to foreign companies like Meta and Google and not one cent stays in the country. How can that be considered transformation?”
Muller says an industry measure needs to be created that aims for cognitive diversity, not demographic realignment.
“Reward advertisers with BBBEE points for creating content in all 11 official languages, for instance. If the most important global development is brands with purpose, we need to support media with purpose and give points to advertisers who support community media — and double tax breaks for advertisers who shoot local television commercials rather than use global work.
“If you start shooting television commercials in Zulu and Sepedi, you’ll have to employ black talent — that’s natural transformation. What’s the point of employing a black copywriter so that they can sit and back-translate bad concepts from Western Europe and North America?”
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.