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LACK OF CAPITAL STYMIES BEE IN AGRICULTURE — EXPERTS

Thabiso Mochiko | 30 July 2023

Most large farms in South Africa are well established, white-owned family businesses.


The cost of funding transformation is prohibitive and there needs to be more co-ordination between stakeholders, say Agri SA, Nafu SA.


The agricultural sector has posted mixed performance on black economic empowerment (BEE).


Presenting the third Sanlam Transformation Gauge report, Lerato Ratsoma, MD at Empowerdex, said there were “a lot of improvements from last year. Ownership increased from 68% to 75%, but still below the 2021 figures. We are seeing an improvement in management and control, which must be commended.”


Listed companies fared much better than their unlisted counterparts in areas such as ownership and skills development. However, in management and control, unlisted companies' performance was superior, while at listed companies it was below 50%, “which is an area of concern that should be delved into further to figure out why it's so low compared to everything else”, said Ratsoma.


The Sanlam Transformation Gauge found a persistent challenge for the sector’s charter council was that few businesses reported on their broad-based black economic empowerment (B-BBEE) compliance.


This year, only 57 businesses voluntarily submitted BEE certificates, according to Madime Mokoena, director at BBBEE Charters Compliance at the department of agriculture, land reform & rural development. The department managed to obtain an additional 21 certificates via desktop research and verification agencies, the report said.


Mokoena said the data was inconclusive, making it a challenge to determine whether the sector was transformed. “There are more than 30,000 commercial farmers in South Africa, according to Stats SA, but only 57 submitted certificates.”


Thapelo Machaba, agricultural economist and policy analyst at the Agricultural Business Chamber (Agbiz), said in the report that the nature of agriculture and the inherent flat structure of most primary agribusinesses deterred farmers’ participation in BEE.


Motsepe Matlala, president of the National African Farmers Union of South Africa (Nafu SA) agreed, saying the country’s internal agricultural market was dominated by established, white-owned enterprises which are mainly “family businesses”.


“You can’t come and tell me that I must come up with BEE in my family. It is not about the white farmers alone. Let’s be fair, it’s not easy to expect a family farmer to bring in a Motsepe Matlala to work in the family business,” he stated in the report.


Nafu represents smallholders and commercial farmers with up to 20,000 hectares.

Christo van der Rheede, CEO of Agri SA, said capital was needed to drive transformation. “[With the challenges farmers are facing, they are] not in a position to drive transformation on their farms because they just don’t have the capital.”


Matlala agreed the cost of funding was prohibitive, saying during apartheid the Agricultural Credit Board funded white farmers and did not charge interest. “The government at that time truly wanted farmers to develop.”


Van der Rheede and Matlala want transformation efforts to be consolidated.

Van der Rheede said in the report there should be more co-ordination between stakeholders, with realistic goals to sustainably build and transform the sector.


“The problem is we’ve got all these very good plans such as the National Development Plan and the Agriculture and Agro-processing Master Plan, but they are poorly executed, if at all.”


Matlala said in the report that one national department and nine provincial departments acting independently made it difficult to deliver effective services to farmers. This had seen the proliferation of farmers’ unions and associations, leading to unnecessary contestation.


“Farming is a business. Farming is a science. It should not be politicised or racialised,” he said.


Ratsoma said there could be improvements and “I am hoping there will be as the economy improves and there are more available resources to fund different farming activities that fall under agri-BEE”.


In forestry, while there had been some resistance to change, compliance had improved.

According to the report, the sector achieved ownership targets of 92% from 72% last year, management was at 54% from 50%, skills development at 88% from 72%, and enterprise development was at 90% from 68%.


Makhosazana Mavimbela, executive director of the Forest Sector Charter Council, stated in the report that big companies had been consistent with reporting and compliance. However, smaller businesses,, particularly those that did not do business with the government, needed to be persuaded to report.


Forestry's management control stood at 54% behind the overall average of 67%.


Mavimbela said companies were comfortable using the same faces on their boards because they were reliable. This often robbed them of an opportunity to give women a chance to contribute to diversity at board level. She acknowledged that while some companies were making progress, the sector continued to face migration and fewer numbers of women in science and technology.


Commenting on skills, Mavimbela said work was under way to change the mindsets of young people who were not attracted by the rural locations of companies in forestry and also that the majority of roles were low-level — blue-collar work.


“We are creating a database of women who are currently in training and also calculating how much the industry spends through bursary schemes and skills development, and how we can best maximise those resources,” said Ndlovu.


‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.





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