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'RACISM BEHIND LACK OF DIVERSITY'

Dineo Faku | 30 July 2023


Transforming the “C-suite” in South African companies to reflect the country's demographics continues to lag, according to the latest Sanlam Transformation Gauge released last week.


The report was produced by financial advisory firm Intellidex and sponsored by Sanlam in conjunction with Business Times and Andile Khumalo.


The third edition of the report looked at B-BBEE scorecards of 14,542 companies in 10 sectors focusing on black ownership, management control, skills development, enterprise and supplier development, and socioeconomic development.


The report said despite the improvement to 69% in 2023 from last year's 56%, management control had been the worst-performing segment since the report was established three years ago.


More than half of the B-BBEE verification agencies that responded to the survey said racism was the reason corporate South Africa resisting appointing black people to management positions, while 23% flagged skills as a hurdle.


In his message in the report, Bonang Mohale, president of Business Unity South Africa, said economic justice and fairness were required to boost economic growth.


“Asking for a hand up is not the same as asking for a handout. B-BBEE is not a permanent crutch on which black people want to lean for the rest of their lives.”


He said succession planning was key in transforming top management.


“When you have black people and women in the C-suite, they will find other competent, professional and experienced black people. They will also enrich our collective culture, thought processes, strategies and priorities.”


“C-suite” refers to senior executives whose titles often start with the letter “C”, such as chief executive officer, chief information officer and chief financial officer.


Speaking at the launch of the report, Sanlam chair Elias Masilela said attitudes had not changed and corporate South Africa was paying lip service to transformation.


“Why is BEE so elusive when we believe it is relevant to change our futures? It is not the policy, it is incumbents' attitudes, it is racism and corruption.”


Masilela said South Africa needed to look at the underlying reasons why B-BEE had not worked.


“Let us not deal with the symptoms, let us deal with the causes or the sources of the problems that bring us to where we are. Let us not blame the design, but the manner in which we implement and the conviction with which we implement.


“Do not throw out the baby with the bath water. Replace the water and make sure it is cleaner and properly soaked.”

Litha Kutta, co-chair of the Enterprise and Supplier Development Community of Practice, said South Africa needs to implement punitive measures by imposing fines of 10% of revenue on companies that fail to comply with codes.


“For me it is the punitive side that is lacking. We can talk until we are blue, but until we fine people nothing is going to happen. We can have discussions and change the codes; absolutely nothing is going to happen.”


The Employment Equity Amendment Act became law in April, giving the minister of employment and labour powers to impose targets in each sector for companies with 50 or more employees.


Kutta said patronage undermined enterprise and supplier development.

“Protecting the patronage system is fundamental to not dismantling the supply chain by bringing in people you do not know.”


Tabea Kabinde, chair of the Commission of Employment Equity, said legislation for foreign nationals at top management should be scrutinised.


“They are given work permits that are supposed to last for a certain period, but the reality is it keeps getting extended and my question is, why?


“Why is it that as a country we are not getting to a place where we say skills development has got to work for us? ... We need you as much as you need us. Therefore, we are both going to make it work. I think we need to get to a point where we take the bull by the horns.”


Disa Mpande, acting CEO of merSETA, said the report showed that skills training was a box-ticking exercise.


“The critical skills needed to drive the economy — we are not training on them. We do skills development needs of each province and we were shocked that North West does not have engineers. How does it make sense when North West is the mining belt?”


Mamkeli Jim, dealmaker for leveraged finance at RMB, said that despite challenges, B-BBEE had created monetary value for black entities 30 years into democracy.


“There is probably northwards of R100bn that is sitting within black investment holding companies. You can look at that and say it is still small relative to the bigger pie, you can look at it and say it is a smaller grouping relative to the population of black people or you can say at least we are lucky there has been value and money sitting in black hands.


There is a lot of value here that without BEE would not be happening; there are businesses that are started,” Jim said.


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




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