B-BBEE in the spotlight as SA sees decline in black business ownership

What’s required is a discussion on the critical elements SA needs to grow the economy to attract investment, says Busa CEO Cas Coovadia.

NZINGA QUNTA: My name is Nzinga Qunta and I’m standing in for Fifi Peters. The Broad-Based Black Economic Empowerment [B-BBEE] Commission has released its national status and trends on the B-BBEE transformation report.

One of the main findings is – and I’m going to quote them directly here: “The 2021 average statistics indicate a decrease in black ownership and black female ownership. In general, the average growth of black woman ownership is lower than black ownership, indicating growing disparities.”

Let’s get a response and discuss this with the CEO of Busa [Business Unity South Africa], Cas Coovadia. A very good evening to you. Thanks so much for your time on the SAfm Market Update with Moneyweb. Just your thoughts on that report and the findings therein?

CAS COOVADIA: Well, I haven’t been through the entire report, but just from what I’ve read, obviously it’s concerning that we seem to have regressed.

But I think that we also need to look at the period which this report is covering. It [is] covering a period during which – just [think of] Covid and the vaccines – the economy [was] essentially in the doldrums and businesses [were] focusing on just keeping their heads above the parapet and managing their businesses as best they can under very, very trying circumstances.

So I think it would be useful to see what the impact of that has been on transformation and black economic empowerment, [which] is the first point I’d like to make.

The second point is that we’ve been sort of saying for quite some time that ownership is obviously a critical aspect of transformation, but we also need to look at some of the broader-based issues. And I think what’s needed is a discussion on what the critical elements are that we need to grow our economy to attract investment.

I would think things like skills, things like development of SMEs, things like getting black suppliers into corporate supply chains and so on are probably going to have a more positive impact on economic growth than only a concentration on ownership.

So I think that we need to look at the report in its entirety.

It is disappointing that ownership has gone down, but let’s look at the period to which the report pertains, and see if that has had an impact.

And then let’s I think not review black economic empowerment, but let’s actually have a discussion to look at what the economy needs and what investors need and concentrate on that, so that we are actually growing the cake that can then be divided or utilised for transformation across the various elements of transformation.

NZINGA QUNTA: When I was reading through the report, what seemed to be coming out from the B-BBEE Commission was a sense of frustration. One of the statistics that they listed was that JSE-listed entities reported R40 billion spent on skills development, while R1.3 billion was reported for organs of state.

And then they said there was a lacklustre response to reporting. For instance, 143 JSE-listed entities failed to submit their annual report [to] the commission, and the commission [was] saying that it was ‘unfortunate’, and data reporting is very underwhelming.

The commission seems to be frustrated in particular [with] the private sector in the amount of money that they put into skills and in the way that they’re reporting to the commission. So there seems to be a reticence [from] private companies to get on board with black economic empowerment decades later.

CAS COOVADIA: Yes. So I think, again, let’s look at if we want people to report, if we want companies to report, we need to make it as uncomplicated and simple as possible. We also need to look at what others [do].

There’s a plethora of reporting that companies actually need to do in the current economic climate and the current global demand, so ESG [environmental, social and governance] reporting, sustainability reporting, and a whole range of other reports that companies need to … actually produce.

Again, I think let’s look at [whether it’s] simple racism. I, for one, don’t think so. But if there are racist practices, those must be clamped down on.

I think that there is a range of reasons why businesses are reticent [in] reporting. They are slower reporting because they’re just concentrating on their businesses, and they report on what is critical to their business, and they report on what they can do without too much complexity. I think that’s what we need to do.

I know when I was at The Banking Association, for instance, and reporting against the Financial Sector Transformation Council, we went through hoops to actually fill those reports, to actually complete those reports – [which were] absolutely complicated in the way we actually calculated things and so on. I think we need to make that simpler. I think we need to make that less complex.

Then let’s look at transformation. It’s not a black issue. It’s a national issue for this country. If we don’t actually involve the majority of our people in the economy we are not growing our economy and, long term, we’re not doing business.

So it’s in the interest of all business to actually ensure that we have an inclusive economy.

Let’s on that basis just take a step back and say: ‘Okay, why isn’t this happening? What do we need to do? Do we need to make any changes to the legislation? Do we need to concentrate more on broad-based stuff?’

Let’s ask those questions and try to move forward on this together.

NZINGA QUNTA: Cas Coovadia, who is the CEO of Business Unity South Africa, joining us there to speak about that report and the challenges faced when it comes to reporting and transformation in South Africa, saying that our economy needs to be inclusive, which is one of the reasons for black economic empowerment, thanks so much for your time on the SAfm Market Update with Moneyweb.

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Can we please have an objective perspective on the measurements applied?

How do the measurements deal with probably our biggest investor pool by way of retirement and savings funds? Are women counted? Are races counted in pension funds? Are funds classified as gender and race neutral and excluded or are funds counted based on their underlying member race and sex?

Facts do matter at the end of the day.

I am SO tired of our country’s preoccupation with damned labels!! It is like the property thing : 2.5 Kruger Park areas falls under traditional kings. Draw that space out in your head on an SA map…. None of the 10-15m people living on that land are counted as not-white. Those people have no land status, they cannot mortgage their land for equipment to add value or grow. If we want to embrace modern norms then lets please start with giving all those people individual tenure rights instead of clinging to this damned colonial / Neanderthal concept of kings owning land.

The same applies to company shares. If my pension owns 10% of SAB or a bank or whatever and I am black/white/female then count me for whatever I am. Please do not tell me that the underlying data does not exist because then all the hired help should be fired on the spot.

sê hulle Johan, sê hulle.

boepens : dit was lelike week, een van my kinders het gevlieg Kanada toe, so verkeerde tye vir kwak soos hierdie

Ah but how do you determine whether you are “black/white/female” or whatever. Pencil test etc? I’m surprised that this racial classification system has never been tested in court.

Paul, the people that did the last property race analysis admitted that they used what race surnames sound like. So Mhlangu ticked black and Marais ticked not black.

our weekend finance minister Van Rooyen probably rated a tick in the not-black column for all his properties. Heaven knows how Shelf179345 Pty Ltd was rated for the properties it owns, or The Sunshine Always Trust.

All of this is the stuff of standup comedy. But very very sad.

21 jaar in Kanada gebly Johann. Dis ‘n ongelooflike land. Hulle sal reg wees my maat.

as hulle Alberta toe gaan laat my weet. Ek het tjomme daar wat sal uitkyk vir hulle geen twyfel.

Dankie, ek weet hulle gaan great doen – dis net so ver.

Hulle is ander kant by Nova Scotia

BEE legislation is a powerful tool in the hands of a collectivist community that they use to turn the economy into a manifestation of their mindset. The rising unemployment rate and the crashing GDP per Capita prove the efficacy of this socialist power tool.

Considering the negative effect on the economy, BEE beneficiaries will eventually be “empowered” by owning bankrupt businesses. BEE is a system that enables economic vagrants to squat on the financial statements of the business.

End of comments.

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