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Government is failing to comply with its own empowerment policies

Penalties, criminal sanctions, new rules and a specialised tribunal are among the recommendations to turn things around and enforce compliance.
The B-BBEE Commission says its report ‘lays bare the blatant disregard’ most public and private sector entities have for these policies. Image: Bloomberg

Just 25% of state organs submitted broad-based black economic empowerment (B-BBEE) compliance reports in 2021, leading the B-BBEE Commission to conclude that government is failing to comply with its own empowerment policies.

The commission reveals in its National Status and Trends on B-BBEE Transformation Report for 2021 that of approximately 326 organs of state, 244 failed to submit compliance reports.

Of those that did meet the submission deadline, 37% were found to be non-compliant with the empowerment policies.

The commission says it is logical to conclude that there is no gate-keeping by organs of state to drive entities to be B-BBEE-compliant.

It adds that the lack of policy enforcement by government entities is negatively impacting its ability to track the effectiveness of existing black economic empowerment policies.

Private sector

The private sector’s poor reporting patterns during the period are just as worrying for the commission, which notes that only 140 – over 40% – of 324 JSE-listed companies submitted their annual reports to the commission, which allow it to conduct B-BBEE compliance checks.

Analysis of the data the commission did receive reveals that overall black ownership across all entities dropped to 29.5% in 2021 (2020: 31%), despite average black ownership within JSE-listed companies increasing by 11% (to 39%).

While 3% of listed companies were fully black-owned in 2019, this was found to no longer be the case in 2020 or 2021 – when none qualified as fully black-owned.

“This report continues to depict a bleak picture of the state of economic transformation in South Africa, crystallises the effects of severe limitations in the legislative framework, and lays bare the blatant disregard for B-BBEE by the majority of public and private sector entities.”

Read:

Black women ownership

According to the commission the ownership numbers for black women in the country are “growing at a dismal rate” – with the finance; marketing, advertising and communication (MAC); and agriculture sectors registering significantly slower growth for black ownership but even more so for black women.

Ownership figures for black women slid to 12.4%, a 2.6 percentage point drop from 2020.

To address the slow growth, one of the commission’s recommendations is that the black women ownership scorecard be revised.

“The Black Women ownership scorecard targets are historically less than Black ownership targets and this should be the same over time to avoid current disparities. The B-BBEE Commission will engage relevant stakeholders with a view to propose revision to Black Women ownership targets,” it says.

Recommendations

In order to revive a seemingly dying policy, the commission recommends that Minister of Trade, Industry and Competition Ebrahim Patel introduce administrative penalties for entities failing to comply with the policy or, more seriously, criminal sanctions.

The commission went further, recommending that government entities be compelled to only do business with certified B-BBEE-compliant contractors, saying this will also protect government from approaching B-BBEE compliance as a mere “tick-box” exercise which often effects no real change.

Additionally, the commission believes the establishment of a specialised tribunal will assist in not only managing compliance with the policy but in tracking its impact as well.

Read: Black ownership of SA businesses falls below 30%

Listen: Busa CEO Cas Coovadia on the 2021 National Status and Trends on B-BBEE Transformation Report (read transcript)

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My fear is that the ANC will never accept the following truths:

1) Less is more. Ironically less forced race based policy (bee( yields more transformation.

2) You cannot truly transform off the back of failing entities (SA).

BEE in the state does not matter.
They are all cadre depolyees on exorbitant salaries paid for doing nothing of any value !!!

The ANC has never encountered a problem for which it does not immediately create even more regulations, a new commission, and a tribunal – just for giggles. And of course, ministerial meddling and draconian fines and penalties. This insanity will continue until the very last business in SA closes down under the sheer weight of bureaucratic BS and we all become proud SASSA grant recipients. But only those of us with the correct hue, of course. Which grants will be paid by … oops, we have not quite figured that one out yet. But starting the printing presses at the Mint in Centurion is the “solution” that has already been mooted by a few ANC Ministers, all of whom are financial geniuses as well as admirers of the Zimbabwean economic miracle.

When will the powers that be recognise that BEE policies are racist and no better than during apartheid? If, after 30 yrs the ANC’s protectionist policies have not borne fruit,perhaps it’s time to give up and accept that economics should have no inhibiting boundaries to survive! Any companies that create employment for South Africans ( no matter their skin colour) is a much better strategy!

Perhaps the question needs to be asked as to how many Blacks WANT to own there own business’s WITH ALL THE STRINGS ATTACHED?? Rather than make it sound like and imply that it’s every other Race’s fault that these numbers are dropping, or are not high enough!!

Owning(running) your own business is a lot easier said than done, especially in todays times and with this Government in power!

there are many suppliers to the state that simply will / can not change or do not qualify to change but that the state needs to work with.

The state is no different than large companies. If they want what Johnny offers it is pointless sending him forms demanding to know what his BEE status is. Johnny is an owner-managed small to medium business. Johnny knows he has a zero rating and won’t bother. Johnny can stand on his head and won’t get the right scorecard. If the state or large companies don’t want to do business with Johnny that is all good with Johnny : he simply doesn’t care or doesn’t need them or has no realistic options.

Google is never going to give away half of Google SA. Neither is Johnny.

End of comments.

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