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Congratulations – Broad-based is the winner
Posted by Keith in BBBEE Knowledge, DA, General, True Empowerment, politics on September 21st, 2010
The leader of the DA, Mrs Helen Zille has written at length about the need for empowerment to be broad-based. The DA has had a broad-based policy for a long time, but for unknown reason has never publicised it widely. Nevertheless we congratulate Premier Zille’s call for broad-based empowerment. However the DA’s policy falls way short of the dti’s codes of good practice. It offers no objective measurement, like the scorecard does, and it gives no targets or indicators to guide compliancy. It falls back onto a subjective approach to broad-based black economic empowerment.
Congratulations today must also go to the department of trade and industry – and the specific people how guided the original act through parliament, and then spent many years developing the codes. In researching this article we looked back at the draft codes of 2005 and 2006 and compared them to 2007. It is very instructive to see how they progressed and improved to the final stage.
Congratulations must also go to the tens of thousands of companies that are making an effort to comply and have produced their own scorecard or verified certificate. While there is a long way to go, some progress is being made towards true, and broad-based empowerment. Many companies are spending a lot of money on skills development. Many are working very hard on enterprise development. Corporate social responsibility is still being implemented and helping the poor and poverty stricken.
Yes, there is a long way to go, but our first fight was to get everyone to start thinking broad-based. The ArcelorMittal deal, on which we were the first to comment has turned out to be the catalyst, or the final straw to narrow-based to making the whole of South Africa realize that broad-based was the way to go, and that broad-based was always the policy of the dti. We are now seeing the politicians calling for broad-based. The SACP has also condemned narrow-based, in favour of broad-based.
Most companies – our clients are very happy to follow broad-based once they know what it entails.
It’s taken some time, but we are getting very excited that broad-based is the winner.
How the DA sees BEE
The DA says: “The Democratic Alliance (DA) believes that Black Economic Empowerment (BEE) is an economic and moral imperative for South Africa. If correctly designed and implemented, not only will it redress the imbalances of the past but it will pull more people into the economy, stimulate competition, improve our skills and productivity, raise our domestic investment levels, reduce poverty, increase employment and broaden our tax base. However, BEE as it is currently constituted has created significant distortions in the economy, which have hampered growth and job opportunities without helping the poor.”
It goes on to complain about specific deals, and specific people who have benefited.
It concludes with
“The DA will review the BEE scorecard to ensure that it accurately prioritises the interests of those who have fallen by the wayside, not those who are already reaping the rewards of the new South Africa. This review will focus on:
- Placing less emphasis on ownership, and more emphasis on skills training and socio-economic investment, in the weightings accorded to the various categories used to evaluate businesses.
- Developing ways to prevent credits from being used over and over again by the same individuals.
- Establishing an ombudsman to resolve questions of compliance quickly.”
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My feeling is that the DA has fallen into the same trap as those who do not understand BEE.
They want to place less emphasis on ownership. Currently ownership is 20% of the generic scorecard and 0% of the QSE scorecard if the QSE chooses so. What would they do? They state that they want to develop ways of preventing credits from being used over and over again by the same individual. Have they realised that the current scorecard has 2 points for “new entrants” – people who have not yet done deals to the value of R20 million – what I fondly call the “anti-Tokyo” clause.
What would they put down for skills and socio-economic development? Skills is currently 15% and SED 5% – which elements would they reduce?
A point to note is on a scorecard that has 100%, you cannot break the pie into more pieces than the 100% available.
My conclusion is that the DA is as confused about B-BBEE and the scorecard as anyone else I have ever criticised.
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