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How has BEE evolved, and what is next?

Criticism always has been raised against black economic empowerment (BEE) policy, however, seven years after the gazetting of the BEE Act, negativity in this regard is now stronger and the general belief is that broad-based BEE should now be evident.

The negativity stems from the belief that BEE was not an initiative developed by black people, but was created by the country’s white elite as a temporary measure to pacify black leaders that transformation was high on the agenda.

It is becoming increasingly difficult to disprove this theory, particularly since approximately 90% of the population of South Africa is represented by African people, while they still only occupy approximately 25% of the cumulative top management positions in the country.

Nothing much has changed for the masses in the country, as they still are being marginalised.

This has seen the advent of a new resistance that is now against the elite, irrespective of colour and creed.

It is evident that the effects of BEE have not been ‘broad’ enough. We have seen the rich becoming richer while the poverty stricken still are not able to enter the economic mainstream and millions remain below the breadline.

The BEE legislation, however, certainly has got people talking and has created the awareness with companies selecting initiatives to be undertaken to achieve a desired contributor status level. So in many ways, BEE remains a compliance issue and not that of a moral obligation – hindering further the broad-based intention of the legislation.

Although a little late, we believe that the initiation of President Jacob Zuma’s BEE Advisory Council is key in driving and sustaining BEE policy into a successful countrywide initiative.

To alter a person’s – or organisation’s – moral values is an incredibly difficult task, however, a more achievable one is to prey on one’s sense of achievement or competitive spirit.

We believe the focus of the Council should be the state-owned enterprises and the governmental institutions which are the only entities compelled by the BEE legislation to comply. Their compliance should be publicised, and measures should be introduced to address non-compliance.

These measures should be structured cleverly to address pillars where no scores are achieved, or where the targets are not achieved.

This would go a long way to achieve BBBEE, as many entities seek compliance at an optimum or desired level while not achieving the intended ‘true’ empowerment.

Another key focus area for the Council should be to lend credibility and a sense of professionalism to the verification industry. This industry body has been criticised for indiscriminately setting rules and policies aimed at “protecting its own interests”. We liken the verification industry to that of an ‘auditing’ field, where an assessment is conducted in terms of a verification methodology.

The findings of this assessment culminate in a verification certificate that is utilised by the entity within its tender application packs. This is therefore a high-risk area, and yet surprisingly, it remains ungoverned and unstructured. Too many legislative issues remain open to interpretation and hence are misapplied and/or misinterpreted to the benefit of the measured entity.

We remain very optimistic that through ongoing intervention by the government and the formation of regulatory bodies, that an escalated recovery may be achieved.

The BEE legislation is one of the most cleverly developed and written pieces of legislation which will only gain momentum once implemented with a view to uplift the lives of the previously disadvantaged majority – instead of it being done for the ‘sake of doing it’.

Rubeshne Gobardan

Ernst & Young’s BEE strategic services division

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