Cosatu: The importance of BBBEE in addressing inequality in SA

Broad-Based Black Economic Empowerment (BBBEE) remains an important tool to address our deeply ingrained levels of inequality.  

It would be strange for any democratic government of a nation emerging from three hundred and fifty years of the most brutal and institutionalised forms of discrimination that left over 90% of society consigned to the most poorly paid form of manual labour, not to embrace state supported economic empowerment programme.  

It would have been tantamount to endorsing South Africa’s status as the world’s most unequal society, something clearly the fringe right wing extremists wish for.

BBBEE is merely one tool, among many, to address the legacies of the past and the inequalities of today.  This is a key prescript of the Constitution and an obligation of the state to society.

BBBEE in short seeks to give a fair opportunity to millions historically denied such due to their race, gender or disability.  People, in particular the race baiting fringe right wing, ignore its inclusivity.  BBBEE includes Africans, Coloureds, Indians, plus women, workers and persons with disabilities of all races.  In short it covers about 97% of society!

BBBEE is not just the 30% shareholding option but also equity equivalents where investors can offer similar investments supporting local companies, creating jobs and investing in communities.  All equally important. 

It includes Employee Shareholder or Worker Ownership Programmes (ESOPs). 

This has been an initiative COSATU and many unions have championed.  In the recent past few years, it has seen over 550 000 workers become shareholders in their companies. 

This has given them a stake in the companies’ well-being and growth, but also crucially put money in their pockets. 

Some critics lament that BBBEE has failed and must be scrapped.  Yet they are silent on its role in creating a growing Black middle class. 

They deride efforts to create Black industrialists yet miss the point of their role in opening factories and companies, and the jobs these create in local communities.  

Is BBBEE perfect?  Of course not.  Does it need to be adjusted, lessons learned, mistakes corrected?  Without a doubt. 

Cosatu does have many concerns with the implementation of BBBEE, notwithstanding appreciating its successes in many instances. 

BBBEE does need to be adjusted to learn from challenges experienced, to avoid repeating them and to ensure its progressive objectives reach those most in need of empowerment, the millions of working class residents living in townships, informal areas, rural towns and villages across the nation.

A discussion needs to be had about the once empowered, always empowered notion.  Do we want BBBEE to continue to benefit those already empowered?

Or can it be adjusted to prioritise those still in need of empowerment?  How can this be practically done?  An elegant solution is needed lest BBBEE be dismissed as benefiting only the wealthy.

How can SMMEs, especially emerging ones, and particularly those in townships and rural areas, be elevated? 

We should not continue to normalise township and rural economies to be composed of taxis, petrol stations, hawkers and taverns alone.  An inclusive targeted approach to these communities where the overwhelming majority of South Africans live, is needed.

Can more be done to eliminate fronting where White South Africans merely add the name of a Black employee or partner to their ownership papers or where a Black owned company simply imports goods from Asia? 

BBBEE is not about names on a letter head. 

It is meant to reach those in need of empowerment.  It cannot be about enriching importers when we need to elevate local procurement and give support to local businesses, Black and White, and not sacrifice them in pursuit of cheap imports.

Public procurement with an annual budget of over R1 trillion, from departments to municipalities, entities and State-Owned Enterprises, has a key role to play in supporting BBBEE and more critically making sure it reaches those who need it, not the nouveau riche.

The recently assented to Public Procurement Act elevating this important objective across the state will be an important boost in this regard.  Public representatives across the three spheres of government need to hold the executives accountable in this regard.

The private sector too, in particular large mining, manufacturing, financial and other well-resourced sectors with large procurement budgets, need to provide more solidarity and support to local companies, in particular BBBEE compliant ones.  This is key not only to transformation and empowerment, but also to boosting localisation and stimulating badly needed economic growth and tackling unemployment.

Whilst Cosatu supports the thrust of BBBEE, the heart of our support and in fact our passion, lays in ramping up ESOPS or Worker Ownership Programmes. 

We want workers to live a better life, to boost their earnings, to have more money to pay their debts, to feed their families and to buy the goods local companies produce and thus spur economic growth and sustain and create more jobs.

We want workers to become co-owners of their companies as this gives them a stake in their success and a direct motive to boost productivity and again spur economic growth and sustain and create jobs.

We want to end the still painfully prevalent apartheid scars that are the feature of almost every township, village and community. 

We want workers, African, Coloured, Indian, White, women and with disabilities, to be co-owners in this economy, including on the JSE.

We want this better life now, not in some indeterminate future promised on a Jpeg by irrelevant populists.  Workers are the backbone of the economy.

They have made South Africa the industrial hub of the economy.  Many have grown wealthy off of their sweat and blood, it is time that this wealth is shared with the working class.  ESOPs are a critical path to doing that.

BBBEE is not perfect, but its objectives remain as valid today as they were in 1994.  Adjustments are needed, in particular to make sure the SMMEs in our townships, local manufacturers, and most importantly workers are elevated and prioritised at all times.

Solly Phetoe is the General Secretary of Cosatu.