Paul Janisch

Mark Peach and BEE sustainability

Mark Peach posted a comment a few days ago

Paul, give me your opinion on this please.

I have at the back of my mind something an ANC veteran once said to me: "don't always focus on what the Govet and the ANC says, look also at what they do without saying anything."

I think the Govt have already turned their back on BBBEE for two reasons: the position they have allowed themselves to be manoeuvred into by business is impossible to continue; and the sheer scale of the problems BBBEE was supposed to address was underestimated in the first place and it has become apparent that empowerment cannot achieve what it must.

In the last few months the Comprehensive Rural Development Programme, the Industrial Action Plan, and the Economic Development Medium Term strategy have all been released, all with the aim of creating jobs and giving birth to the green economy. In my view the objectives of BBBEE have now been included into these strategies making BBBEE largely redundant. Of course, no one will say that or even countenance the view, but it's what is happening that matters most, and Govt knows business has taken BBBEE as far as it wants, there is no energy beyond compliance, but SA needs more than this.

Having read each strategy, I am convinced that Govt has settled for a more focused goal - jobs - and believes when jobs happen, many of the other objectives of BBBEE will only then fall into place.

I think Mark's point is absolutely valid and I agree with him completely. Business has taken it as far as they want to – we are now in a position where BEE scores and ownership levels are going to geared towards compliance and sticking within an industry norm. I sensed that when Rob Davies took over as DTI boss he was more interested in compliance and not so much transformation. I think his thinking is that compliance will lead to transformation in the long term – and to a certain extent I think this will work.

In that light the empowerment agenda must be shifted toward the public sector. And to get that right you need to get PPPFA right. A recent TimesLIVE report tells us that it still is in limbo

There seems to be no rush in getting this act through. The draft act became available for comment in the Government Gazette on August 14 last year. Now, six months later, there doesn't seem to be much movement on the matter.

We asked the national Treasury a couple of questions regarding the new act. The tepid response was: "The new preferential procurement regulations have not been promulgated. Until the new regulations have been promulgated, the current regulations remain valid."

My natural cynic claims that it's not necessary for black people to take a stake in a private company – it seems that the new wealth will come out of tender rigging. No more Mzi'ing for the private sector - and this activity is above the law too.

So what then for us poor BEE consultants etc? The answer lies in sustainability. This is the new buzzword – and it is a global phenomenon, so when the kak hits the fan and you need to go and sweep streets in Sydney – you can at least do it sustainably. If you are into sustainability or want to know what's happening with it then you MUST read and subscribe to Mark's blog. He's a little slow on posts – but perhaps we can all encourage him to become a little more prolific.

http://bit.ly/a3NYCS If all goes according to plan, the ICT charter should again be ready for Section 9 (5) gazetting by the end of April – a goal nearly seven years in the chasing.
Really - now what are the chances?

Encumbered wealth

Solidarity published a study that found

Black ownership on the JSE was at 23,8% in 2008, compared to the nearly 5% in 1993. Further, Solidarity expected that ownership would increase to as much as 34% by 2012.

The DTI weren't happy with this finding (predictably, neither was the largely irrelevant BMF). 

DTI BEE director Nomonde Mesatywa said that the it appeared that the survey only focused on measuring indirect ownership through pension funds, medical schemes and insurance polices.

In addition, she said that unlike the finding of Solidarity, government had agreed on a 40% benchmark in terms of measuring indirect ownership.

"In relation to the Solidarity findings of 23,8% it is still far below the 40% mark.

"Further, the actual direct ownership in the JSE listed companies is still encumbered, therefore it is premature to suggest that the implementation of BEE has contributed more to the development and promotion of a black middleclass than is recognised," she commented.

It's not a bad statement, in fact I recommend you read it anyway because it shows the Nomonde is no slouch when it comes to understanding broad-based BEE. In fact, well Nomonde this was a very well balanced view and very nice to read.

It's this of encumbered wealth that worries me – everyone I know (except for my wealthy banker mate) has encumbered wealth. My house is encumbered, my car is encumbered, the amplifier I bought last month is encumbered. It takes encumberment to generate wealth. And this is the fatal flaw in the DTI's empowerment plan. This flaw is made up of two components

1. Wealth is only accumulated when the encumberment has passed. True but the fact that this person has access to these assets and allows them to sell them at a profit even if they are encumbered means that they will generate some cash (as per Mzi).
2. Empowerment is measured in terms of black representation and not value created by black people. This representation is so stupid. They should allow people to get in, make money and get out. It is getting so ridiculous now that the JSE is going to set up a separate board for these shares.

 

http://bit.ly/b3zctb The government should switch its attention from ownership to lifting its investment efforts in ED - FNB and Endeavor report. "Lack of respect and recognition for the contribution that entrepreneurial activity makes towards the country's gross domestic product and for the initiatives that encourage entrepreneurial activity were highlighted as stumbling blocks."

Some Chinese porn site posted a comment on the blog. Lots of links to all sorts of, shall we say - adult content, I have logged them as spammers but I think we as Typepad bloggers need to be aware of this problem. And nip it in the bud early.

Trade and Industry on Solidarity research on Black Economic Empowerment (BEE) - Nomonde Mesatywa (good for understanding mandated investments)
“In relation to the Solidarity findings of 23.8% it is still far below the 40% mark in terms of the Mandated Investments Exclusion Principle, where 15% of direct ownership (unencumbered) is still required. The actual direct ownership in the JSE listed companies is still encumbered; therefore it is premature to suggest that the implementation of BEE has contributed more to the development and promotion of a black middleclass than is recognized” she said. " http://bit.ly/b3zctb

The race is on - a pissed off post

My good friend Howard Rybko is at pains to point out that if you are going to appeal to the Google deity (el supremo I believe) then you must post a lot and put it all over the place – Twitter, Myspace, Facebook etc. And I have been remiss in the posting department, so to stem the coming wrath I shall post one long but segmented post.

It's costly in the jungle

The department of labour needs another R1bn in the next financial year to operate professionally and deliver on its mandate, director general Jimmy Manyi told parliamentarians on Tuesday.

So we are told by Fin24. I could see this coming and it is the beginning of the end for our intrepid jungle jim. Every totalitarian system needs unlimited funds to continue its brutal work – grand apartheid was a very costly regime and eventually collapsed when the cash ran out. Our hero claims that he needs the R1bn for

"Among our needs are to have statisticians who do number crunching and enable the department to analyse labour market issues, civil engineers who inspect buildings in the construction industry, medical doctors going through various hospital records and a whole range of teams of experts to enable the department to professionalise its service."

And then he lets slip that what he really wants the money for is

transformation was one of the biggest problems in South Africa "as far as inspections and enforcement services are concerned".

Yes readers, our esteemed DEEGEE wants cash to police the racist white companies and ensure that they transform to his satisfaction. It's all about racism with jungle and he will go to any lengths and spend all our tax money to prove this. We should let him go ahead – give him the money for three years after which Treasury will call for an audit and when he comes up with nothing – because, like many of our cabinet ministers and MPs, jim is not big on action he just likes seeing his name and face in print and on TV, jim will be without a job.

BEE –EM-EFFort

jungle's friends at the BMF have (quite correctly of course) noted that the call for lifestyle audits as masking 'racist narratives'. These narratives say "black Africans cannot be wealthy without being corrupt, the Black Management Forum said on Tuesday". (23 March-ish). Isn't amazing that when racism is alleged (in this case empirically proven) then the English goes back to about 1900. Very fine statement, full of words like narratives, manipulate and de-historicise.

Apparently the racists (read whites) when asking for lifestyle audits (apparently it is only racists who do this) are perpetuating a narrative

"In doing so, the purveyors of this narrative seek to silence the emerging black economic elite and middle class, lest they are blackmailed by the now exposed banner that says: blacks cannot be wealthy."

All this verbiage (oh shit – now I've joined the antiquated language collective too) is credited to BMF deputy president Tembakazi Mnyaka. Of all the utterances exiting his mouth there is only one sentence that makes sense to my (white and hence racist) head

"Blacks should not be made to feel ashamed of legitimately acquired wealth or sorry for doing business with government,"

You are so correct Mr Mnyaka. In fact no one should feel guilty about this not even whites or Chinese. Our big problem is that our tax money is ending up in the hands of not only politically connected people but politicians who seem to be flouting tender regulations in a rather plunderous fashion. I'll tell you what 'Kazi, you let us racists question this stuff and if it goes to court and we are proved wrong then you are right – we are racists (I sense that you might find a bunch of black people also racist in the process). If we are proved right then you have singularly managed to confirm the perception that the BMF is nothing more than a bunch of disgruntled people who are not connected enough to line their own pockets with the government's generous benevolence.

Black wealth

Another little thing on blacks getting wealthy is that issue of Mzi Khumalo who did one too many Mzi's and blotted his BEE copy book.  Strangely enough I think the Mzi's little blow with Basil Read makes perfect sense.  He does a "BEE deal" with Basil Read, buys shares at an incredibe discount and eight months later sells them for a nice bundle  (after doing something similar to Harmony Gold in 2002).  At that point Basil Read needs to find another 15-odd percent black shareholding. 

We should not be too hasty to dismiss this behaviour.  Yes Mzi did the Mzi on Basil Read which really is in bad faith, but he is a capitalist and capitalists borrow money (or in some cases invest their own money) to generate wealth.  I don't bear Mzi any grudges in this venture at all - however if I was a major business looking for a black partner I wouldn't go near him.

Got this from Collin Clark this morning - rings very true.
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for,that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."
~~~~ Dr. Adrian Rogers, 1931*

William Gumede - ANC must spring-clean, nothing less.

Drop black economic empowerment as a policy and give companies BEE points for how much they invest in job creation, black education and housing; and for uplifting the physical and social infrastructure of townships and rural areas, and supporting the five-million entrepreneurs in the informal sector.

http://bit.ly/cAD4Gk

http://bit.ly/9BgHMz The Zimbabwe indigenization agenda has been hijacked by alarmists who nicodemously seek international sympathy without adjudicating on the true facts.
Oh my HAT!!!!. Obviously the Zimbabwe Guardian is a puppet of Bob's regime and nothing like our M &G. Don't get the two confused now