(Betcha you didn't know I could be this formal).
I am writing to you, not as a citizen of Namiba, but as a keen observer of the South African broad-based black economic empowerment system. I have been eagerly awaiting the publication of the final TESEF document and would appreciate the opportunity to discuss a few aspects of the South Africa B-BBEE system that might assist TESEF in its ultimate success.
- Identifying the underlying reasons behind B-BBEE
If recent civil unrest over service delivery and unemployment in SA are indicators then they must be pointing to the fact that South Africa needs to address these critical areas. B-BBEE does make reference to these issues but they have got lost underneath the narrow-based notion of ownership that still persists and is a fundamental driver within the public sector. South Africa (and judging by your draft document, Namibia) needs more jobs and a more skilled population. It almost appears that for SA is too late to steer the focus towards this.
A new wave of black intellectuals are now rejecting the notion of 25% ownership of a business and advocating 100% black ownership in key areas (minerals, financial services etc). South African had great success in this field during the Apartheid years where the government insisted that the Afrikaners should own certain aspects of the economy (a policy of volkskapitalisme). South Africa desperately needs this – a new financial institution that can adequately compete with other large intuitions' would have a huge impact on job creation and competition. (I am aware of the difficulties of achieving this – but the methods to achieve this have not yet been exhausted).
- Transformation should not be enforced via a stick method. Carrots should be offered
The need to transform is often forgotten and when targets are not achieved the South African government threatens to opt for a stick approach. People by their very nature are acquisitive and as such tend to perform better when they can derive some benefit from the process. A tax rebate system (for instance for those companies that achieve the 30% target of production spend on labour) is one of the most effective methods. There is little doubt that if a rebate is offered then the transformation process will operate more effectively. Admittedly a programme like this is open to abuse – but if such a rebate is offered then it is the responsibility of the company applying for the rebate to adequately prove that they qualify for it.
- Building on preferential procurement
The preferential procurement element is the cornerstone of BEE's adoption in South Africa. The consistent requests for BEE scorecards over the last five years has seen a large number of companies producing some form of BEE scorecard. The preferential procurement element however falls short in understanding human spending patterns. To a large extent it is a lone voice in the drive to stimulate local production. A greater harmonisation between importing tariffs, production stimulation and other types of legislation will make this a success. South Africa is trying to achieve this with the draft industrial policy action plan (IPAP).
A solution might be a relaxation of preferential procurement requirements where jobs or skills are created.
- Celebrating successes
Transformation is a process and each step needs to be analysed and where there is success then it should be noted. This is sorely lacking in the South African context – our politicians seem to be more at home criticising the process as opposed to recognising the successes it has achieved (and there are many).
- Public and private sector involvement
At present the South African public sector does not appear to have the legislative support to actually implement BEE. The drafters of the legislation seem to have omitted to take this into account. As a result the transformation of South Africa's economy seems to be driven by the private sector in isolation. Any far-reaching policy must have mechanisms built into that allow for all stakeholders to participate.
I wish you the best of luck with this process and will be watching it keenly – Namibia is in the best position to make a truly meaningful contribution to the African transformation process.
Paul Janisch
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