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Past practices in SA have resulted in excessive concentrations of ownership and control within the economy, and since our first democratic elections in 1994, it has been an imperative to transform the SA economy to promote equal opportunity.
The SA fuel industry must meet significant transformation objectives within the next five years — not only to ensure basic compliance with the government’s expectations in terms of the Liquid Fuels Charter, but also to ensure a sustainable industry.
Like most other countries, the fuel industry in SA is considered to be of strategic importance to ensure energy security and economic growth. According to the SA Petroleum Industry Association, the fuel subsector contributes about 8% to the country's GDP, which is about R300bn in production output. There are about 5,000 petrol stations across all brands, creating more than 700,000 direct and indirect job opportunities that make up 5% of total formal employment in SA.
The government has introduced several policy and legislative reforms in its efforts to help with this transformation — the B-BBEE Act and Petroleum Products Act, which promote the participation of black people in the SA economy; and the Competition Act, which among other things promotes a greater spread of ownership, particularly an increase in the ownership stake of historically disadvantaged South Africans. Government has also concluded agreements with certain industries and developed charters in terms of which industry participants and government agree to certain transformation goals, while passed industry-specific legislation also promotes the transformation of the fuel industry.
Although the liquid fuels industry is highly regulated with government dictating the petrol price, black entrepreneurs still face challenges such as access to infrastructure, finance and markets. It is important to shape transformation in a holistic manner and to encourage greater market integration, removing obstacles that retard competition and entry into the industry orderly, but swiftly. Businesses are faced with the realisation that transformation is more than just a compliance exercise. They must now also look at ways to add sustainable value to the lives of historically disadvantaged South Africans through empowerment initiatives.
Ultimately, to achieve greater economic equality key players in the industry must promote greater responsibility towards economic, political, and social objectives, driven by progressive, principled thought and positions. Our role is to help all players in the industry to transform, focusing on those who are serious about achieving their transformation goals.
But the effects of transformation within the fuel industry has been slow. There are still very few black entrants who struggle to increase their market share. There are also limited measures imposed by the government to ensure and enforce compliance with its policy considerations and transformation requirements. However, transformation is an ongoing process.
The challenge of implementing transformation must be managed continuously to ensure the development of a robust and economically sustainable sector. We need solutions that keep up with the pace of transformation to help companies implement transformation policies effectively through appropriate strategies, programmes, and actions. Communication and consultation with all role players will foster a supportive culture of co-operation and understanding.
• Keylock is national franchise manager at Nedbank Business Banking.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.