It’s time to reassess the BBBEE framework and address areas that aren’t working
One of the biggest bottlenecks in implementing effective transformation is the incapacitation of BBBEE sector councils, writes Sanlam Gauge’s Andile Khumalo
I underestimated the amount of work required to compile the Sanlam Gauge, a report that takes a holistic measurement of economic transformation in SA — accounting for all elements of BBBEE.
I did not know how broken the system of driving and measuring BBBEE is and how that affects its implementation. I have come to learn that one of the biggest bottlenecks is the incapacitation of BBBEE sector councils.
Almost all sector councils agreed that transformation is happening too slowly, that it’s not meaningful, particularly at the management and ownership levels, and that after 28 years of democracy it’s time we reassess the BBBEE framework and address areas that are not working.
Before publishing the Sanlam Gauge report, my team and I consulted and met with the following sector councils: AgriBEE, construction, financial, forestry, information and communications technology, the marketing, advertising and communications, property and tourism. We also met with a representative of the department of transport and the Minerals Council of SA.
Sector councils were established to measure and drive transformation in accordance with their respective gazetted sector codes. In my interactions with the various sector councils, I made a number of observations that are worth noting.
I noted the sector councils that had strong representation from top industry companies tended to be financially stable, professionally managed by a full-time executive team, open to third-party engagements and kept up to date with annual reporting on the state of transformation in their industries.
The sector councils, which consisted mostly of government representatives, were generally financially unstable, had a poor record of BEE scorecard submissions from the industry, and were initially closed to third-party engagements.
This led to major frustrations for the public servants tasked with running these councils on a day-to-day basis. Some council terms had already expired for months and at times, years, awaiting the relevant minister to sign off on new sector council members.
We did not meet the integrated transport sector council because it has been operating on BBBEE codes of good practice that haven’t been revised since 2013, and its charter council was, according to an insider, after two extensions, labelled ineffective and phased out in 2017 by ministerial decree. Though the process of establishing a new council began immediately, progress was repeatedly stalled because of changing perceptions and priorities.
In the mining sector, legal wrangles have seen provisions of the latest Mining Charter set aside, so companies are reporting according to the 2010 charter, which is designed to suit the industry’s conditions. But JSE-listed mining companies and those that supply the likes of Eskom need department of trade, industry & competition-approved scorecards, so they have to score according to the generic code — which caters for sectors that do not have their own code.
The BBBEE Commission’s stance is that there is no mining sector code that has been approved and gazetted in terms of section 9 of the BBBEE Act, and by inference there is no official sector council.
With the recent appointment of the new Presidential BBBEE Advisory Council, I sincerely hope the issue of capacitating and funding sector councils will be addressed. We chose this policy of BBBEE and set up the various structures to ensure it is implemented. We are failing ourselves if we do not give the sector councils the support they need.
This article was paid for by Sanlam Gauge.