Why have the B-B in B-BBEE

Cast your mind back over the last three years or so and consider how many times you have seen BEE-related press articles and headlines that did not deal exclusively with the ownership and/or control elements?

We tested this a little while back (thanks Google) and were astounded at how few went beyond these aspects. So! What then is the B-B or ’Broad-Based’ bit about? This, in reality is the really tough stuff, not the ownership – that is the emotional stuff.

Why emotional? Well it cannot be easy selling 25% of the business you have created through great sacrifice and hard work to satisfy a legislative requirement. Also consider the figures we see in some of the headlines – they are reflected in millions, even billions of rands; plus so many of the same names are associated with the deals that are reported.

Back to the question ’why have the B-B in BEE’, and the statement that that is the tough stuff. The reality is that for large companies (turnover of +R35m) the ownership aspect is only 20% of the overall scorecard, while for medium companies (or QSE’s – turnover of between R5m to R35m) the count is only 25%. In addition, consider the window period of B-BBEE which is 15 years – and this could be extended.

How long does it take to set-up a really good (I am not talking window dressing, or ’fronting’) BEE ownership deal? What about the other 14½ or so years and what about the remaining six elements? Which are socio-economic development, enterprise development, preferential procurement, skills development, employment equity and management and control.

Considering the dire skills shortage we have in SA, coupled with the fact that about 50% to 60% of our population is not educated beyond the level of ’functional literacy’, it makes economic sense that the focus and sequence of the elements of B-BBEE is as stipulated.

Add to the mix the crisis we have in education (the woes in this regard could fill all the pages of an entire year’s issue of Computing SA and still barely scratch the surface). And yes, this is largely a carry-over of the legacy from the past. Alistair Sparks, somewhere in his trilogy of books looking at the transition in SA, makes the statement that we must be the only country in modern history that deliberately disinvested in the education of its people. Here the reference is mainly to the period of the 1950s through to the early 1990s, and sadly, though less so, even through to today.

Everything in economics ultimately depends upon the capacity that people have to add value (be this in terms of the conversion of raw materials or the provision of services). David Packard (of Hewlett Packard fame) expressed this principle very succinctly when he said: "No company can grow its revenues consistently faster than its ability to get enough of the right people to implement that growth".

The challenge in this regard is obviously far greater in highly skilled sectors such as ICT.

Our fear, or concern, regarding B-BBEE is that the leaders responsible for its implementation take too narrow a view and seek above all to attain compliance; to get a score. Going beyond compliance by significantly impacting on the ’value chain’ of our human capital in SA, right from school level, in actively identifying talent and then developing and nurturing it, must be the legacy we seek in order to ensure B-BBEE succeeds in the long-term. This is the only formula for sustainable economic growth.

Across all sectors of our economy large sums of money will be spent to achieve a suitable score and anything short of seeking to make a real impact will be tantamount to pouring vast quantities of water into the sands of the Kalahari.

Going beyond compliance, entering the spirit and intention of B-BBEE is the real challenge. Meeting the challenge means not shying away from the tough stuff, but embracing it in a creative and considered manner.

 

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Why have the B-B in B-BBEE