A self-audit on the work of the office of the B-BBEE Commissioner, set up in terms of an Act of Parliament.

The office of the B-BBEE Commissioner was set up in terms of an Act of Parliament in 2013. DENISE MHLANGA finds out if the office has seen any significant success in nine years

Since the government introduced the Broad-Based Black Economic Empowerment (B-BBEE) Act in 2003, black people, including Africans, coloureds and Indians, in South Africa have made strides in economic participation and the workplace. Black businesses now have access to procurement opportunities and ownership deals they didn’t have before. Many black people occupy senior, executive and board positions in both the private and public sectors, thanks to B-BBEE requirements.

Businesses that integrate black people in the workspace and support black businesses receive points that they can claim on a

B-BBEE certificate, increasing their chances of obtaining government contracts.

“Progress in the implementation of B-BBEE is painfully slow, and more needs to be done, especially in economically empowering township and rural communities and women,” says Zodwa Ntuli, commissioner for the B-BBEE Commission.

Established on 6 June 2016, the B-BBEE Commission is a regulatory body that monitors and advances the implementation of B-BBEE policy and legislation and acts against violations such as fronting and misrepresentation of B-BBEE status.

The implementation is measured through five key elements: ownership, management control, skills development, enterprise and supplier development, and socioeconomic development. Both private and public sector entities are annually required to contribute towards these elements.

“In the five years of existence, the B-BBEE Commission has proved that it is a formidable regulatory entity focused on achieving compliance through guidance and advice and, in some instances, invoking the enforcement action,” says Ntuli.

SUCCESSES AND CHALLENGES

In 2017, the rejection rate for noncompliant transactions was over 32 per cent, but

dropped to 18.9 per cent during the 2020/21 period. The B-BBEE Commission has recorded 528 major B-BBEE deals valued at over R550-billion in the past five years.

Ntuli says there is an emergence of sale of assets promoting a “more skin in the game” approach to empowerment and private equity fund deals, showing active participation by black asset managers. If implemented well, the value of these deals will translate into higher margins in the hands of black people in 5 to 10 years.

According to the Annual National Status and Trends on B-BBEE Report 2020, black ownership moved from 29 per cent in 2019 to 31 per cent, with black women ownership increasing from 12 to 14 per cent.

Management control rose to 57 per cent from 39 per cent in 2019.

She adds that there’s been some improvement in skills development, enterprise and supplier development, and socioeconomic development contributions. However, lack of adequate planning, poor and ineffective training, and misalignment of training to the critical skills required often undermine the progress of skills development.

Black women representation on the board of JSE-listed companies has been stagnant at 20 per cent, while white directorships continue to dominate (56 per cent), followed by black males (23 per cent). Overall, black directorships account for 43 per cent.

“The shrinking number of black women is concerning, and directing skills development funds towards growing a pool of black women for these positions could solve the problem.”

General lack of knowledge about the B-BBEE Act and its benefits still persists in various sectors. The B-BBEE Commission has embarked on awareness campaigns in various provinces to increase awareness.

FRONTING

Fronting, in which some ownership deals purport to facilitate the transfer of ownership, strips black shareholders of participation rights and economic benefits – this is a major obstacle in implementing B-BBEE.

During the 2020/2021 period, the B-BBEE Commission handled 909 complaints, issued findings in 423 cases and resolved 22 through alternative dispute resolution with over R105-million paid to black partners.

Ntuli says under current legislation, no administrative penalties can be imposed on offending entities until they are convicted in a criminal process. Additionally, legislation prohibits the B-BBEE Commission from publishing its investigation findings, and there’s no dedicated tribunal to hear fronting matters.

“PROGRESS IN THE IMPLEMENTATION OF B-BBEE IS PAINFULLY SLOW, AND MORE NEEDS TO BE DONE, ESPECIALLY IN ECONOMICALLY EMPOWERING TOWNSHIP AND RURAL COMMUNITIES AND WOMEN.” – ZODWA NTULI