COMPANIES should be jumping up and down with glee at the news that the trade & industry department is considering removing employment equity and skills development from the empowerment scorecard.
The fact that these companies are instead reportedly complaining that such a change could make compliance more difficult exposes both their own hypocrisy and the self-defeating nature of so many attempts at black advancement.
Despite the incessant bleats of Jimmy Manyi of the Black Management Forum, SA is an economy lacking in skills. (Incidentally, I must apologise for calling this body the Black Management Foundation in a previous column, though unlike a bilious correspondent, I can't see that this affected the validity of my argument).
This was even acknowledged by Manyi's daytime boss, Tiger Brands CEO Peter Matlare, at Tiger's profits presentation last week, although Matlare also wryly acknowledged that Manyi would be broaching the subject with him again.
Few involved in business could deny that they've encountered people incapable of doing the jobs they nominally occupy and to which they were appointed, not on merit but on the grounds of discriminatory affirmative action, which is what so-called employment equity really is. This is true even in the media, though more so in electronic media than in print.
As I've written before, this has cost the country billions. Just think Eskom, for one.
That companies are less than ecstatic at the thought of again being able to employ people purely on merit is mind-boggling. It also shows the extent to which genuine empowerment initiatives have been neglected.
So there may be more emphasis on things like procurement and transfer of equity, may there? Good. These are far more meaningful to black economic advancement that appointing a few token blacks to prominent positions.
They also require far more energy and commitment, not least in selecting appropriate equity partners, as has been shown by so many deals that have rightly been described as enrichment rather than empowerment.
Still, as I wrote last week, plunging share prices are sorting out a number of these deals. One really has little sympathy when billionaires are reduced to mere multimillionaires - or worse, if the original transactions were heavily geared up with debt.
Genuinely broad-based transactions, financed without recourse to the theoretical beneficiaries, are the way to go. Naturally they're more difficult to finance, but isn't that why investment bankers earn their exorbitant fees?
Incidentally, I read a press report the other day that claimed some nutty academic has proved that borrowing money to buy shares is no more risky than buying shares you can actually afford. Go tell that one to the marines.
Showing all the urgency of a sloth
Considering that media company ElementOne is a pure dividend funnel for its minority shareholding in Caxton, and that its listing is thus at risk, it's worth quoting in full what is said about this in the preliminary report for the year to September, published on Monday.
"The directors continue to carefully consider the immediate future of the company. As soon as the board is able to do so, shareholders will be advised of the options open to the company and the proposed course of action."
Talk about Rome not being built in a day.
ElementOne has enjoyed (if that's the right word) its present status since March 31, and the directors knew the situation months before that.
As I understand it, they have until March 31 2009 to come up with a solution or face losing the listing. Something a bit more positive than "careful consideration" is now required, preferably with a little more sense of urgency. Certainly more urgency than is reflected by the taking of two months to produce a preliminary report which, given the nature of the company, could have been spewed out of a computer on October 1.
And it doesn't look as if they can rely on any help from Caxton.
Its latest annual report discloses that it holds far fewer ElementOne shares than would have accrued from its previous (now largely sold) stake in Avusa.
So though buying ElementOne would have allowed Caxton to reduce its own issued equity at a substantial discount, it apparently prefers to let that company sink or swim on its own efforts - which are pretty unimpressive to date.
- Fin24.com