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Black business wants a bigger slice

Oct 14 2012 17:38 Andile Ntingi - City Press

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Johannesburg - Having realised that BEE has not delivered meaningful ownership of SA’s economy, the Black Business Council is pushing for black entrepreneurs to start their own businesses to create jobs.

The Black Business Council celebrated its second anniversary this week amid calls by its bigwigs for government to give black businesses a 30% slice of the planned R1.3 trillion infrastructure spending.

The spending is expected to usher in a new era in South Africa’s re-industrialisation and the council wants to use this investment as a launch-pad for creating 200 black industrialists yearly, starting from next year.

The council’s change in the tone also signifies a shift in strategy in the way black people have been accumulating wealth in the post-apartheid era.

In the last 16 years, blacks have amassed a vast quantity of their wealth through buying BEE stakes in large, white-owned companies, but have done very little to create new, sizeable businesses.

The council’s executive chairperson, Xolani Qubeka, told City Press that this strategy has failed to create jobs and to promote entrepreneurship among black people.

“We need to inculcate a culture, within our members and a broader black community, that buying stakes in large, white-owned companies does not create jobs.

“It creates wealth for the shareholders who bought in, but does not create new employment."

Target infrastructure spending

This week, the council invited the chief executives of some state-owned enterprises (SOEs) that are leading the infrastructure projects to its annual summit held in Midrand, Gauteng.

The message was clear: give blacks a significant share of the business.

In attendance was Brian Dames, the chief executive of Eskom, which is spending more than R300bn on building new power stations and transmission and distribution infrastructure.

Lucky Montana, the chief executive of the Passenger Rail Agency of South Africa (Prasa), was also in attendance.

Prasa is spending R126bn to buy more than 7 000 train coaches over the next 10 years while transport and logistics parastatal Transnet is investing R300bn over the next seven years to upgrade its locomotives and ports.

“With this infrastructure investment, we have entered a new era of reindustrialisation, which means there is a window of opportunity to create new capabilities.

"We can build new capacity to build trains instead of purchasing them abroad.

“When South Africa was under sanctions, it was able to reindustrialise and build new capacity in arms manufacturing, for instance,” Qubeka said.

He said small black construction firms should be looking at merging to build economies of scale and take advantage of opportunities presented by the construction of power stations by Eskom.

“The starting point is for small, unsustainable black companies to come together to build new capacity and competencies,” he said.

Split with Busa

Qubeka also made it clear that the council was not seeking to merge again with Business Unity South Africa (Busa) after 18 black business and professional lobby organisations broke away from it.

Busa had been acting as a mouthpiecefor business formations, be they black, white, big or small.

“At this stage, Busa is not on our radar screens for affiliation purposes. However, we have agreed with Busa to collaborate on various programmes,” he said.

Busa and the council have already signed a joint agreement with the UN Development Programme.

The joint agreement will pave the way for big companies to play a role in the creation of small companies, particularly black suppliers.

“Big companies will outsource non-core components of their businesses to small companies,” Qubeka said.

Busa and the council are also sharing a seat at Nedlac, the government, labour and business negotiating chamber.

Qubeka said the council did not want its agenda to be diluted again by Busa, which black business sees as being controlled by big white capital.

“We want to avoid the issues that made us leave Busa in the first place. Our focus is to create new black industrialists.

“We want to create a thriving black middle class within an expanding South African economy,” he said.

Progress since last year

Qubeka said the council, which is made up of 22 black affiliate formations, has since its relaunch played a significant role in influencing changes to legislation.

One of its key recommendations is the criminalisation of fronting, where black partners are fraudulently exploited to win state tenders on behalf of white businesses.

“We want to ensure that the major beneficiaries are black. We are quite certain that when the new BEE Amendment Act is enacted, there would have been a significant contribution from the BBC,” he said.

The council is also pushing for the scorecards of the BEE codes of good practice to be made less onerous for black businesses.

He said it was unfair for 100% black-owned companies to score less than majority-white owned companies when it came to empowerment scoring.

“A 100% black owned company should be scoring level one. Black companies don’t have to go through onerous scorecards,” Qubeka said.

The council also signed a memorandum of understanding with the Indian Chamber of Commerce and Industry to enable council members to form joint ventures with Indian companies in the areas of manufacturing and tools making.

- City Press

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