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Gigaba: BEE 'fronting' a concern

Sep 08 2011 11:03

Johannesburg - Public Enterprises Minister Malusi Gigaba on Thursday defended a decision by black business to break away from Business Unity SA (Busa).

He said there was concern about black economic empowerment "fronting" because it eroded the potential for authentic black businesses.

"Look at the management core in South African business, look at the ownership of industries and enterprises," he said in an interview with SAfm radio station.

He was responding to a decision at a Black Business Summit on Wednesday to form a new Black Business Council, with businessman Patrice Motsepe as chairperson, and to immediately suspend its participation in Business Unity SA (Busa).

"The fact of the matter is that after 17 years of (black economic empowerment) much of what we have seen with BEE is the emergence of black shareholders who play no part in the management and ownership of the enterprises in which they hold shares. (There is) a lot of fronting."

"Fronting" is a term used to describe the practice of white businesses presenting fake black business partners or directors to fulfil the black ownership requirements that accompany tendering for government business.

Gigaba said it was still important in South Africa to have black business organisations.

Although South Africa had a lot to benefit from a unified non-racial business organisation, that should be the "culmination of a process".

There was still racism in the private sector, said Gigaba.

"Just look at a few things... look at the Johannesburg Stock Exchange ... black ownership of productive capital is quite low.

"Look at the management core in South African business, look at the ownership of industries and enterprises."

Black businesspeople also had no access to finance, and complained that even development finance institutions were not supporting them.

"We think that the resurrection of black business is an important step that needs to be supported."

Government needed to support black business formations and business in general and "genuine" transformation issues needed to be identified.

In a speech prepared for delivery on Wednesday night, Gigaba said the conduct of some private companies was fuelling the debate on nationalisation,

"There is a growing underlying legitimacy crisis regarding whether the private enterprise is a 'socially responsible' institution, capable of both developing the economy in a sustainable manner and equitably sharing the benefits of economic growth and development."

In a separate interview on SAfm, Xolani Qubeka, chairperson of the black business summit organising task team, said there was a need for a unified business structure in South Africa, and that structure was currently Busa.

"It must be understood black businesses were part of the founding of Busa."

But, although they had resolved to suspend their membership of Busa, they did not exclude going back to the business body.

Their future would ride on the outcome of discussions with Busa.

The Black Management Forum membership of Busa pulled out earlier this year, as they felt black opinions were being overrided.

Business Day reported that on Tuesday that Busa CEO Nomaxabiso Majokweni and president Futhi Mtoba were asked to leave the Black Business Summit. They were apparently invited by mistake, and were asked to leave because Busa was going to be discussed.

Qubeka also called for a 50/50 representation at the National Economic Development and Labour Council, saying present representation was majority white. 

bmf  |  busa  |  malusi gigaba  |  businesses  |  bee


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