Johannesburg - "Fronting" and tender abuse is an "unintended consequence" of an overemphasis on diversity of ownership and senior management in implementing broad-based black economic empowerment (B-BBEE), President Jacob Zuma
said on Friday.
"The unintended consequence of this over-emphasis is fronting and tender abuse. We are happy that the council spoke out so strongly against fronting which is one of the major obstacles to the implementation of B-BBEE," he said.
"Fronting is an insult to the dignity of the poor and we have to act decisively against it. I am pleased that the council is so determined to work with us to act against this heinous practice," said Zuma in a statement issued by the presidency.
Zuma chaired a meeting of the Black Economic Empowerment Advisory Council on Friday.
It was agreed that fronting insulted the dignity of the poor and the practice had to be eradicated - possibly through punitive measures against those found guilty of fronting practices.
The council recommended that government should "urgently ensure proper monitoring and evaluation" of the implementation of the B-BBEE Act.
According to the act, heads of government departments and the chief executives of parastatals had a "legal obligation" to report on the performance of their institutions in implementing B-BBEE.
During the meeting, emphasis was placed on the new growth path and the role of B-BBEE in creating jobs.
The presidency said the meeting "emphasised" that B-BBEE was "not just about big business deals for a few individuals in society".
The council called for the "consistent implementation" of B-BBEE in all parts of the economy to ensure that the policy had an impact on more South Africans.
"Provisions in the new growth path were supported which require a much stronger focus on the broad-based elements of the BEE regulations, such as ownership by communities and workers, increased skills development and career-pathing for all working people and support for small enterprise and cooperatives, as well as a new emphasis on procurement from local producers in order to support employment creation," the statement said.
"It was pointed out that to contribute to job creation, B-BBEE has to, amongst others, promote new enterprise development, encourage local procurement and enhance skills development and employment equity."
A progress report was presented by the government on the work done in the past year to promote job creation.
This included a R41m budget for the Cooperative Incentive Scheme paid out to 222 cooperatives, creating around 2159 new direct job opportunities and a further 745 temporary job opportunities. A total of 100 new small scale cooperatives withabout 500 new job opportunities were established, and 113 cooperatives were supported to enhance access to markets through local and international exhibitions.
The council was appointed in December 2009 to advise the government on BEE, review progress in the implementation of B-BBEE and advise it on the draft codes of good practice.