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Leaders in business need to take transformation as seriously as they took the charges against the minister of finance, says Mncane Mthunzi, the 12th president of the Black Management Forum (BMF) in its 40 years of existence.
“They need to stand up and say this is wrong,” he says.
Mthunzi is the first BMF president to rise all the way from the bottom – from a student chapter of the BMF to head of the organisation – and he says the credit must go to the BMF forum for grooming black business leaders like himself.
Now, under his leadership, the BMF is gearing up to tackle transformation in the business sector. “We are disappointed with the slow pace of transformation,” he says. “Captains of industry don’t realise that we are sitting on a time bomb.”
Some of the key decisions taken by the BMF in its draft resolutions on transformation document include a call for an employment equity tribunal, broader department of trade and industry support for black industrialists, stricter procurement thresholds for black economic empowerment (BEE) and a call for the JSE to force companies to include race when they report on their employment equity plans. (The JSE announced on 1 November that companies will have to disclose racial diversity at board level.)
Mthunzi says there is a desperate need to hold companies accountable for meeting their employment equity obligations. “Government has abdicated its responsibility by not being vocal and not going after non-compliant companies.”
Mthunzi feels that if the carrot is not working, you are forced into a position where you have to pick up a stick.
“More than one hundred companies didn’t submit employment equity reports [in 2014],” he says. “Two years later nothing has happened.”
The Jack Hammer Executive Report, released late last year, revealed that the proportion of CEOs who are black South Africans has fallen from 15% in 2012 to 10% in 2015.
In April 2016 theCommission of Employment Equity Report revealed that the top management representation within corporate South Africa sits at 14.3% black and 68.9% white, compared to an economically active population of 77.4% black and only 9.9% white.
In its annual report the BMF noted with “deep concern” the reversal of transformation gains where black CEOs of major companies were replaced by white candidates in cases where qualifying black candidates were available.
“It is for this reason that we have been critical of appointments made by MTN Group; Tiger Brands; ArcelorMittal SA; Nestlé SA and Sasol, to name but a few,” stated the BMF. “We have on the other hand applauded the progressive appointments made by Nedbank; Telkom Business Connexion; Edward Nathan Sonnenberg [law firm] and the Transnet Group, to name a few.”
The BMF is not afraid to take on big players in corporate SA, even ones who are major sponsors of it, like Sasol. “People think that when you take money from companies, you can’t criticise them,” says Mthunzi. “We maintain our independence.”
Mthunzi says the Employment Equity Commission is a “toothless bulldog”.
“There is no bite.” This is why the BMF feels SA needs an Employment Equity Tribunal, which can be a court where companies are prosecuted for non-compliance and fined.
Mthunzi says he sees this working in much the same way as the competition authorities, where the commission is the prosecutorial arm and the tribunal acts as a court.
Financial challenges
One thing that will be troubling Mthunzi is the financial performance of the BMF.
Its annual report states that the last several years were some of the most “financially challenging” that the BMF has ever experienced.
The report says the financial position of the entity has declined by R5.7m, or 20%. Overall, the surplus for the year has decreased by 389% from R2 570 266 to a deficit of R7 431 037.
This is attributed to higher operating costs and a decline in revenue from the BMF’s investment vehicle, Black Management Forum Investments (BMFI). The BMFI was set up in 1993 with the intention of ensuring the sustainability of the organisation.
The BMFI’s continued focus is on seeking private investment opportunities in the small and medium enterprise space, targeting companies with equity valuations in the range of R50m to R400m with a view of growing its portfolio.
The current gross value of the BMFI portfolio is R348m.
“The deficit for the year was attributed to the decrease in investment income as dividends received from the BMFI.
“Income from the BFMI declined from R12.8m in 2015 to R5.6m in 2016,” reads the annual report.
“Our financial performance has been less than impressive in this financial year,” admits Mthunzi. “However, we are confident that we have made a correct diagnosis of our challenges and corrective measures are being implemented.
“The year under review had experienced tough economic headwinds and our performance is in context of the economic environment that we operate in.”
The BMF at 40
The theme at the BMF’s 40-year anniversary conference this year was making transformation a business imperative.
It has been a year with a lot of reflection for the BMF, a lot of thinking about how to position the BMF in 2016 and how to strengthen the organisation internally, Mthunzi points out.
The BMF was founded in 1976 by a group of black managers who felt they could support each other in what was a very hostile environment in corporate SA.
The ultimate objective was to assist in transforming the South African economy by helping blacks to rise in the companies they worked for.
The BMF conceptualised and lobbied for both employment equity and black economic empowerment legislation, and it continues to be vocal on these fronts, calling out companies that don’t comply and lobbying government to monitor and penalise non-compliance.
Mthunzi is proud of this legacy and points to the resolution taken in the late 1990s by the BMF in Stellenbosch for an empowerment commission, which evolved into the Empowerment Act and is an important part of the organisation’s history.
Mthunzi says the BMF’s affirmative action blueprint resulted in the Employment Equity Act we have today.
The BMF currently boasts 35 branches and over 11 000 members, with Gauteng (46%), the Eastern Cape (16%), the Western Cape (11%) and KwaZulu-Natal (8%) making up most of the membership. Some 89% of its members are black, 6% coloured and 3% Indian.
Currently, 63% of members are male and only 37% are women. The BMF says it is ready to tackle the patriarchy and is looking to facilitate better networking opportunities for professional women and to add its voice to condemning the harassment of female professionals in the workplace.
Busi Mavuso was appointed as the BMF’s managing director and Mthunzi feels she has made an impressive start. Mavuso has been with the BMF since 2009, previously holding the positions of chief financial officer and operations director.
This is a shortened version of an article that originally appeared in the 24 November edition of finweek. Buy and download the magazine here.
