Gigaba: BEE 'fronting' a concern

2011-09-08 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. 

  • Anton - 2011-09-08 11:31

    My dear sir, why do you not open your own companies? If you open your own companies you can employ whomsoever you want to, at whatever salaries you want to, at whatever level of ownership that you want to?????? Why does anybody else have to "give" you anything? Nobody owes anybody else anything, a living is earned in a free market economy. To use your own references: why has no big "black" entrepeneurs emerged in the last 17 years? Why is there no new massive "black" universities, school, hospitals etc, (said with the utmost respect). You refer to "black capital ownership" on the Jhb stock market? Nobody was given any "capital shares", those who own then had to buy them, and they carry the risk of trading in them? maybe it is time "black" South Africa wakes up and start to understand that it is only they themselves that will work themselves out of poverty, without "taking" everything from "white" South Africa, (once again with the utmost respect, I am not a racist and believe in equality before God and man). The world will eventually start to "pity" Africa, but given the nature of man the "pity" will turn to disgust if Africa will not join the party as equals. "Black" Africa has its destiny in its own hands, and must start to bear the responsibility for this destiny or risk being left behind the rest of the "Developed" world forever.

  • Appietrader - 2011-09-08 11:48

    What about a "White business Forum" or is that racist? Just wondering

  • wishfulthinking - 2011-09-08 12:02

    Duuuuh, morning Malusi. This has been going on since inception of BEE.

  • VELOCITY - 2011-09-08 12:13

    There they go - Stocking the fires of blatant Racism in South Africa. Its a never ending process and it won't stop until the last white man has either been killed, or has left this continent.

  • Deut8 - 2011-09-08 12:14

    Good luck to you Patrice. I would not want that job. Sounds like the infighting and levels of reality is problematic.

      Al - 2011-09-08 13:59

      His peers will eat him in the end, they are mercenary in their pursuit of wealth (read greed)

  • grimbie1 - 2011-09-08 12:15

    This entire thing just shouts racism.. Never have I seen a country with so many racial problems that are so in deeply ingrained into the society. Such a shame.

  • BB - 2011-09-08 12:15

    black To differentiate based on RACE! Isn't that the definition of racism?

      Karien - 2011-09-14 21:33

      And guess what! Right now our government is fighting for the right to sing songs of war and murder against whites! I'm sure that that is going to get foreign white investors flocking to this country. P.S. their not racist at all hey!

  • Jaja - 2011-09-08 13:00

    Get a proper education & 10 years relevant experience and THEN demand a proper job / opportunity.

  • Al - 2011-09-08 13:58

    Hey, here is a novel idea! Why don't blacks start their own b usinesses, employing only blacks? Then, when the business really takes off (due to superior service/product delivery) then they can take it to the JSE. Is it quicker to just hijack the currently successful businesses?? Not all business was built on the backs of the "previously disadvantaged"

      Karien - 2011-09-14 21:30

      And I quote: "resurrecting black business". MWAHAHAHAHAHA!!!

  • Pieter van der Merwe - 2011-09-08 16:13

    Gigaba sir, what concerns me is the decline of morality and civilization in SA. This far outweighs your BEE policies... We all should be very very concerned...

      grod - 2011-09-13 21:18

      Simple - remove BEE and there is no need for fronting.

      grod - 2011-09-13 21:35

      Eish! This Apartheid Thing she is not dead! just a different franchise...

      grod - 2011-09-13 21:40

      Just a thought - How did Patrice get so rich so quickly?

  • Bosman - 2011-09-13 20:41

    Dear Minister. The codes of good conduct is the basis upon which we determine BEE score for a company. The previous Narrow based form of BEE opened the door for fronting but has long since been revised and BEE are now scored on 7 elements with sub elements including economic interest (this means that you actually get scored on the fact that black shareholders receive their dividends or not and voting rights - counting the physical votes that black people have) It is therefore NOT based on ownership alone so you fronting tirade dont hold any water. Please read before you just jump on the band wagon dear mr minister ......

  • Boerseun - 2011-10-03 17:05

    Fronting is just the response to some very evil laws. In the end no law can ever prevent good people from going ahead and evil ones from getting the trouble they deserve.

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