Is it time to re-examine SA’s BBBEE strategy?

There is a school of thought that SA’s overall BBBEE strategy needs to be adapted — or even overhauled completely — to better reflect transformation on the ground. This was one of the many takeouts at the launch of the 2022 Sanlam Gauge on Wednesday.

Launched in 2021, the Sanlam Gauge is the largest independent research taking a holistic measurement of economic transformation in SA. A sector-focused research report, it takes stock of how the public and private sectors are succeeding in transforming their businesses and leadership. This year the study investigated the BBBEE scorecards of more than 10,000 companies, grouped in 11 sectors.

The report found that the 11 sectors combined are achieving an average of 87.16% of their BBBEE contribution targets. With the exception of the socioeconomic development pillar, businesses are not meeting their scorecard targets. For the second consecutive year the scorecard element posing the biggest challenge is management control which only achieved 55.9% of the target. Black business leaders concede that this is an area within their control and that they could be doing more to improve this element.

Enterprise and supplier development (ESD) is the next biggest challenge, achieving only a combined 64.5% of the target. In theory, this element of the scorecard has huge potential if done correctly based as it is on the idea of procuring from small black-owned businesses, in the process providing them with support to grow and develop. If SA is to become more competitive it needs to prioritise skills development to upskill its people and ensure they are more employable.

For the second year running, socioeconomic development is a standout pillar of the scorecard, exceeding the target by an average of 160%. However, while many companies are making an effort to ensure their contributions make a meaningful impact on beneficiaries, others continue to throw money at it to score relatively easy points.

The underlying theme of all the panel discussions at the launch of the 2022 Sanlam Gauge were the factors inhibiting transformation. Are companies too focused on the BBBEE scorecard and ticking boxes? Should the scorecard be adapted to measure qualitative as well as quantitative areas? To what extent has a tough economic environment resulted in businesses putting transformation on the back burner and will transformation efforts see an uptick as the economy starts to recover? If voluntary commitments to transformation are not working will a legally binding, enforceable framework yield better results? These were among the issues discussed and debated. Clearly, there remain many challenges to SA’s journey to economic transformation.

Of concern is that not all the sector charter councils are operating efficiently given a lack of funding. The Construction Sector Charter Council, for example, has spent years waiting for its proposed funding model to be approved. In the meantime, the council relies on volunteers to fulfil its mandate.