His Majesties, Kings of the Zulus, Tswana, Pedi and Sotho
and other traditional leaders present
His Excellency Prime Minister of the Kingdom of Lesotho and his Ministers present
South African Government Ministers and Deputy Ministers
Ambassadors and other members of the diplomatic corps
MECs, Mayors and DDGs,
Executive Chairman of African Rainbow Minerals (ARM) and Founder of the ARM BBEE Trust
Ladies and Gentlemen
It gives a great pleasure to be part of this function wherein we witness the implementation of our Government game-changing policy of Broad-Based Economic Empowerment (BBBEE). We salute both the leadership of the African Rainbow Minerals (ARM), and Trustees of the ARM BBEE Trust. We further congratulate the beneficiaries that are due to receive dividends today. It must be said that the African Rainbow Minerals is a true pioneer in terms of broadening the participation of previously disadvantaged individuals in the mainstream economy. We salute the visionary leadership of Mr. Mr Patrice Motsepe both in his capacity as Executive Chairman of African Rainbow Minerals (ARM), and Founder of the ARM BBEE Trust. You’re indeed a true son of the soil.
Lest we forget it must be remembered that the apartheid regime’s racist policies led to the exclusion of Blacks in general and Africans, in particular, from active participation in the economy. Concurrently, South Africa was partially excluded from the global economy due to sanctions spearheaded by the oppressed people of South Africa and our friends throughout the world. The aim of the sanctions was in the main to stop foreign capital inflows into the country that had the habit of using the country’s resources to mount a relentless war against the large sections of its population.
Prior to 1994 the economy of our country was characterized by the participation of a small number of citizens mainly white males. In an effort to reintegrate our country into the global economy we needed to fundamentally restructure our economy. The first democratic election in 1994 which was won by the African National Congress (ANC) made it possible to focus on patterns of business ownership, participation and overall transformation from the start. In an attempt to transform the economy to include the majority of South Africans the ANC led Government developed a number strategies and programs. The most important legislation passed was the Broad-Based Black Economic Empowerment Act (53/2003) which has since been amended in a bid to strengthen it. The overarching aim of the BBBEE legislation is to make it possible to include previously disadvantaged individuals into the mainstream economy of our land. The Act laid down certain requirements for all businesses with an annual turnover of R5 million and more to adhere to in an effort to transform. These requirements entail the participation of previously disadvantaged individuals in management and ownership structures. Preferential procurement and skills development are also part of the legislation.
The implementation of this radical economic transformation through the BBBEE policy is led by the Department of Trade and Industry (dti). The dti’s growth strategy for the implementation of BBBEE “includes a focus on broadening participation, equity and access to redress for all economic citizens, particularly those previously marginalised” (dti 2007b). A special ‘BBBEE unit’ was created in the department with a single vision to “work towards ensuring, through equity and empowerment policies and strategic interventions, that the South African economy is restructured, to enable the meaningful participation of black people, women and rural or under-developed communities in the mainstream economy, in a manner that has a positive impact on employment, income redistribution, structural re-adjustment and economic growth”
The dti correctly defines BBBEE (broad-based black economic empowerment) as “a specific government policy to advance economic transformation and enhance the economic participation of black people in the South African economy” (dti 2007b). Considering the amount of information in terms of the rationale, codes of practice, and so forth, that has been developed it is clear that BBBEE has undergone a rapid metamorphosis and has arguably become an integral part of South Africa’s everyday business life.
However, the success of BBBEE policies has been stonewalled by big corporates for nefarious political purposes. In his 2009 Master's Thesis submitted to the North-West University, Potchefstroom Campus, on the impact of BBBEE, Orton Douglas concluded thus: “Based on the findings of the empirical study, it was concluded that the majority of family business owners do not believe that Broad-Based Black Economic Empowerment are successfully addressing the critical issues that could lead to the achievement of Government's goals.”
Other misplaced critics of the BBBEE policy include such individuals such as Moeletsi Mbeki, a brother of the former president of South Africa, Thabo Mbeki, who, during his Presidency from 1999 to 2008, was probably most instrumental in enacting legislation to ‘formalise’ BBBEE. Moeletsi Mbeki vehemently argues that “it [BBBEE] strikes the fatal blow against the emergence of black entrepreneurship by creating a small class of unproductive but wealthy black crony capitalists made up of ANC politicians, some retired and others not, who have become strong allies of the economic oligarchy” (Mbeki 2009: 61). He also cynically claims that “BBBEE and its subsidiaries – affirmative action and affirmative procurement – have metamorphosed... they have become both the core black ideology of the black political elite and, simultaneously, the driving material and enrichment agenda which is to be achieved by maximising the process of reparations that accrue to the political elite” (Mbeki 2009: 61). This analyses if we can call it that is far from the reality.
In a most elaborate study undertaken in 2011 to gauge the impact of BBBEE on businesses, Unisa Professor of Operations of Project and Quality Management L.P. Krüger concluded sadly that the perceptions of respondents in the study indicate that the impact of black economic empowerment (BBBEE) on South African businesses on ten dimensions, which include overall domestic and global competitiveness, service excellence and client satisfaction, quality and acceptance of products and services, productivity, entrepreneurial spirit, production performance, human development and staff morale, business ethics, sales and access to markets, and financial performance, “are mainly negative.”
He further found that the majority of the 500 respondents in the survey, who are employed in small enterprises and micro-enterprises, medium enterprises and large multinational companies, disagreed with the notion that the adoption of BBBEE practices would improve the performance of their company in any of the ten dimensions of business performance listed above.
However other authors such as Hamann, Khagram and Rohan (2008: 25) have noted with concern the apparent lack of progress that BBBEE has made in rectifying the legacies of apartheid because “ten years later many of the challenges remain or have become even more acute in terms of poverty, unemployment, housing and basic services, inequality, HIV/AIDS”. Kovacevic (2007: 6) also observes that “the program has achieved little success in eradicating poverty, increasing employment or fostering economic growth”.
Despite all this negative energy emanating from some large corporates mainly dominated by white males, there have been huge pockets of very successful BBBEE transactions in the last eight years. At the pinnacle of this success is of course the African Rainbow Minerals (ARM). The African Rainbow Minerals Broad-Based Economic Empowerment Trust (ARM BBEE Trust), which was established in 2005 with the primary objective of contributing to the improvement of the living conditions of poor and marginalised persons has largely symbolised that it is possible to achieve business growth while empowering the previously disadvantaged. The ARM BBEE Trust provides funding to various provincial rural upliftment trusts throughout South Africa. These provincial trusts were established by ARM to fund various education, health, welfare and enterprise development projects. Over the preceding five years the ARM BBEE Trust has disbursed R74 million to the rural provincial trusts as well as to various church groups, women’s groups and trade union organisations who collectively own 10% of ARM through the ARM BBEE Trust.
In conclusion, Programme Director; allow me to congratulate the beneficiaries once again. We wish that the leadership of ARM and Trustees grow from strength to strength. We call to all other sceptics and critics of BBBEE to adopt the ARM strategy for the sake of a future non-racial, non-sexist, united, and prosperous business empires.
I thank you.