Broad-Based Black Economic Empowerment(B-BBEE) and the Development of Sustainable Employment Creation

Unemployment is one of the triumvirate of scourges that plagues our nation together with inequality and poverty. The lockdown has just contributed to a massive deterioration in all three scourges.  

We know that if we address unemployment effectively, inequality and poverty also decline. Broad- Based Black Economic Empowerment (B-BBEE) was one of the mechanisms chosen by the government to address this suffocating triumvirate, and now toward the end of the lockdown B-BBEE has become even more significant as an employment creation facilitator than ever before. B-BBEE has several mechanisms to address unemployment in the short and long term.  

Contents

• Why is B-BBEE actually important?
• B-BBEE is good for your corporate brand
• Using skills development to build your corporate legacy
• Skills development as a catalyst for entrepreneurship and Enterprise development
• Real socio-economic value from corporate citizens
• How sustainable employment can be used for B-BBEE Procurement

Why is B-BBEE actually important?

We know that we need to transform our society that was economically polarised by colonialism and apartheid, leaving the majority economically deprived. 

This unfortunate legacy has not left us and is in fact deeply entrenched in the structure of our economy. Transformation is therefore not a luxury but an absolute non-negotiable in the interest of everyone irrespective of personal origin or background. 

B-BBEE may have its detractors and claimed it has failed but failure is only plausible if an attitude of ticking the box compliance is adopted rather than a transformational one. 

All South Africans must understand that B-BBEE is not about redistribution but rather empowerment.

Redistribution is simply the sharing of existing resources in an equitable way. However, empowerment is about the expansion of national wealth and resources using pools of existing resources as a catalyst. Empowerment benefits the beneficiary and the benefactor. 

B-BBEE is good for your corporate brand

In the 21st century many corporates have expanded their definition of a return on investment beyond the narrow dividend return based on investors capital, toward building value on their balance sheet through social capital. 

Corporate citizens of our democracy can choose to grow social capital through the goodwill they attract by the application of the elements and mechanisms of the B-BBEE transformational agenda. 

In developing economies growth of market share is often stifled by the socio-economic state of the market. Corporates market share benefit in the long term by contributing to the development of their market especially in developing nations with huge youth capital. 

Socially developing the society, especially its youth, could earn corporates great social credit and in the long term inspire brand loyalty and respect for the contribution they have made. In summary, corporate altruism now results in long term self-interest for the future through brand recognition and loyalty. 

Using skills development to build your corporate legacy

The Skills Development element within B-BBEE transformation has a strong learnership component for the unemployed. A learnership has a limited duration contract of employment for a year or longer and make the learners three times more employable after the learnership compared to before. 

Learners earn an income, obtain a formal qualification and valuable work experience. For example my company, EduPower Skills Academy has 25% of its own workforce comprising learners that graduated from its own learnership for the unemployed and were offered permanent employment thereafter. 

This type of employment occurs quite often, provided learners invest their effort into the process. So learnerships are a great way to get inexperienced unemployed learners’ access into the job market. 

The B-BBEE skills development element provides a useful incentive of additional valuable points to absorb unemployed learners into permanent employment after a learnership. So Skills Development on the B-BBEE scorecard is as much about educational development as job creation which is the actual end game. 

Skills development as a catalyst for entrepreneurship and Enterprise development

New small business and entrepreneurship is the single most important mechanism for creating the millions of jobs required in the South African Economy. Government cannot and should not create these jobs within the state as governments role is that of enablement. 

Government does not produce technology and innovation and in fact is a net consumer of technology. Current business just cannot grow fast enough to create the required jobs. Innovation, creativity and technological advancement often comes from talented small business owners who create jobs for others, through the production of their unique goods and services. 

B-BBEE Enterprise Development is a brilliant support mechanism for entrepreneurs to express themselves and start new businesses thus creating this most valued employment. 

Large corporate support for small business through Enterprise Development is a form of corporate Ubuntu. 

A further, even better development is the migration of some of these small businesses to becoming suppliers to the very corporate that supported their development as a small enterprise. These growing small suppliers in the supply chain of large corporates also get assistance in the form of B-BBEE Supplier Development support. As these small enterprises grow to becoming suppliers, they create further employment opportunities.  

The Enterprise and Supplier development element within B-BBEE transformation allows corporate donors a rich variety of creative options to express their support for small business development. 

The COVID crisis has focussed attention on the vulnerability of international supply chains and its concentration mainly in the Chinese economy, and large corporates investing in the development of local supply chains may have a great risk mitigation strategy and a competitive advantage. Corporates investing in small start up enterprises is also a way to diversify if they become minor partners to the business. 

Real socio-economic value from corporate citizens

Socio-Economic development, which is another element of the B-BBEE scorecard, provides yet another mechanism to create employment. This element allows a much broader interpretation thus inspiring corporates to be creative in adding value to society. 

A powerful way for corporates to express creativity is to facilitate the establishment, creation or support of jobs in a variety of options. 

Socio economic development focussing on job creation rather than charity builds sustainability, dignity and self-sufficiency, though charity remains an important tool in addressing our social challenges. 

How sustainable employment can be used for B-BBEE Procurement

The broader Procurement Element of the B-BBEE scorecard also provides for corporates to support small business through procurement of products and services.

This element also empowers our society’s vulnerable groups such as people with disability, youth and women. Economic development of vulnerable groups empowers them, building a stronger more equitable society where all voices are heard, and more people have a sense of dignity and self-sufficiency. 

The broader Procurement Element of the B-BBEE scorecard also provides for corporates to support small business through procurement of products and services. 

This element also empowers our society’s vulnerable groups such as people with disability, youth and women. Economic development of vulnerable groups empowers them, building a stronger more equitable society where all voices are heard, and more people have a sense of dignity and self-sufficiency. 

This leads to a lowering of dependence on charity and the state to support the vulnerable and in-fact contributes toward the growth in the tax revenue base. 

Conclusion

B-BBEE, in all its detail, should be embraced as a powerful transformative mechanism giving large corporates the opportunity to be on the right side of history when being judged for their contribution toward building an empowered society with multiple equal voices all enjoying their place in the sunlight. 

B-BBEE is not politics though it may be used by political protagonists for their own aims. B-BBEE is not perfect and I am sure analysts can point to weaknesses, but it must only be replaced by a better vehicle for transformation because transformation is itself a non-negotiable imperative, a fact that most of those same analysts will agree upon.

Authored by Sivarajan Naidoo

Sivarajan is Managing Director of Edupower Skills development academy, a level 2 BEE contributor. Edupower’s aim is to address the socio-economic issues of young South Africans by providing fully hosted learnerships and innovative solutions to absorption, enterprise & supplier development. Edupower is trusted by companies such as Unilever and Safair to address their corporate legacy in South Africa.