“Centuries of white domination and the inequitable distribution of socio-economic benefits have left our new democracy in an untenable situation. Political power without economic power is unsustainable. At the time of transition to democracy, South Africa was in an unenviable position of being one of the most unequal societies in the world, alongside Brazil, with a Gini coefficient of over 0,60. Inequality needed to be tackled urgently to promote social stability.” Commentary by eminent academic, anthropologist, business leader, political activist and former Vice-Chancellor of the University of Cape Town, Dr Mamphele Ramphele in her latest book entitled Laying Ghosts to Rest- Dilemmas of the transformation in South Africa.

THE SOUTH AFRICAN economy is characterised by racial distortions. The black majority remain systematically excluded as an integral function and part of the mainstream economy.

Moreover, extreme unequal distribution of income has become deeply entrenched in post-apartheid SA. This is aggravated by factors such as the persistent shortage of skills, an environment inimical to the development of small and micro enterprises, and limited access to finance by budding entrepreneurs.

As part of normalising the socio-economic situation, black economic empowerment - the endeavour to deracialise the mainstream domestic economy - has become a business imperative for South African companies. Simply put, empowerment is a business dynamic that requires a business response. But nevertheless, this cannot successfully take effect without a clearly defined role by Government.

In the late 1990s, the constraints of narrow-based BEE became apparent with the need for an inclusive approach that recognised the necessity to bridge the chasm between the “First” and “Second” economies. Strong emphasis was then put on introducing mechanisms that would accelerate the entry of blacks into the “First” economy. This new approach became known as broad-based economic empowerment and was subsequently codified into law. It also triggered off the emergence of sectoral empowerment charters such as the Mining Charter and the Financial Sector Charter.

The Broad-Based Black Economic Empowerment Act contemplates the recognition of various forms of contributions by the public and the private sector towards the attainment of black economic empowerment which strives to open the economy to all entrepreneurs without discrimination and exclusion, as was the case under the apartheid regime.

The law is an essential aspect of Government’s strategy to make the domestic economy more equitable by spreading the ownership of assets. This will be done with the view of stimulating the growth and demand potential of the economy. However, empowerment has to cultivate a broad base in terms of ownership and control in order to avoid a situation where a highly concentrated class of black capital owners is imposed on a highly concentrated white business class.

Therefore, the acquisition of a company by black business people will have a limited effect if it is not accompanied by other transformative measures. These include adequate resourcing of education and training within the organisation, affirmative policies of promotion and recruitment to redress the demographic anomalies, as well as efforts and initiatives to transform elements and structures of the corporate culture, which still tenaciously border on the gender and racially exclusive.

The BBBE (BBBEE) Act is an enabling framework that allows for the development of the Codes of Good Practice on BEE. The latter provides a standard basis for the measurement of broad-based BEE across all sectors of the economy. In terms of the Codes, all business entities operating within the South African economy should enjoy a levelled playing field. This is why the Codes provide comprehensive criteria for the measurement of BBBEE.

Central to the empowerment legislation’s objectives is adding impetus to the values and aspirations of creating a model South African society as envisaged by our Constitution.

While the South African Constitution explicitly outlaws almost all forms of discrimination, it also aims to promote the achievement of equality through the use of legislative and other measures designed to protect or advance persons or categories of persons that have been disadvantaged in the past.

Thus, empowerment-driven instruments derive their constitutionality from the fact that the status quo ante was laden with unfair discrimination, inequality and disadvantage to particular individuals or categories of individuals on the basis of race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religious conscience, belief, culture, language or birth - the list is extensive yet not exhaustive.

Given the scenario, the rationale for broad-based BEE in the domestic economy is inextricably linked to the universally admired South African political miracle.

Sello Mabotja writes in his personal capacity.