Cape Town - As the legacy of apartheid’s policies, which exclude the black majority from ownership of productive assets, still exists to this day, the Broad-Based Black Economic Empowerment (B-BBEE) Commission finds that efforts to turn things around are slow.
In its report, titled “Determining the Effective Implementation of Enterprise and Supplier Development Funds”, the commission found there were significant funds available for Enterprise and Supplier Development (ESD) programmes, with reported budgets ranging from R101 000 –R999 999; R1 million – R5m; and R21m or more, the bulk being in the R1m to R5m range, and the overall total for 2021 being in the region of R26 billion.
However, only 61% of the funds allocated to ESD were implemented, which was a continuing trend over the past five years (2017: 44%; 2018: 60%; 2019: 51%; 2020: 61%).
The research study assessed the abilities of entities to implement the funds allocated for ESD, as required by B-BBEE Codes of Good Practice which set the targeted ESD spend of 3% Net Profit After Tax for ESD.
B-BBEE commissioner Tshediso Matona said: “The study puts the spotlight on critical issues that require attention in the ongoing implementation of B-BBEE, and which should be on the policy agenda of government and on the compliance agenda of private and public sector entities.
For example, the survey results show that only 62% of participating entities confirmed having ESD strategies, most of which operate in the property, construction and financial services sectors.
This suggests the prevalence of ad hoc approaches to implementing ESD, which reduces the intended impact of ESD as B-BBEE lever.”
The issues highlighted by the study range from the need of many measured entities for assistance to comply with B-BBEE legislation and to correctly implement the ESD element, to misalignment between their preference for one form of contribution to ESD, such as mainly financial support, like grants, early payment to suppliers, on one hand; and the requirements of beneficiary enterprises for support with operational effectiveness, market penetration and sustainability, on the other hand.
Policy analyst Nkosikhulule Nyembezi said: “The slow progress in the uptake and utilisation of funds remains a great concern in an economy that is in dire need of investment.
The absence of plausible explanations for the slow progress is also a concern, especially in this period when the economy is struggling to recover and reach pre-Covid levels.
The government seems to be lacking in its role as a stimulator for the economy, largely due to corruption. It appears that politicians persist with wanting to award tenders to their connections. If not, nothing happens.”
Among others, the commission recommended reinforcing the commitment and responsibility of the government to enterprise and supplier development and ongoing monitoring and tracking of beneficiaries to track the progress of ESD programmes.
“The government must invest in strategies to broaden access to economic opportunities by empowering companies and individuals who are unfairly disqualified by the red tape and application of policies in a prejudicial manner,” Nyembezi said.