The role of transformation in unlocking economic opportunities for South Africans

This week, I read with concern the United Nation’s latest report on the recovery of the South African GPD, which predicts that it will take at least five years for South Africa to rebound. For a country that was already in recession pre-COVID-19 with already high levels of unemployment and rampant poverty, ordinary South Africans will be even harder hit, urging something different to be done.

The United Nation Development Programme (UNDP) points out that black populations, female-led households, people with lower education levels and those working informally would be particularly affected. Unless we as a collective confront this reality urgently, it will lead to deepening levels of inequality and despair for the most vulnerable in our society.

Many large businesses have dodged their responsibility to transform, denying ordinary South African workers the opportunity for a better life. More than 20 years into democracy and despite progressive legislation guiding companies on how value should be created and shared, a lot still needs to be done to change the landscape of equality in our country. To expect that the responsibility to uplift poor people out of poverty is that of government alone is highly irresponsible and morally and ethically unsound.   

I believe that the government has provided adequate guidance through BBBEE transformation as but one vehicle to unlock economic opportunities for the most vulnerable, especially women, youth and people of colour generally who remain marginalised.  One look at the agriculture sector and it is plain for all to see how little it has transformed. South Africa’s agricultural heritage is the reason the Dutch East India Company stopped in the False Bay to start with. More than 368 years ago our colonisers started farming in the Western Cape and built a thriving and globally recognised agriculture sector, yet not much has changed since indigenous people in the Cape first tilled the soil. 

Farm workers are predominantly women, farming conditions have hardly changed and women in this sector remain vulnerable, marginalised and excluded from any meaningful participation in these businesses. Women farmworkers are the backbone of this sector, yet they have not benefited through the interventions of business in any real meaningful way. Indigenous people were forcibly removed and have lost their land, very little if any of which has since been restored or compensated for. Whilst there opportunities abound in large value chains in the agriculture sector, little has been done to support small emerging farmers, provide training and support, access to funding or to off take agreements. These farming communities have not been supported to start their own businesses. They remain poor till this day, and are plagued by the evils of poverty such as foetal alcohol syndrome, drug and alcohol abuse, poor health and hopelessness. 

Look at a few of the agriculture players, Fair Cape Dairies is a major producer of local dairy products in the Cape. Their website states  “We take our responsibilities seriously”. Which responsibilities? The Board and senior management team consists of  12 white males, 1 white female and 1 coloured female. Their BBBEE Score is Level 8. Their publicly available certificate is dated 2013.  How is this even a licence to operate? They score zero for Black ownership, zero for Management control and zero for Enterprise Development.  They boast on their website that they have an association with Woolworths. As a listed company, what is Woolworths responsibility towards transformation of its supply chain ? How does Woolworths in good conscience do business with such an untransformed company? How come no pressure is applied by Woolworths to ask Fair Cape to transform? Fair Cape speaks the right way. They talk about “ethics, social responsibility and their animal welfare”. Nowhere do they talk about their people. They are apparently committed to a set of guiding principles that ensure that they “do the right thing,  everywhere, every day and every time”. Come on Fair Cape, transform. Empower your people, diversify your supply chain, upskills the very people who help you to be a leading local brand. Uphold the principle of Ubuntu and all the other good stuff you talk about!

Rainbow Chickens, they are listed as one of the top 10 agri-businesses in South Africa. There is currently no information on their website about who they are, how they create value, what their impact is and how they benefit the communities in which they operate. No transparency? What is their shareholding? Who owns and manages such a large integrated farming facility that produces, processes and markets broiler chickens? Chances are that most of the chicken we buy and consume comes from them. What is their policy towards the empowerment of small holder farmers? How many workers do they have? Are they committed to building and transferring skills? 

Clover SA is apparently fully committed to transformation, yet they are Level 6 BBBEE contributors. Recently selling to an Israeli company for R4.8 billion, it is not clear how this sale aligns to its transformation claims. All that is apparent is its ambition to grow its business in Sub-Saharan Africa. What is clearly not talked about is the empowerment of its employees, its community and meaningful social upliftment. 

In the agri space there are a few exceptions, some corporates are looking to diversify their supply chains through supporting small holder farmers, some are signing off take agreements, some are assisting small business with loans and grants and non-financial support some corporates are starting to realise that the land was never theirs, neither were the cows.

When are other corporates going to realise that unless the financial health of its customers is a consideration in its value creation model, that increased unemployment poverty and inequality will erode its customer base, and decrease the customer’s share of wallet- ultimately impacting negatively on revenue in the long term.  When are corporates going to realise that this white economy is built on the backs of black people? That this economy is indeed a white economy. When are we going to realise that South Africa’s middle class is extremely fragile and underpinned by indebtedness? When are we going to see that the country’s few “black diamonds” are merely part of the fringe economy and that they don’t own the means of production? 

It’s about time that businesses start to realise that the 7 pillars of transformation were meant to  unlock real economic opportunity and value for people of colour. That is meant to support local economic development and the establishment of black and women owned businesses, to drive innovation, to aid in the creation of new jobs and to enhance skills. This all for the vulnerable, for women, for the youth who are currently hopeless, and despondent.