by Staff Reporter on 11/02/13 at 12:30 pm
In its manifesto the ANC commits to building a better life for all and to the transformation of South African society. Government has shown insight in proclaiming that political transformation without economic emancipation is meaningless and has committed to economic freedom for all. In such, job creation became a focus area.
This is sound thinking, especially combined with the awareness of the need for quality local public services. In a recent study it was shown that in Gauteng at least, infrastructure or the lack thereof is not impacting on business success. There is no doubt that a lot of good has been done since 1994, South Africa being one of the most stable and growing economies on the continent, but poverty or the alleviation thereof remains a constant challenge. Unemployment and income inequality are contributing factors towards poverty and a deeper focus is required on the enhancement of women in entrepreneurship, healthcare and education, especially entrepreneurial education.
“Although Government is right in saying that a lot has been achieved, the creation of short term jobs will not relieve poverty,” says Mannie Hirsch from Gestalt.” It is important to understand the ailment, diagnose it correctly and then apply a full solution. There are solutions that are not being considered or implemented at the moment”.
One solution is to improve the balance of trade by enforcing that for every import an equal amount of goods should be exported. This will achieve two things for South African citizens; cheaper imports will still be available to the consumer, but jobs will be created and an income stream will be generated from the demand the exports will create. Such a policy will generate economic growth. The African Growth and Opportunity Act (AGOA) that was promulgated in 2000 to offer tangible incentives for African countries to open their markets and build free markets, can be taken as an example. The Act provides for duty-free and quota-free treatment of certain products, but only when such products are produced within the United States. The Act also provides credit to African importers and exporters, but only when USA products are procured. Ultimately, each economy is looking after itself, and therefore Africa has to take control over its own destiny.
“We cannot protect the local manufacturers against global competition,” says Hirsch. “Consumers deserve lower prices, but the more the manufacturing industry grows the more competitive the local manufacturers will be as the numbers will grow and economy of scale will work towards being globally competitive. In order to grow industry and the South African economy we have to embrace the macro environment we have to operate in and provide the building blocks for companies in South Africa to use the tools available. When corporate governance regulations and business legislation such as BEE is embraced and harnessed for positive growth, rather than objected to, it can be used to grow the economy, but only if it is applied correctly”. The BEE scorecard leads corporate to support small companies, which in turn will assist in growing entrepreneurship and the economy. This is what will lead to economic emancipation, but not if the provisions of the BEE legislation are not enforced.
When BEE is embraced and applied correctly, it can create value for corporates and entrepreneurs. When points are maximised and compliance can be proven, the corporate will have a better BEE certificate and gain more business, which will improve turnover and, in turn, increase the enterprise development fund resulting in a better BEE scorecard and a positive upward spiral. In order tomaximise the BEE scorecard points it is important to focus on rural entrepreneurs and woman as well as CSI projects, especially in health and education.
It is obvious that government applied sound strategies, that the Manifesto addresses the correct issues and that the correct policies are in place, but is it implemented correctly? Do Government tenders enforce procurement regulations or are South Africans still taking ‘off the shelf’ solutions without considering the economic growth of the country?
“Those companies that want to do it right will take the BEE scorecard seriously, incorporate it into the business strategy and consult with knowledgeable companies on how to increase the BEE scorecard in a way that will positively affect the economy and assist entrepreneurs,” warns Hirsch. “Being BEE compliant is not just getting some documentation together once a year and submitting it to a verification agency. It has to be worked on throughout the year. How can BEE be used to benefit not only the company, but the economy as a whole? Where Gestalt consults on the improvement of BEE compliance, it is often found that managers are unaware of issues such as value-add companies. When procuring from a value-add company (a company that is not capital intensive but employs a fair amount of people) for every R1.00 spent, points are allocated as if the business had spent R1.20. This can easily positively affect the BEE compliance level”.
It is obvious that using BEE to enhance the economy and fulfilling on the ANC manifesto by building a better life for all while transforming society is a complicated issue, but consultants are available to gain the maximum advantage while making a contribution to society. Government’s policies and legislation can achieve much, but only if the policies are implemented and legislation is enforced.
*Mannie Hirsch consults internationally to the private sector and to Governments on enterprise development and ethical business investment. He is CEO of The Gestalt Group. For more information contact Mannie Hirsch at 011 781 7841 or visit www.gestaltconsult.com
Ideate is one of South Africa's biggest business blogs, with a team of authors all of whom have had entrepreneurial experience. Ideate is read by entrepreneurs thinking BIG. Follow us on Twitter here. View more articles by Staff Reporter.