THE BLOG
16/05/2018 06:14 SAST | Updated 16/05/2018 11:16 SAST

JSE Black Empowerment Consortium And Forgotten Communities

SA's brutal past cannot be forgotten when our the needs and well-being of vulnerable communities have no urgency nor a voice in corporate boardrooms.

Siphiwe Sibeko/ Reuters

Since the inception of the Black-Broad Based Economic Empowerment Act, 2003; numerous black-owned companies continue to enter joint ventures to acquire equities in domestic and multinational companies listed on the Johannesburg Stock Exchange.

Transformation and affirmative action remain a regulatory requirement for private and public companies operating within the South African jurisdiction. As such, foreign investment companies seeking to do business in South Africa are expected to have black representation in their shareholding structures.

It can be argued that such an expectation is supportive towards 'transformative constitutionalism' which is a means of providing black people, and particularly communities, with equity access thereby allowing them to benefit from diversified economic activities from which black people had historically been excluded.

This economic exclusion appears to still haunt South Africa through vast levels of unemployment, lack of critical skills in various core sectors such as agriculture, increasing socio-economic inequalities and unsatisfactory access to basic services for rural or township communities.

Undeniably, the enactment of the Black-Broad Based Economic Empowerment Act was envisioned to tackle these realities by providing black people and particularly communities with equity access to benefit from diversified economic activities.

Consequently, this important law is not implemented as widely expected because of the concentration of empowerment deals to a limited politically connected black empowerment consortium, made up of mostly family oriented capital distributions - as supposed to communities driven distributions. It is saddening to continue to see share prices rise in the Johannesburg Stock Exchange while communities regress with widening poverty and undignified standards of living.

South Africa's brutal past cannot be forgotten when the needs and well-being of vulnerable communities have no urgency nor a voice in corporate boardrooms.

It is troublesome that listed-companies with a black empowerment consortium shareholder will have the board of directors chaired by a black South African; whose intention is far beyond the balancing of profit and sustainability. Further to this, the Social and Ethics Committee's of listed companies are chaired by black women who are failing to represent the best interest of vulnerable communities in sectors such as mining and construction.

South Africa's brutal past cannot be forgotten when the needs and well-being of vulnerable communities have no urgency nor a voice in corporate boardrooms. The first principle of the King IV code on Corporate Governance is ethical leadership; notably, this code is compulsory for all JSE listed companies yet we are continuously seeing our communities regress in socio-economic development.

Is it through the lack of adherence or commitment to 'transformative constitutionalism' by black empowerment consortium? It is fair to argue that is so in addition to the empathy and disinterest expressed by other shareholders.

Corporate Social Investment practices do not usually see communities as development partners rather as mere beneficiaries because the culture of consultation prior to any development is simply absent. These practices often flow from the boardroom; where a representative of vulnerable communities appears to maintain the 'status quo' due to the fear of being 'too progressive' in implementing the black empowerment agenda.

The real leadership championed by black empowerment consortiums will be celebrated when the experience, knowledge and resources of communities are not taken for granted. Rather, an appetite for a preference to truly distribute wealth, resources and skills to communities are most in need. Inclusive stakeholder engagement alludes to the idea the communities must be consulted on business activities that would either directly or indirectly affect the community.

The intention to equal treatment of all stakeholders should be undoubtedly advocated by black empowerment consortiums since their collective presence is to positively safeguard the advancement of transformation and affirmative action in South Africa.