Ntshavheni puts B-BBEE numbers on the table: 3.4 million in the middle class, R400bn a year

Broad-Based Black Economic Empowerment remains South Africa’s central instrument of economic redress, Minister in the Presidency Khumbudzo Ntshavheni has said, and she has put numbers behind the claim.

Speaking to IOL, Ntshavheni said 3.4 million black South Africans now belong to a middle class their parents were barred from by law, with R400 billion a year in spending power.

“Apartheid was declared a crime against humanity. It was also an economic crime. Families were forcibly removed from their land. Workers were barred by law from skilled jobs,” she said.

“Black children were given an education designed to keep them in servitude. In 1994, South Africans chose redress over retribution. B-BBEE is an instrument of that choice, and section 9(2) of the Constitution requires it. Redress is a constitutional obligation, not a bargaining chip. And it is working. Behind every figure is a South African whose life has changed.”

The Broad-Based Black Economic Empowerment Amendment Act defines B-BBEE as the viable economic empowerment of all black people, including in particular women, workers, youth, people with disabilities and people living in rural areas, through integrated socio-economic strategies that include increasing the number of black people who manage, own and control enterprises and productive assets.

Ntshavheni pointed to the Youth Employment Service, created under the B-BBEE framework, through which some 240 000 young people have been given a full year of paid work, earning R15 billion in salaries. More than half are young women.

Through Equity Equivalent Investment Programmes alone, she said, global companies have created more than 2 000 jobs, backed 87 black-owned businesses, almost half of them owned by black women, and trained more than 2 500 people.

President Cyril Ramaphosa explained the purpose of the EEIP in his newsletter to the nation in June last year. It was created, he said, to accommodate multinationals whose global practices or policies prevent them from complying with the B-BBEE ownership element through the traditional sale of equity or shares. The programme allows those companies to invest in socio-economic, skills and enterprise development in South Africa without selling equity in their local subsidiaries.

Ntshavheni said the progress has not come at the expense of white South Africans, who continue to prosper in the economy. “It belongs to the whole nation,” she said.

She also acknowledged that for many, the promise of 1994 is not yet fulfilled. Some 23.1 million black South Africans remain outside the fruits of economic prosperity, she said. A typical black African worker earns R5 200 a month, against R25 000 for the typical white worker.

“To abandon redress now would be to tell these South Africans that their freedom ends at the ballot box,” she said.

The Minister stressed that B-BBEE is not a precondition for investing in South Africa. It applies where a company requires a licence from the state, such as in mining and information and communications technology. Multinationals whose policies, on the proof thereof, do not allow them to sell local equity can comply through EEIPs.

South Africa, she noted, is a founding member of the World Trade Organization and a non-aligned country. “Non-discrimination is a principle we hold to. Every investor plays by the same rules in our country, wherever they come from,” she said.

On mining ownership requirements, Ntshavheni said these are not arbitrary. Under the Mineral and Petroleum Resources Development Act, South Africa’s minerals are the common heritage of all South Africans, held by the State as custodian.

“Those who extract them must share the benefit with the people who own them. Multinationals that do not wish to sell equity have a clear alternative in EEIPs,” she said.

She described flexibility across sectors of the economy, with each sector having a set of Sector Codes governed by a charter council that negotiates flexibilities within agreed frameworks for that sector.

“Under the B-BBEE Codes, a multinational that cannot sell local equity, by virtue of their policies, can instead make an equivalent contribution to black-owned enterprises and suppliers, skills development and other national priorities through an EEIP,” she said. “Cabinet has also supported a review of the framework to strengthen it for transformation and growth.”

Companies that comply through Equity Equivalent Investment Programmes, investing in black-owned businesses and skills instead of selling equity, include Dell, Microsoft and HP, she said. Others continue to expand. Microsoft has announced a R5.4 billion investment in local cloud and artificial intelligence infrastructure, the US International Development Finance Corporation has invested $50 million in the Phalaborwa rare earths project, and Amazon Web Services is investing in cloud infrastructure over several years.

Ntshavheni said South Africa determines its domestic policy on the basis of the best interests of its citizens. “Our energy, telecommunications and mining rules are made by South Africans, under our Constitution, to serve our development,” she said.

She said the country provides fair market access for all partners. While South Africa wants foreign capital, it wants it to build processing, beneficiation and manufacturing capacity on home soil.

“That is investment with development, not investment at the expense of development. Our minerals belong to the people of South Africa and must work in their interest. Investors who help build these value chains here are partners in that project, and we are actively seeking them,” she said.

The Department of Trade, Industry and Competition is already taking investors through what the policy provides, including its flexibilities, and engages companies on individual transactions, she said.

“B-BBEE ensures that growth is shared, and that is what makes it sustainable,” she told IOL.

This report is based on SAnews (South African Government News Agency), which summarises the Minister’s remarks to IOL rather than reproducing the full interview, and on the department’s account of the policy. Source: SAnews, Ntshavheni reaffirms B-BBEE as key instrument for economic redress, https://www.sanews.gov.za/south-africa/ntshavheni-reaffirms-b-bbee-key-instrument-economic-redress