It’s either a cunningly convoluted way to shut down the ANC’s Chancellor House and Batho Batho Trust, or an incredibly ham-fisted way of ensuring that hundreds of thousands, possibly millions, of vulnerable South Africans stop benefiting from black empowerment. Whichever, it does appear to be a wilful misinterpretation of the underlying broad-based BEE (BBBEE) codes.
Across the country there are thousands of amazing people doing heart-wrenching work that helps to make painfully difficult lives just that little bit less painful and difficult. More than any political party, these people, who operate at grassroots, bring hope of change, of some slight improvement in the daily grind.
Some existing deals may unwind if the commissioner gets her way. Explain that to the child abuse clinic in Tembisa
These are the staff of NGOs who, on the smell of an oily rag, serve communities throughout the country. These NGOs eke out an existence, relying on philanthropy, occasionally the government lottery and, as it happens, BBBEE.
Nobody involved is to become a shareholder in a distant company whose name they probably don’t know. The situation is too urgent for that. The beneficiaries of these deals are getting protection today from a situation that was not of their making; or getting just a bit of support that will help ensure the new SA really is a better place for them.
There is an awful lot that is wrong with the way BEE has unfolded. It has made a handful of well-placed individuals obscenely wealthy; it has diverted money and good intentions down dark cul-de-sacs; it has helped create expectations that were always going to be impossible to meet; and it has inevitably led to resentment. And there’s little doubt that many so-called BBBEE entities are opportunistic shams that benefit a handful of usually politically aligned individuals.
But instead of addressing those specific challenges, the BBBEE commission has decided to launch an attack on all BBBEE trusts. The statement from BBBEE commissioner Zodwa Ntuli that it’s possible that the vast majority of transactions involving these trusts are not compliant with the law has sent a chill through the business community. It has been enough to ensure there will be no BBBEE deals until further notice. It might even lead to the unwinding of some of the existing deals — explain that to the desperate clients of the child abuse clinic in Tembisa or the nursery school in Langa.
It would of course be great if so many millions of South Africans weren’t forced to rely on NGOs and all the potential benefits of BBBEE could be directed to building a share-owning black middle class. Though it has to be said the "individualist capitalism" underlying this objective is at odds with the much-lauded, and rightly so, ubuntu approach to development.
It would be great if the ANC actually delivered on its election promises. But that’s not the reality. And until it is, we should understand that the existing code is on the side of these maligned trusts. The code allows for "a defined class of natural person" to be a BBBEE beneficiary.
Ntuli is right to be wary of trusts; many are remarkably opaque. But instead of destroying them she needs to introduce disclosure obligations that will ensure that the public can have sight of the delivery of the claimed broad-based benefits. This will shut down the scams and allow the good guys to flourish. And most urgently, she needs to provide clarity.
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