By Rob Worthington-Smith
30 April, 2018
BEE became B-BBEE as the South African government grappled with what it means to empower the previously disempowered. Even defining exactly who is the most deserving of empowerment is difficult to define and various industry charters place different emphases on women, the disabled and of course black participation.
While the dti’s codes of Good Practice cover aspects such as Employment Equity, Skills Development, Preferential Procurement, Enterprise Development and Socio-economic Development, the most contentious and debated subject is black participation in business through direct ownership.
Currently, this question is the subject of a court battle being contested by the Mineral Resources Minister Gwede Mantashe, who is challenging the high court ruling on the “once empowered, always empowered” principle.
On the letters page of the 30 April, 2018, edition of the Business Day, Sydney Kaye argues the absurdity of forcing companies to dilute their value by subsidising ownership to black groups each time a black beneficiary sold its shares. A more interesting and considered view is offered by Frans Cronje, CEO of the Institute of Race Relations. In his opinion: “the government is focusing on the wrong metrics in measuring the empowerment contribution of the mining industry to the country and society at large.
Accrding to Cronje, “the best measure of what any industry does to empower society can be found in its contributions to:
- Employment
- Tax payments
- Exports, and
- Fixed investment
“These measures do far more to deliver real changes to the lives of ordinary people than the narrow racial transformation objectives of the government.”
In this era of New South Africa 2.0, most of the population is desperate for social justice to prevail and provide for a more equal society. However, even the best intentions can too easily result in unforeseen consequences. A key measure to keep an eye on is the overall size of the pie that can be divided between citizens. At some point a balance has to be struck between a small pie, equally divided, and a larger pie with unequal slices. Capitalism has proved that the latter option delivers larger slices than the former even for those with the smallest slices. However, the vast disparity in outcome appears too unjust to be politically acceptable – and maybe rightly so. Who are we to be the judge?
See the full article at: https://www.businesslive.co.za/bd/opinion/letters/2018-04-30-letter-setback-for-mining-sector/
The FarSight Model of Leadership Maturity
From our research into decades of corporate reporting, and noting the significant difference between how mature leaders report against these five actions compared to immature leaders, FarSight developed a model for assessing leadership maturity in terms of how well companies respond to their most material issues. Every two months we analyse a sector of around eight companies on the JSE and submit our findings to the asset management industry through our channel partner, Legae Securuties, the first B-BBEE Certified Stock Broking firm in South Africa. Summaries of these findings, and how the model works, can be found at www.FarSightFirms.com
* Rob Worthington-Smith is the founder of FarSightFirms.com. The FarSight model analyses leadership maturity based on the IIRC’s Integrated Reporting Framework, an international standard designed to guide companies towards better reporting of their value creation story. In the SA asset management market, FarSight has an exclusive working partnership with Legae Securities.