Consensus lacking on BEE codes

The draft black economic empowerment (BEE) codes for the agricultural sector gazetted yesterday promise a “radical transformation process”, according to the Department of Trade and Industry (dti), yet the policy continues to be shot down by some of the industry players it aims to benefit. The AgriBEE charter is a framework providing guiding principles for broad-based BEE in agriculture. Industry players started negotiating the charter in 2003, it was adopted in 2006 and first gazetted in 2008.

The charter had been lying dormant due to disagreements over the inclusion of micro enterprises with a turnover threshold of R300 000. The 2008 charter suggested that enterprises with a five-year “moving average annual turnover” of between R5 million and R35m qualified for the BEE compliance measurement. The threshold has been lowered to R300 000 in the draft codes. The dti said interested parties had 60 days to comment on the code. The AgriBEE charter council, which oversees the sector’s transformation agenda, comprises farmworkers’ unions, commercial farmer bodies, emerging farmers and the government.

Motsepe Matlala, a commercial farmer and owner of Mafata Farm near Ermelo in Mpumalanga, said the current AgriBEE charter would not attract investment to farming. BEE was a policy that needed an overhaul because black people should not strive to gain equity stakes in white peoples’ businesses. Instead, black South Africans should use their resources to build a sustainable and profitable environment for self-sufficient black agribusinesses, explained Matlala. “Look at the recession, companies have gone bust. The current framework is a drawback… BEE as a whole needs a re-look. We need to come up with creative means and ways to build sustainable black businesses in the sector,” he said.

Explaining the prospects of the charter, the department believed that after the submission of public comments, the final AgriBEE transformation framework would lead to increased participation by black people in the ownership, management and control of agricultural enterprises and the agricultural value chain as well as progress on the enhancement of skills development of the workers in this sector. The charter council was the main driver of the development of the sector code and was charged with ensuring broader public participation. However, Matlala did not believe that the current charter would pave the way for black advancement in agriculture. He blamed the current financing models and claimed that corporate South Africa was sitting on R470 billion and lacked confidence to invest it in the country.

“The current financing model is not sustainable for black farmers. Current white commercial farmers had the agricultural credit board in the past where they paid back their loans at 1 percent interest over decades. How do you expect blacks to be successful without (similar) recourse? “The current model is not working and this will result in conflict… There will come a time where in South Africa, black and white farmers will have to be guarded by the SA National Defence Force to produce food,” he explained. Madime Mokoena, the director of broad-based BEE charter compliance at the Department of Agriculture, Forestry and Fisheries, said the new draft had set a preferential procurement target of 70 percent, 20 percentage points higher than the 2008 charter’s target of 50 percent.

In addition, companies would have to contribute 3 percent of their net profit after tax to enterprise development. This was a percentage point higher than the previous document. Companies targeted for compliance in the sector were commercial farmers, agribusinesses that were affiliated to the agricultural business chambers, and retailers who could find themselves in an advantageous position if they procured from black South Africans, Mokema added.