Retail ‘needs BEE charter’

The Government must introduce a broad-based black economic empowerment (BEE) charter for retailers to ensure they were fully compliant with BEE codes of practice, empowerment experts said yesterday. Despite BEE programmes by retail giants such as Spar, Pick n Pay, Massmart, Woolworths, Cashbuild, Clicks and JD Group, there has been general criticism that the retail sector is not fully compliant with BEE standards. Ajay Lalu, the managing director of Black Lite Consulting, said yesterday that the government had little or no leverage on broad-based BEE in the retail sector.

He criticised the sector’s enterprise development programmes and employee share schemes, saying some of them were used to sugar-coat empowerment programmes as they did not fundamentally transform the supply chain. Lalu said deals such as the Massmart and Walmart merger would not have been opposed by the government if Massmart had good empowerment programmes or better employee relations. “In my view the merger would have received support from (the) government had Massmart been more proactive on its empowerment programme,” Lalu said. The retail sector, unlike other industries, does not have a transformation charter with set targets to be achieved by particular dates.

Instead of full partnerships with black-owned businesses, retailers have put in place a number of enterprise development programmes and broad-based employee share ownership programmes. Massmart spokesman Brian Leroni said the company had placed 18 million shares in the Thuthukani Employee Trust, and staff were awarded units in the trust at a price of R49.98. The retailer said the Walmart transaction resulted in the payment of R439 million to staff shareholders when Walmart acquired 51 percent of Massmart’s share capital at a price of R148 a share. The retailer had also established a youth development trust to assist unemployed youth to set up Hot Dog Cafés at Builders Warehouse stores.

Clicks allocated shares to 7 965 permanent staff members, with black employees receiving 71 percent of the shares. Through its enterprise programme, Woolworths said, it had appointed Stuart’s Joinery, a black family-owned company, as its preferred shop-fitting supplier for the company’s African stores and it supported BEE suppliers. Pick n Pay’s chairman Gareth Ackerman said its employee share trust held 3.4 million shares in the company. “Procurement from black-certified businesses remains a priority and targets have been set for all buyers in all categories to ensure that they have an element of black procurement within their respective portfolios.” The company had also established an enterprise development foundation and a franchise academy. However, BEE analysts said this was not enough.

Lalu said retail empowerment programmes, including enterprise development, were inadequate unless retailers were prepared to establish a transformed and sustainable supply chain with real benefits flowing to black people. Lalu stressed that more attention should be given to the manufacturing and retail sectors. Andile Thloaele, the chief executive of consultancy Inforcomm, said the reason retailers lagged behind with BEE programmes was because they were not incentivised. He also added that BEE guidelines were too diluted to get the sector to fully comply.