SA looks to Brazil for BEE inspiration

Trade and Industry Minister Rob Davies has acknowledged that the broad-based black economic empowerment (BEE) initiatives of the government are not the only mechanism needed to spread wealth in the mining sector and steps are also required to reduce inequality. Presenting the bigger picture – after the Marikana tragedy – at a media briefing on Friday, Davies said that the Brazilian example might help to transform the economy “much more rapidly so that poor people benefit. This is what it is about… not only after Marikana.”

As decided by the ANC policy conference the government had to make structural changes to the economy “to deliver a higher growth rate and a higher labour absorbing growth path”. Among the Brazilian examples to emulate were former Brazilian president Luiz Inácio Lula da Silva’s “zero hunger” programme, one of many “very telling” initiatives in his second term. People were given vouchers that they could only use for the purchase of local products. This in itself spread domestic employment. In Brazil there were also good small business “incubation programmes”, which could be emulated.

Lionel October, the director-general of the Department of Trade and Industry (dti), said another Lula da Silva innovation was that local manufacturers were given a 25 percent bid advantage for state tenders. Davies said his department was looking closely at the model put in place by the Brazilian government. Lula da Silva, a social democrat, is a close friend of the ruling ANC. Asked why the Broad-based BEE Act and its associated codes of good conduct and complicated scorecard system appeared not to have spread mineral wealth – given the spreading unrest in the platinum mining sector after Marikana – Davies believed these had already emphasised the need to spread wealth and to be “broad-based”.

But he acknowledged that there was now a need to create “greater equality… we need to look at the inequality question very seriously indeed, and I believe there are lots of lessons and programmes (to emulate) from Brazil”. The pending changes to the BEE policy include placing greater emphasis on enterprise development to ensure more black people are encouraged to become real entrepreneurs. What had happened in the past was that many black people ended up as shareholders in companies, but did not enjoy any role “in the operations of the companies”. In some cases a black person might have expected to be an executive in a mining company, for example, but “ended up being the window dressing… a form of fronting”, Davies said.

The government was tackling these issues. Changes to the Broad-based BEE Act would see the establishment of a commission that would check the BEE performance of companies and ensure that they were prosecuted if they were guilty of fronting. The changes to the codes, including higher points for enterprise and supplier development, meant that if these did not happen “you will get a discount on your scorecard”. Davies said he had spent much time discussing the Marikana fallout in the UK recently. While the impact on the economy was “localised” in the mining industry, “and in particular companies that are affected by this”, he said that the government could not be complacent.

“We recognise that an incident like this has a potential… the president said it should never have happened and the government is doing everything it can to ensure it doesn’t happen again,” he said. There had been “all the efforts” to resolve the pay issue in the mining sector, “with varying degrees of success”, he added.