Ownership should be the entry ticket to BEE game

I concur with the views of the former president of the Black Management Forum (BMF), a fearless advocate of the ownership society - Mr Lot Ndlovu. He says and this makes perfect sense to me and I know to others as well "Ownership should be the entry ticket into the black economic empowerment (BEE) game. It's real ownership that yields real economic value".

Let us begin by simplifying things and understand what I mean by Ownership.

Terms and justification

"Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate, or some other kind of property (like government-granted monopolies collectively referred to as intellectual property). It is embodied in an ownership right also referred to as title. Ownership is the key building block in the development of the capitalist socio-economic system." - Wikipedia.

Capitalism is a socio-economic system in which private ownership means profit to the owner. The owner controls the means of production, so the profit belongs to the private business owner. In capitalism, the free market determines the production, distribution and price of goods and services.

I will not discuss the merits or demerits of capitalism as this is beyond the scope of this article. The South Africa ruling party which is expected to lead government after 22 April 2009 has indicated their support of a mixed economy system - therefore capitalist elements are still going be a major part of the South African socio-political economy. 

It stands to reason that Owners are therefore, "people" who have exclusive right and control over "propert(y)ies. These people have total control of what they want with their property, how it should be managed, who should manage it, for how much and for how long. These are the people that dictate the "rules of the game" on their propert(y)ies.

"After the end of Apartheid in 1994 and with the advent of majority rule, control of big business in both the public and private sectors still rested primarily in the hands of white individuals. According to Statistics South Africa, Whites comprise just fewer than 10% of the population, meaning that most of the country's economy was controlled by a very small minority. BEE is intended to transform the economy to be representative of the demographic make-up of the country." - Wikipedia (rationale for BEE) (edited)

The minority (10% of population) "owns" and "controls" South Africa's economy - this is illogical and is a recipe for instability and is therefore clearly unsustainable and should be corrected immediately now!

In summary, from the above information:

• South Africa is owned (economically and to the certain extent politically) by the minority grouping - though some progress have been made especially on the political front and
• He who owns - controls and therefore dictates.

Logic on the implementation of BEE

It is clear that without a significant shift in ownership of the South African politic and economic (emphasis) resources towards the majority - South Africa is sitting on the instability time bomb.

The emphasis will logically therefore be a strong and specific focus on the ownership component of the BEE equation, because through ownership the owner dictate to whom do I delegate my day-to-day responsibilities and duties to (management control), through management control who should I employ (employment equity), through management control which area do I "invest" in (skills development, social-economic development), through management control which suppliers do I use (preferential procurement, enterprise development and SMME support).

It stand to logic that ownership and management control are key components of BEE and is therefore crucial that the new brand of BEE players take an active role in the operational and administrative decisions of their investee companies - this is a must!

I propose the following approach to BEE:

• Ownership should be assessed and weighted separately and
• Significant ownership element should be a prerequisite for other BEE elements
• Other elements i.e. management control, skills development, preferential procurement, enterprise and socio-economic development and SMME support should be assessed separately with a significantly high weighting allocated to management control
• BEE players should take an active operational and administrative role in their investee companies
• The BEE players should work unbreakably for operational and administrative transformation in their investee companies
• More importantly, the BEE vehicles should represent the broader society and beneficiaries should be "live" people and not the so-called disguised NGO's and trusts of the current order.

I believe that this approach is in line with the declaration in the Freedom Charter - an achievable wish list of the people of South Africa, black and white that says "The people shall share in the country's wealth"   

Regional transformation

I anticipate a situation where ownership of all economic structures representing a demographic mix of that particular region or province.

I also promote a culture of local participation where significant ownership of the resources is by the locals. 

All new major projects and business ventures

I expect that all new major projects and business ventures particularly those supported and funded in one way or the other by government and any government agent should, on the onset have an ownership mix that is representative of the demographics of the area in which they seek to operate.

One word or two on the emerging black middle class

Please do not behave like your white counterparts - you have a huge responsibility to your family, community and society at larger, your success is in part through your sweat and that of others, it would have been difficult and even impossible had you gone alone!

Senzo Masengemu is a former secretary general of the BMF Student Chapter, Natal Technikon (2001). He is currently a supervisor: KPMG Corporate Finance KwaZulu Natal. The views expressed above are made in his personal capacity as such nobody else can be held accountable for them.

Click here to sign up to receive the free Politicsweb daily headline newsletter