If the government wants to improve broad-based BEE it needs to fix local government, says Gloria Serobe, co-founder and CEO of women’s investment group Wiphold. “Instead of empowering black women to be entrepreneurs and run small businesses, broken municipalities have crippled and impoverished them.”
Trade, industry & competition minister Parks Tau said recently he wanted to drive tighter BBBEE compliance by business.
“We’re quite excited that the DTIC minister is keen to make BBBEE work,” says Serobe, a member of the BBBEE advisory council newly chaired by Tau. “But on the business side we’re starting to see traction, and it’s not just a ticking-the-box thing.”
She refers to “very strong black women” who are CEOs in the mining, financial services, retail and publishing sectors, as well as the chairs of Sasol and Standard Bank. “These are meaningful positions of substance in big, strong entities. These are hardcore engineers, hardcore chartered accountants, hardcore lawyers. There's nothing ticking-the-box about their appointments. They've worked their way up through the system, they haven't been parachuted in to satisfy BBBEE requirements.”
Without titles to their homes or land, they can give no security to anyone. So without a funder who believes in them, they don’t have a chance to start or run their own businesses
And there’s a pipeline. “There are many women at the second layer of management in these companies. We’re excited about what we’re seeing.”
The big challenges to BBBEE are in the rural space where not enough women are being pulled into transactions such as the one between Wiphold and Sasol, where there are not enough projects for black women, and where those trying to start their own businesses are being crippled and impoverished by dysfunctional municipalities.
“Government has been on the periphery of BBBEE with small projects and so on, but that’s not going to move the needle for rural areas. To empower black women in rural areas there is much more that needs to be done. The nature of rural life suffocates them.”
A big obstacle in the way of BBBEE is the ongoing failure of the government to give them security of tenure. “Without titles to their homes or land, they can give no security to anyone. So without a funder who believes in them, they don’t have a chance to start or run their own businesses.”
As a result, thousands of opportunities are going begging, which Serobe believes could have a huge impact on the rural economy and job creation. “They should be included in the government’s land-reform programme, in terms of being given ownership of homes and land.”
Wiphold has been running a maize project in the Eastern Cape for women on 2,800ha of rural, communal land for which they have no title, no security of tenure and no lease agreements. Their situation is aggravated by “patriarchal issues about land being given to men only”, though they don’t have security of tenure either.
A “big shock” for Wiphold in their campaign to win security of tenure as a key part of BBBEE has been the noise from communities who say they don’t want women owning title deeds “because then that land can be sold to everyone”.
“Communities are not united on this thing of title deeds. I thought all you need is to give them security of tenure, so to get pushback like that from parts of the community that say, actually, not quite ... it’s a big conversation to be had if we’re talking about BBBEE for rural women.”
Communities along the Wild Coast fear that with title deeds they will “wake up tomorrow to find that all of Europe now owns the Wild Coast, that it has moved from being a Xhosa enclave to being something global. We need to have serious conversations to understand that psyche.”
In the meantime, the government must find innovative ways of making would-be entrepreneurs fundable without security of tenure for the land they’re on.
One option is to make what they produce on the land the collateral they need to access funding, even if they can't use the land itself as collateral. “We have to make sure the banks are forced to think that way. We can’t keep using the fact that they have no security of tenure to deprive them of capital,” says Serobe, who sat on the Nedbank board for 12 years and headed its transformation committee.
She understands that bank credit committees have to comply with the National Credit Act, “but we have to make these processes more sympathetic to the particular hardships of black women entrepreneurs in rural areas. The banking system is not very friendly to black women in the entrepreneurial space.”
Rural areas have schools in abundance and they’ve got feeding schemes. We can be creative about involving rural entrepreneurs in this, and also supplying hospitals
A bigger challenge even than no security of tenure are the broken municipalities entrepreneurs and small business owners depend on “for everything”, including water licences, tax certificates and registering their businesses. “Municipalities that are broken have caused so much damage. It’s not just about having water in the house or something, it’s about crippling the possibility of entrepreneurs to go ahead and grow and be successful because they have nowhere else to go. It’s terrible.”
Trying to run a business in a rural area is “a nightmare” because of municipalities that have broken down. “This goes to the heart of BBBEE in rural areas.”
Another challenge that makes a mockery of BBBEE is red tape, which is also “strangling” BBBEE in rural areas. To cut this red tape, Tau, the minister responsible for BBBEE, will have to “talk to his colleagues in Cogta [the co-operative governance and traditional affairs department], which is running the municipalities. When someone goes to register her business, can we loosen the requirements, maybe, so they can get through the system? Don’t kill them before they even start.”
State-owned enterprises have the capacity to support small businesses, “but if they're also broken, it’s a problem”.
There’s no shortage of opportunities, Serobe says. “Rural areas have schools in abundance and they’ve got feeding schemes. We can be creative about involving rural entrepreneurs in this, and also supplying hospitals.”
Tau needs to liaise with premiers and provincial education and health MECs to make it happen. “This is doable, it’s not complicated. Let’s cut the red tape and make it work. And then of course pay these entrepreneurs on time.”
The BBBEE compliance Tau talks about needs to embrace all these things, Serobe says. “Compliance is about functional local government supporting SMMEs and funding entrepreneurs. It’s about skills training and financial literacy. These are practical solutions, nothing complicated, no legislation needs to be changed. These are things that can sommer be done.”
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