Are we making progress?

This week I was struck by an article which appeared in Business Report looking at the attention we pay to BEE and the return it has yielded. It made the point that is often repeated that “most companies have focused on the ownership element because it is easier to implement compared with the other elements and because government departments and public sector entities, through the old preferential procurement framework regulations, focused heavily on it”.

The article makes the point that “the media has great power in filtering what we invest our attention capital in by virtue of what they publish”. It goes on to make the point that attention capital is a resource, on which society, businesses, celebrities and politicians depend. The it adds:“what makes attention capital valuable is its scarcity, which is linked to time”.

What is clear is wherever our attention is invested there is energy that is unleashed, which yields a return”. One wonders whether South African business pays attention to such ideas. However, what is evident is the steady 'progress' towards more and more BEE deals being struck.

One that will be interesting to watch is the recently announced Walmart-Massmart deal by which the company readily promised to open new stores and expressed its ambition to grow its food business by over 50% in five years. The company also disclosed tempting plans of carrying out a “substantial” program to train and develop thousands of local farmers, bringing into [line] its corporate social responsibility with black economic empowerment.

Massmart also said it intended creating 15 000 jobs in the next five years.

"While there are other exciting promotional campaigns planned, this offering so soon after the finalisation of the Walmart merger is a clear demonstration of Massmart and Walmart's intent to save people money to live better," Massmart CEO Grant Pattison said in a statement.

A strange ring of the ruling party's slogan: 'A better life for all' one is tempted to ask? Which is where BEE deals have been remarkedly failing, they have not been translating into a better life for all. And yet a lot of 'attention capital' is spent on Black Economic Empowerment and lately the focus has been sharpened by none other than our ever controversial Julius Malema, the ANCYL's president. He himself is the subject of this attention by the media and business, as well as the general public, through his pronouncements on economic transformation, whether on land reform or ownwership of the mining industry.

But even Malema moves in the same sphere of 'ownership' which BEE critics accuse it of not delivering any meaningful transformation to the majority of black people, although it is them who who vote substantially for the ANC. Apart from the Walmart-Massmart deal what else is on the table that looks significant? Is BEE moving into new territory?

What may be regarded as significant 'progress' comes from one of the government's state-owned-enterprises, Eskom whose yearly report states that “Eskom supports the government's Economic Growth Path and has put plans in place to enhance its developmental contribution. Among the highlights of the financial year were that 79% of new build contracts placed in the financial year were local content, that Eskom has a pipeline of nearly 5 300 learners and is expanding its training with a focus on youth, the R41.9 billion spent on Broad Based Black Economic Empowerment and reaching the landmark of 4 million households electrified under the electrification programme since the early 1990s”.

However, the SOE does not seem to be idful of the huge poverty gap within South African society, and this is borne out by the report on executive pay, where Eskom's directors' remuneration report reveals that R18.5 million was paid to executive committee members, compared to last year's R8.8 million. The biggest winner was human resources head Bhabhalazi Bulunga, who pocketed 507% more at R3 million, compared to last year's R501,000.

Of the two executive directors, CEO Brian Dames was the highest paid at R5.7 million, a 0.9% increase. However, finance director Paul O'Flaherty took home 346% more at R4.9 million. These are remarkable figures from a company that had to go begging for a World Bank loan just last year in order to meet its service delivery imperatives, where electric outages are still a threat to many businesses and a constant cause of misery in poor homes. The amounts paid just to these executives is just a little less than half what is spent on the company whole BEE procurement program for thousands of 'would-be beneficiaries' in the black community.

However Eskom seems to be doing better than most companies in complying with the BEE codes as shown by the CEO's letter in the report, which states: 'The code of practice for broad-based black economic empowerment sets a target of 50% for procurement spending from black-owned businesses.

'Eskom as a company is ahead of that target with an attributable black-economic empowerment spend of R41.9 billion, or 52.3% of the total. Work is still needed to raise the proportion of spending directed to businesses owned by black women, which now stands at just over 4% of attributable black economic empowerment spending'.

And behind all BEE deals and hype is the ever increasing of providing jobs. Here the SOE seems to be doing its bit. The CEO's letter further shows that: “As a state-owned enterprise, Eskom has an important role to play in developing the capacity needed to sustain our own operations over the long term, and to grow skills for the broader economy. We are investing heavily in our workforce, and at R998 million (2010: R758 million), Eskom’s investment in training and development is 5.7% of the wage bill, a level well above international norms”.

It further reports that the Eskom Academy of Learning as a professional centre of excellence. The Academy will focus on training engineers, technologists, technicians and artisans for the future. There are 5 283 (2010: 5 255) people in training, of whom 4 240 (2010: 3 780) are studying in the engineering and technical fields. Once they have completed their training, they will be absorbed into the business. In response to the request from our shareholder to contribute to the new growth path, we have also committed to partner with our suppliers to train an additional 5 000 learners, and set the target of creating 10 000 apprenticeships, and 100 000 direct and indirect jobs by 2015 through all of Eskom’s activities.

It seems that some companies performance, or plans give us cause for hopes and optimism in the future. Eskom is one of them Walmart may yet be a surprise runner in the race. What about the others? Are the rest of the country's businesses playing an important role in meetingthe country's challenges? Anglo American seems to be entering the space with firm and meaningful intentions and plans.

Anglo American (AGL), one of the world's five largest resources groups, has announced it was committed to creating and sustaining 25,000 jobs by 2015. This it would do through up to 1,500 new businesses.

Speaking at Anglo American's local procurement and enterprise development trade fair, Chief Executive Cynthia Carroll said Anglo's enterprise development arm, Zimele, has already invested some 467 million rand in 845 local businesses, which together employ about 16,000 people, and generate a turnover of more than 1.8 billion rand.

She also said Anglo's commitment to developing new businesses supported the country's vision of creating economic opportunities for black South Africans.

Anglo's procurement spend with black empowered business in the past 10 years has increased from 911 million rand to 21 billion rand.

This makes up more than 40% of the group's total available procurement spend to historically disadvantaged South Africans.

Another deal that was concluded this week was reported in Moneyweb, which says Broad-based BEE shareholders are to own more than 26% of Assore.

It states: “Assore (JSE:ASR) Limited (“Assore”), the iron, manganese and chrome ore miner, ferroalloy producer and mining group, together with Shanduka Resources (Proprietary) Limited (“Shanduka”), are pleased to announce the conclusion of a transaction which results in the disposal by Shanduka of its interest in Assore for R2.7billion and creates an opportunity to facilitate a third Broad Based Black Economic Empowerment (BBBEE) transaction that will secure the Company’s long term credentials well above the empowerment shareholding threshold set as a target for 2014.

Shanduka’s sale of its 11.8% interest in Assore at a price of R163 per Assore share, for a total of approximately R2.7 billion, facilitates Assore’s third broad-based BEE transaction and expedites the realisation of some of Assore’s key long-term BEE goals, while providing Shanduka with an attractive return on its investment”.

It looks like in spite of the ANCYL's roar at their annual congress about BEE deals not benefitting the black population much, a lot is happening and lots more still needs to be done. We could and we should be asking more pertinent questions about how, who, and where are these programs making a difference, and against what odds? Are they penetrating to the slum areas or the shack settlements? Are the companies, even Black-owned companies - or more especially black companies - dealing with organisations representing this constituency? Do the 'Abahlali Base Mjondolo' have representation on any BEE company, and if not, why not? Are they also representative of the dispossessed of the Rainbow Nation or not? How are shack dwellers to be empowered? 'Are we making progress?' seems to be an apt question to ask, as economic transformation and social justice are being neglected and screaming for attention.

Attention capital.