Reflecting on the economic transformation journey

It’s been 10 years already since the introduction of Black Economic Empowerment (BEE) as an intervention that was aimed to transform our economic landscape – but has it really?
This may sound like a very silly question given that it is quite obvious that the road ahead of economic transformation is still long and paved with challenges of its own. But I guess it would have been rather ambitious of anyone to think that we had it in us to transform the political, the socio and the economic landscapes of our country within 10 years.
To change in 10 years what took more than 300 years to instil would require nothing more than pure magic, if not a supernatural intervention. Restricting a certain class or group of people from meaningful economic participation takes time and some doing! Equally, its undoing will take time and effort. But, has BEE transformed our economic landscape in the past 10 years or should we look at an alternative intervention?
Awareness risen
It's fair to acknowledge that since its introduction there has been a significant number of individuals – who otherwise would not have dared to open shop – who are now direct or indirect owners of big or small business interests. This, therefore, means that the awareness and the desire to own a business among the previously disadvantaged has risen. Entrepreneurial thinking is cultivated, and people are beginning to think beyond owning a corner café and/or informal trading shop. That is good and is encouraged! Because of BEE, previously disadvantaged people are beginning to aspire to own mines, cleaning companies, trucking companies communication agencies, etc.
However, aspiration and desire alone will not transform our otherwise very challenging economic background. The fact that many of our people’s understanding of BEE is clouded by expectations of instant riches without sufficient understanding of what it takes to run a successful and sustainable business as a shareholder, or even as an owner, makes it even more challenging to create wealth. Fly-by-night companies have contributed significantly to this notion of instant riches to a point where people think that getting a tender is, in itself, a sustainable business. Tenders are good and our people should get preferential treatment when it comes to awarding of tenders, but tenders do not make for a sustainable business model – although they offer a good starting capital, tenders cannot be THE business.
So back to the question, has BEE worked for the past 10 years? The answer is 'yes', but only to an extent of raising awareness and cultivating a spirit of entrepreneurship. Although, for us to be able to take ownership of our economy we need to do more. In order to give transformation the necessary impetus, we need to change a few things in us (at a personal level) and in the interventions we seek to employ.
Attitude
What needs to change in us? It will do us some good to take stock of our attitude towards a number of things, including our attitude towards business and money. As the saying goes: “Your attitude determines your altitude.” We need to take an attitude test and keep our attitude in check because until our attitude is right, we will struggle to achieve what we had set out to achieve no matter how noble our interventions. Generally speaking, I think South Africans have an arrogant attitude to a point that sometimes we are unteachable because of our arrogance. I am not sure if this attitude is to stamp authority, to announce our arrival or to make up for our general lack of business acumen and commercial savvy, but one thing I know is that it needs to change.
The second most important thing that needs to change is our attitude towards money. Again, my observation is that we generally cannot delay gratification, we tend to spend our personal money as well as our business' money in search for instant gratification from material possessions and acceptance from our peers. I have noticed many people who have gone into business having won a tender and almost immediately, even before the first invoice is paid, spend the money.
Such people have a desire to make the “I’m OK” statement. Whether this statement is to friends, ex-work colleagues, ex-girlfriends, ex-wives, ex-husbands or even ex-bosses, without thorough thought of immediate business cash flow frustrations, it can destroy a good business. We sometimes seem to be so outwardly driven by the esteem we receive from those we desire to impress – even for a short while – that we make unsound business decisions with long-term implications, only to regret them after the transaction. This is why our definition of success is reduced to material possession and the very reason why so many small businesses have come crashing down in less than three years of existence. Therefore, to this end, we need to manage our desire to impress others at the expense of our business’ cash flow. It may sound basic, but we will not achieve our goal of wealth creation if we do not put first things first! Consider this, 90% of most business failures are actually character failures?
Funds
What needs to change with the employed interventions? BEE is a sound model but without the necessary support, BEE is pointless. It’s been 10 years of BEE funding practise, yet I personally do not think that funding institutions such as banks have geared themselves to support BEE transactions in a way that appreciates where entrepreneurs come from and through sharing their business vision. Once again, I do not mean for institutions to finance without deliberation. You need controls when it comes to lending money, but my view is that the required kind of model to fund ideas or entrepreneurs is still remote to financial institutions. This is why so many entrepreneurs with good ideas, but who sometimes fail to thoroughly express those ideas on paper, are often unsuccessful in raising funds.
Bank officials, in my humble opinion, are sufficiently trained to read business plans but not to understand or interpret them. To-date, the challenges and lack of support entrepreneurs face when it comes to raising funds are simply prohibitive and suppressive to economic development.
It is my hope and, indeed, my desire that we may take to heart what needs to change and act on changing it in the next decade so that effective economic transformation may happen in our generation at least.