Godongwana defends employment equity as necessary for transformation

President Cyril Ramaphosa shares a joke with Enoch Godongwana before making his maiden budget speech as the new Minister of Finance. Photograph: Phando Jikelo, African News Agency.

President Cyril Ramaphosa shares a joke with Enoch Godongwana before making his maiden budget speech as the new Minister of Finance. Photograph: Phando Jikelo, African News Agency.

Published Aug 18, 2022

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Finance Minister Enoch Godongwana has defended employment equity and affirmative action as necessary tools for transformation on the back of criticism that these policies were holding back South Africa’s economic growth.

Godongwana said that inclusive growth must ensure that everyone shared the benefits of growth in an equitable manner.

The minister said that South Africa’s history and the country’s current state of transformation demanded that the government pursued both these objectives at once.

“It has become popular to suggest that we must abandon or postpone employment equity and affirmative action objectives in order to achieve faster growth. This cannot be,” Godongwana said.

“Expanding the participation of black people, women, people with disability in the economic mainstream and in strategic economic sectors such as property and construction can and must go hand in hand with faster growth.

“The most recent report by the BEE Commission shows that we are losing ground when it comes to transformation, broadly and in the property sector in particular.”

The Broad-Based Black Economic Empowerment Commission (B-BBEE Commission) has published its annual broad-based black economic empowerment (B-BBEE) trends report for 2021, showing a decline in compliance and a drop in black ownership of businesses in South Africa.

In 2021, there was a 1.5 percent decrease in the levels of transformation, with overall black ownership declining from 31 percent in 2020 to 29.5 percent last year.

The BBEE Commission has thus recommended that the B-BBEE Act be amended to include consequences of non-compliance in the form of administrative penalties and criminal sanctions.

Godongwana was speaking at the second day of the annual convention of the South African Institute of Black Property Practitioners.

He highlighted that the Economic Recovery and Reconstruction Plan committed the government to privilege local industries and companies that empower black people, women, young people and people with disabilities in the delivery of infrastructure.

He said that in the property sector, which is valued at around R8 trillion, average black ownership across residential and non-residential categories almost doubled, to nearly 18 percent in 2021.

Godongwana said that the increase was worth celebrating but, viewed over a five-year period, there was some cause for concern as black property ownership stood at 34 percent in 2017.

He also said that beyond ownership, a number of organisations were still struggling to diversify their workforces and failing to benefit from the clear link between higher diversity and inclusion and increased growth and performance.

“This skewed participation in the mainstream economy, especially in an environment of economic stagnation feeds into income and wealth inequalities,” Godongwana said.

“It also has knock-on effects on social stability, as it threatens our national project of unity, reconciliation and prosperity for all.

“As government we continue to work on remedying this situation by implementing progressive legislation and policies that seek to address weaknesses in our economic framework.

“At a macro-policy level, we are using instruments such as preferential procurement, employment equity and broad-based black economic empowerment to correct the massive distortions in our economy.

“We are also strengthening the structural transformation of our economy, which is about changing ownership patterns to enable inclusive and equitable growth.

“To achieve this, we have prioritised localisation, and our Preferential Procurement Policy Framework Act (PPPFA) of 2000 is aimed at providing the incentive for government and businesses to procure from BEE certified suppliers.”

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