South Africa needed to "revisit" the country’s black economic empowerment (BEE) practices for the sake of job creation and entrepreneurship, Pamdozi Gold chairperson Ndaba Ntsele said on Tuesday.
Ntsele told the Wits Business School in Johannesburg that BEE was “abnormal” and was inhibiting both entrepreneurship and job creation.
Ntsele, whose Pamodzi last year created Africa's largest $1,3-billion private equity resources fund, urged that South Africa's BEE framework be "revisited".
He pointed out that the Pamodzi group that he had founded "outside of the BEE space", currently employed 32 000 people – "enough to fill a soccer stadium".
Blacks, he said, should be allowed to challenge the status quo and become job creators, but those who had embraced BEE did not have control over their own destinies.
“Somebody else takes care of your destiny,” he said.
While Pamdozi had taken the route of employing South Africans of all colours and also firing those who did not perform, “in the BEE space, it doesn’t work like that”, Ntsele lamented.
The problem was that BEE had been structured by politicians/business people, who "did not have a clue of how business was run".
Two pioneering BEE companies, New Africa Investments Limited (Nail) and Real Africa Investments Limited (Rail), were no longer in existence because asset managers invested for them and the blacks involved had no genuine control of the companies.
When a black company did well, it failed to gain the accolade of being a "blue chip", but was referred to as a “black chip”, which he found "racist".
Ntsele favoured normalisation and believed business should be "all about people, not blacks, not whites, but people”.
Initially BEEs were not subjected to lock-in periods, but those who used that freedom to cash in were condemned as “fat cats”, which he found wrong.
He said he was against long periods of BEE lock-in, even in the case of broad-based BEE deals.
It was wrong that people were tied to businesses for ten to 15 years and some stood to lose out because of being precluded from taking advantage of stock-market market movement.
Earlier this year Ntsele predicted that, in the next five years, South Africans would no longer be referring to "black companies", but only to "South African companies".
Wits Business School Associate Professor Strategy Gillian Marcelle said that Ntsele had drawn attention to BEE policy, as currently expressed, failing to "get to the heart" of some of the factors necessary for successful entrepreneurship, including "access to finance at the appropriate scale".