State-owned companies (SoCs) could play a role in combating fronting by looking within for the skills they need and encouraging the establishment of supplier companies in line with their demands.

With fronting an ever-increasing issue impacting on the transformation ambitions of the 2003 Broad-Based Black Economic Empowerment (BBBEE) Act, the 2013 Amendment Act provided more leverage to mitigate the challenges of ensuring economic empowerment.

However, despite fronting now being criminalised, it remained an embedded, fraudulent activity that had, in part, been driven by the need for skills, Amatola Water CEO and BBBEE advisory council member Lefadi Makibinyane told delegates at a recent BBBEE Commission conference in Midrand.

“It is critical that people who get involved in business know what they are getting into, know what they are doing and have the skills in the niche they want to do business in,” he said.

One solution, he suggested, would be to seek out the appropriately skilled candidates already employed by firms and entities and encourage them to form entities that would supply the SoCs with the required products and services.

Meanwhile, in a separate session at the conference, Enterprise Development Council of South Africa president Sisa Ntshona indicated that black-owned businesses were, for the most part, not being given the benefit of the doubt.

He said that, with every corporate firm applying enterprise and supplier development programmes, some of the businesses were being shuffled into development programmes despite having been in successful operation for five to ten years.

He explained that many of the programmes were largely undertaken and implemented with the end goal of securing further points to bolster BBBEE levels and black businesses were not being taken seriously.

Further, Ntshona said that fronting was a two-way street and, very often, the intended beneficiaries were not at the receiving end of the benefits.

“For every fronting case you see out there, there has to be a fronter and frontee,” he said, pointing out that it was always viewed from the perspective of the company undertaking the fronting activity, and not the willing benefactor and participant agreeing to go along with it.

In addition, the biggest beneficiaries of economic empowerment were the “middlemen”, such as consultants and advisers and not always the intended persons outlined in the Act.

However, with the legislation and policies firmly in place, it was up to the companies and stakeholders to follow the ambitions of the Act and not seek out loopholes.

“We have done enough. The key thing we need to change is intent and will and we cannot legislate that.”