Tuesday, 23 May 2017

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Business responds to ‘radical economic transformation’

Siki Mgabadeli




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SIKI MGABADELI:  Deputy President Cyril Ramaphosa defended the government’s calls for radical economic transformation, in fact outlining what the understanding of it is, and saying that it must happen with urgency. He said that those who don’t like the phrase “radical economic transformation” should wake up and smell the coffee – as it would happen soon. He was speaking at the Black Business Council’s Economic Recovery Dinner in Johannesburg last night.

George Sebulela is secretary-general of the Black Business Council and joins us now. George, thanks so much for your time today. What did you make of the way that the deputy president outlined ‘radical economic transformation’ – what is it, what it means and what their plans are?

GEORGE SEBULELA:  Thank you for inviting me., Siki. I think the idea and the understanding that this radical economic transformation is indeed a process that has been there for some time. I think it has been just so sad that we have realised that it only gained a lot of momentum just after the president’s SONA speech announcement, when he mentioned that I think we have to try and do things differently, and we have to utilise the state resources to ensure that the previously disadvantaged, particularly the majority of this country, have to begin to see some benefit of the wealth of this country – whether it's land, it’s procurement opportunity. This needs to be accelerated and I think we have taken that position at BBC to say yes, we definitely agree with the president’s speech, with the former minister of finance … of saying it is unheard of to have only 10% of the population of this country owning 90% of the economy of this country.

Thirdly, the deputy president has really outlined clearly what the radical economic transformation is. And if you look at these three messages, there is nothing different in terms of the definition of radical economic transformation.

SIKI MGABADELI:  And that’s the point the I want to get to, particularly – what is different. There have been policies. You talk about doing procurement for example differently, doing land for example differently. So on procurement we have legislation that specifies exactly how much needs to go to black business, to black people. And the Constitution on land is clear about the ability to expropriate. So should we maybe not be calling for government to actually implement what is already in our statutes?

GEORGE SEBULELA:  Look, I don’t know if you are aware some of the issues we have raised what we believe were literally the short- to medium-term …which can be implemented as fast as possible as we thought. I’ll take one typical example.

We talk of payment for businesses to government for the work done within the …and that is not happening. And procurement is in the centre of transformation for businesses to succeed. If I give you an example, one of our members was owed close to about R400m for seven months. That cannot be correct.

SIKI MGABADELI:  Owed by whom? Was it a government contract?

GEORGE SEBULELA:  It was owed by government contract. Now just imagine how many of those suppliers that are sitting there have a…to get the work, but are not paid within 30 days. There is a lot of interest. Some of these businesses end up closing because of cash-flow scenario. So we are just saying, if we are really serious to make sure that we radicalise this transformation, let's do the right things that are simple correctly.

Secondly, if you look at the government procurement expenditure, it has been quoted to be in the region of about R600bn. Just by taking what we said is fruitless expenditure, the former chief procurement officer had announced publicly to say about 30% of that has been classified as fruitless expenditure.

SIKI MGABADELI:  Yes.

GEORGE SEBULELA:  Just imagine how much of taxes would have been collected by Sars, how much of other small and medium enterprises will have been created just by 30% of R600bn.

SIKI MGABADELI:  Okay. Now, I watched the deputy president’s speech last night and the reaction that he got, and obviously a lot of what he said resonated with the people in the room, and I would imagine resonated with a lot of people who were watching it, hoping that all of those things would be implemented.

But again, here is my question: Who is putting the pressure then on government to pay those people within 30 days that are supposed to have been paid within 30 days? I know a lot of people who are waiting for payment for things they did six or seven months ago, for example. Who is ensuring that the wasteful expenditure does not happen as fruitless and wasteful expenditure. As the Black Business Council, are you putting pressure on government to do the things that they say they are going to do, and how is that going to change with the term “radical economic transformation”?

GEORGE SEBULELA:  Remember, I've only mentioned two things, because radical economic transformation is a number of activities that are supposed to happen. I was still going to go on the procurement policy.

SIKI MGABADELI:  We have very limited time – only a minute and a half left on this show.

GEORGE SEBULELA:  But I wanted to tell you that the biggest procurer of goods and services on a big transversal contract is domiciled in National Treasury. Now all the transversal contracts are managed by National Treasury. As the issue was the contract, they must issue us the terms of the payment for those contracts, and even the response that the officials in various government have to treat the payments of those contracts. You can't issue the conditions of the contract and leave the implementation solely to the department. So you must also put that condition of non-compliance and penalties to those various government departments to ensure that they honour as you require the suppliers to honour the contract. That is very critical.

So it's really few things that we can do within the state machinery to ensure that radical economic transformation is achieved.

SIKI MGABADELI:  So if it's a few things, then what is radical about it?

GEORGE SEBULELA:  Remember in our contracts as an organisation we are saying we would like to see the majority of black business, black people, to play a key element in the mainstream of the economy. As I said, the two things I've mentioned are only two of 20 that we believe will radicalise that shift of the 90:10, including the ownership of shares in the Johannesburg Stock Exchange – to play in that role what will require to be done.

SIKI MGABADELI:  Let's do this, George. Since there are so many issues in this, and so much I want to ask you, and I'm keen to hear what those other elements are, I'm going to make a promise to you right now that we are going to have a much longer conversation, which we'll air and just talk about what are those changes that you’d like to see and then interrogate them. Is that okay?

GEORGE SEBULELA:  Thank you so much, and I'm glad to hear that.

SIKI MGABADELI: It's a pleasure Thanks, George. George Sebulela is secretary-general of the Black Business Council.

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