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9th November 2020

South African Corporates Like Clicks Have Already Piloted Non-Racial Redress Economics — and it Isn’t Going Well

South Africa is on the verge of a race-based meltdown.  We can deal with it by erasing race from our policies, as the Democratic Alliance (DA) seeks to do, or we can address race more directly.  But let’s remember that when Clicks put out an advert implying white people’s hair was superior to black people’s hair, one of their excuses was “unconscious bias”.  How can someone be conscious of something that policy does not speak to?


Some sought to mitigate the extent to which Clicks’ error could be correlated to South Africa’s race issues by saying the guilty parties were black, but as we’ve pointed out on these pages, Eusebius Mckaiser explains that even black-on-black racism can be seen as a perpetuation of the legacy of the past.  “De-racializing our laws and allowing everyone civil and political rights in 1994 mattered morally to signal a profound break from the past.  But the limitations of a normative vision is now plain for all to see; a vision for a better tomorrow means nothing if the intrinsic features of your colonial state, including the racist violence it metes out, isn’t changed.”  


Though he was writing about state violence, it can be argued that as long as the economic beneficiaries of racism remain white people, getting rid of race-based policies puts the problem (insofar as it affects all of us) where business leaders are not directly aware of its impact or of their likelihood to be scapegoated.  In the age of trending screenshots and hashtags, everyone’s afraid of saying or doing the wrong thing.  But this fear doesn’t plague people who’ve dealt with the possibility that they may have been socialised into thinking and being the wrong things in the first place — that pesky “unconscious bias” Clicks spoke about.


Clicks apologised, but the EFF threatened protest action similar to that launched against H&M and more aggressive than the march on ABSA unless it named the directors and employees involved in commissioning the advert.  The EFF wanted to show the demographic gap between the people selling and the people buying the products.  If Clicks’ B-BBEE rating (currently 6, with 8 being the lowest and 1 the highest) is any indication, they had reason to hesitate disclosing those names.  The EFF followed through on its words, with property as collateral damage, and the High Court dismissed Clicks’ application to stop them.


Earlier this year, Dischem had a blackface incident involving mannequins.  


You see a pattern also in the below examples: 


A labour dispute at Dippin Blu Racing in Fairview, Port Elizabeth, resulted in the death of one horse, the injury of twenty more and a nation-wide debate about race in horse-racing that’s highlighted the vulnerability of stable grooms.  Hedley McGrath, the owner of the horse-race barns, has been quoted as saying, “We don’t owe them a cent and we followed all the labour laws of this country.  I have a court order against them.  Now I am busy with my legal team to see which is the next step to take”, and  “These horses are owned by prominent people who are now also calling me to check on the safety of their horses.”  What he doesn’t seem to realize is he’s displaying an “unconscious bias” towards the wealthy owners while overlooking, and in fact pitting himself up against, black labourers who’ve been proven able to drum up vastly more immediate community support than he could.  


On the 30th of May, 2018, Steinhoff International’s shares were taken by its many sins down to R1.18 each.  For comparison’s sake, that figure has peaked at R96.85.  As Tom Eaton observed, “South Africans are demanding that stronger language be used, pointing out that the middle class and the media, always so quick to unload both barrels at state corruption, tend to go easy on dirty corporates.  White crooks, they claim, make ‘mistakes’” or accounting irregularities “while black ones are corrupt thieves.”  


Tiger Brands had a listeriosis outbreak.  Black South Africans concluded that the lack of transformation in its supply chain corresponded with shortcuts in other areas of governance compliance, which then looked like white businesspeople internalising profits and externalising costs to their black customers.  Tiger Brand’s business market capitalisation fell by R5.7 billion and the share price, by 7.9% to R391.47.  Understanding that the problem was more than just hygiene, Tiger Brands aggressively pursued an Enterprise and Supplier Development program that won them an award with the B-BBEE Commission earlier this year. 


Property groups, too, are paying a price for slowness on transformation.  “Construction companies, property developers and big industries all over SA are coming to terms with the communities and entrepreneurs in rural and peri-urban areas who threaten closure of plants and new projects while demanding to be part of their supply chains,” wrote Growthpoint Properties’s Shawn Theunissen.  “Forced shutdowns of property developments by popular protests have reached across South Africa, pushing the transformation agenda in the most robust way possible.”  The recurring theme is “investors don’t know how to deal with local communities on the development sites they manage, and typically have a reactive approach.”


Balwin Properties took it a step further and paid for certification of their B-BBEE non-compliance at least two consecutive years even as they were coming under public scrutiny for President Cyril Ramaphosa’s support towards a building project.    


We’re aware of other incidences in law and accounting firms where black employees wanted to commit suicide because they experienced racism.   


What have these businesses got in common?  The sweeping public perception is that they’re part of racist corporate South Africa.  


It’s possible to empathise with South African business-people who face challenges related to COVID-19, load shedding and the like and still know for a fact that inequality, race and racism are central to the risk profile of all businesses in South Africa.  The truth may sting, but rather the courage to be stung by the truth than body-slammed in the middle of a false sense of safety. 


B-BBEE could have been used to guide transformation and diversity management.  Instead, as the Clicks and Unilever’s Tresemme incident demonstrates, corporate South Africa doesn’t know its customers because it grudgingly treats B-BBEE as a tick-box exercise.  Without transformation, there can be no inclusive economic growth and our tax pyramid will remain inverted, which will leave large numbers of people susceptible to the rhetoric of demagogues who, like the EFF, have a vested interest in scapegoating business.  Your organisation could be next.


We don’t agree with the DA removing race as a proxy for disadvantage.  While they’re correct that B-BBEE has been abused to create billionaires, those of us who implement it daily could recommend solutions the voting public would find more palatable.  The outcomes the DA claims to strive for can be achieved through proper B-BBEE implementation.


“Clicks provides a service for chronics in our areas,” a Facebook user lamented, pointing out that diabetics, HIV-positive, cancer and high blood pressure patients depend on the stores for their well-being.  There’s no doubt that South African businesses assist charities and are active as good corporate citizens — and this is probably aligned with the DA’s Sustainable Development Goals.  But the practicalities of implementing such are still unclear, wrote Rebecca Davis.  “Would it be acceptable for a South African company to employ an all-male or all-white workforce if it made a contribution to climate action?”  We now see that the answer is it’s irrelevant: even if a business does a lot of good, but miscommunicates with its customer base as Clicks has, it will be exposed to risk.  Once it’s exposed, then, the absence of an incentive framework like B-BBEE for measuring racial representation would turn out to be the absence of a way to measure that risk exposure.  While a B-BBEE scorecard doesn’t tell you everything there is to know about your business it is a start, and without one you may have no way of measuring how racist or inclusive your organisation is.  Therefore, redress policy that doesn’t speak to race is a rope long enough for corporate South Africa to hang itself with.  


Implement BEE while you have a choice on navigating its incentive framework, before government decides the best way to promote transformation is through nationalisation.  Your business can’t survive without a country, but countries, while unable to survive without business in general, can survive without yours in particular.  The way you engage transformation determines how these macroscopic dynamics play out at the microcosmic level of your business while adding your business to the critical mass of businesses leveraging transformation legislation to build a country where every citizen, through economic inclusion, has the direct line-of-sight into policy formulation and implementation  to hold political leaders accountable for their actions. 


Race-based economic redress will probably win.  Is there a strategy for truly dovetailing transformation into the rest of your organisation’s DNA so its future and the country’s future are mutually assured?  Or, in a world of evolve or die, will your business be left behind by the winds of a new awareness, heightened by digital technology, of the legacies of past legislation?  Kodak was only the first victim, and the DA is probably following suite during  its Federal Congress within the next week.  Contact us today for extrication from its recklessly negligent policy thinking.