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A CRITICAL REVIEW OF BROAD BASED BLACK ECONOMIC
EMPOWERMENT POLICY IMPLEMENTATION IN THE FOREST SECTOR IN
AMAHLATHI MUNICIPALITY
SURAJ HARUNA
SUBMITTED IN FULFILMENT FOR THE DEGREE:
DOCTOR OF ADMINISTRATION
FACULTY OF MANAGEMENT AND COMMERCE
DEPARTMENT OF PUBLIC ADMINISTRATION
UNIVERSITY OF FORT HARE
SUPERVISOR: PROFESSOR EDWIN IJEOMA
OCTOBER 2017
i
DECLARATION
I, Suraj Haruna, hereby declare that the thesis entitled: A Critical Review of Broad Based
Black Economic Empowerment Policy Implementation in the forest sector in Amahlathi
Municipality is my own original work, except where indicated in terms of acknowledgement;
and it has not been submitted for any other degree in any other university.
……………………………………. ……………………………….
Signed Date
ii
ABSTRACT
African countries have become synonymous with policy drafters and abortive policy
implementers. After independence from long period colonialism, slavery and apartheid, African
states policy administrators began putting in place policies to improve either the living
conditions of citizens or the inequities emanating from the administration of colonial
governments. However, these policies do little to naught to meet the aforementioned goals.
The Free Education Systems in Nigeria and Ghana, and the Indigenization Policy in Zimbabwe
are examples of policies that experienced miscarriage of policy implementation in the past.
This study therefore, aspires to explore the Broad Based Black Economic Empowerment policy
implementation in the forest sector and specifically identify bottlenecks in the implementation
processes in South Africa.
Qualitative approach was used in order to meet the primary and secondary objectives of the
study. Semi structured interview questions were administered to relevant companies,
institutions and the municipality which were purposely sampled to capture the processes of the
BBBEE implementation.
The study revealed that measured entities are complying with the prescript of the policy but
that finance and a continuous policy amendment presents a bottleneck in the implementation
dynamics. Lastly, labour intensive measured entities find it impossible to meet the skills
development element due to high cost of training. These results suggest that the value
envisaged is not being met.
The study also found that verification agencies are effectively providing their watchdog function
in the implementation of the policy however the use of technology is non-existent in monitoring
the process. Finally the study found that agencies are hired by measured entities to verify their
BBBEE status which presents a huge inducement for both parties to collude. It also found that
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the policy is implemented in a top-down approach hence municipalities have been relegated
from the implementation process.
The study recommends decentralization of the policy in a strategy called Local Economic
Equity for the Disadvantaged (LEED) which involves the expertise of white South Africans and
permanent resident people in order to build truly inclusive society envisaged by the
Constitution of South Africa. Additionally, it recommends the use of technology dubbed e-
BBBEE to implement the policy.
iv
ACKNOWLEDGEMENTS
A work of this nature could not have been produced without assistance of some sort. I wish to
therefore acknowledge a few people and institutions that helped in the realisation of this
research work. I am indebted beyond measure to the Almighty God for affording me the
excellent health throughout this programme.
I would like to thank my supervisor Professor E. O.C. Ijeoma as well as the Research
Committees of Department of Public Administration and Faculty of Management and
Commerce for their constructive critique and directions; this helped re-aligned my originally
diffused ideas into perspective.Your valuable support helped me to successfully complete this
study. I would also want to express my sincere gratitude to the staff of C. J. Rance (Pty) Ltd.
especially the Group Services Manager, Mr. Davron Swift for giving me all the time out of his
busy working schedules for the interview and furnishing me with the necessary documents for
my scrutiny. I would like to also extend my profound gratitude to Amahlathi Municipality‟s
Strategic Development and Planning unit for their unwavering assistance.
I finally would like to extend my sincere thankfulness to my wife (Hamida Kalimashe) and
children for their unceasing and unflinching support towards my academic works all these
years.
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LIST OF ACRONYMS
AA Affirmative Action
ACF Advocacy Coalition Framework
AFC Amathole Forestry Company
AFSC Amended Forest Sector Charter
AIM Amanah Ikhtiar Malaysia
ANC African National Congress
ARG Adjusted Recognition for Gender
B-BBEE Broad Based Black Economic Empowerment
BCIC Bumiputera Commercial and Industrial Community
BEE Black Economic Empowerment
BEECom Black Economic Empowerment Commission
BEN Black Economic Enablement
BMF Black Management Forum
CCFP Conversion of Cropland to Forests Program
CEPPWAWU Chemical Energy Paper Printing Wood and Allied Workers Union
CIPC Company and Intellectual Property Commission
COSATU Congress of South African Trade Unions
CRLR Commission on Restitution of Land Rights
CSR Corporate Social Responsibility
CWP Community Work Programme
DAFF Department of Agriculture, Forestry and Fisheries
DEA Department of Environmental Affairs
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DLA Department of Land Affairs
DoA Department of Agriculture
DoL Department of Labour
DPE Department of Public Enterprises
DRDLR Department of Rural Development and Land Reform
DTI Department of Trade and Industry
DWAF Department of Water and Forestry
DWAS Department of Water Affairs and Sanitation
EEA Employment Equity Act
EED Economic Empowerment for the Disadvantaged
EIA Environmental Impact Assessment
EMEs Exempted Micro Enterprises
Esop Employee share ownership programme
FAWU Food and Allied Workers' Union (FAWU)
Fedmyn Federale Volkseleggings and Federale Mynbon
FETA Forest Education and Training Authority
FFA Federal Forest Act
FSA Forestry South Africa
FSC Forest Sector Charter
GDP Gross Domestic Product
GEAR Growth, Employment and Redistribution
GEPF Government Employees Pension Fund
HICOM Heavy Industries Corporation of Malaysia
vii
ICA Industrial Coordination Act
IDC Industrial Development Corporation
ITTO International Tropical Timber Organisation
LED Local Economic Development
LEED Local Economic Equity for the Disadvantaged
NBS National Biodiversity Strategy
NDP National Development Plan
NEF National Empowerment Fund
NEMA National Environmental Management Act
NEP New Economic Policy
NFAC National Forests Advisory Council
NFPP Natural Forest Protection Program
NHBRC National Home Builders Registration Council
NP National Party
NRF National Research Fund
NYDA National Youth Development Agency
OEAE Once Empowered Always Empowered
PAMSA Paper Manufacturers Association of South Africa
PDA Petroleum Development Act
PFMA Public Finance Management Act
PIC Public Investment Corporation
PNB Permodalan Nasionale Berhad
PPPFA Preferential Procurement Policy Framework Act
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QSE Qualifying Small Enterprise
RDP Reconstruction and Development Plan
SAFCA South African Forestry Contractors Association
SAMAF South African Micro-Finance Fund
SANAS South Africa National Accreditation System
SAQA South African Qualifications Authority
SARB South Africa Reserve Bank
SARS South African Revenue Services
SAUPA South African Utility Pole Association
SAWPA South African Wood Preservers Association
SDA Skills Development Act
SDF Stutterheim Development Foundation
SDLA Skills Development Levies Act
SEDA Small Enterprise Development Agency
SETAs Sector Education and Training Authorities
SFM Sustainable Forest Management
SME Small and Medium Enterprise
SMMEs Small Medium and Micro Enterprises
SOE State Owned Enterprise
SSA Sawmilling South Africa
SSP Sector Skills Plan
STATSSA Statistics South Africa
WCNRDP Wildlife Conservation and Nature Reserve Development Program
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WWF World Wide Fund
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LIST OF FIGURES
Figure number Page
Figure 2.1: The Strategic Triangle of public value creation 17
Figure 2.2: Advocacy Coalition Framework 21
Figure 2.3: The Six-variable model of policy implementation 26
Figure 2.4: Matland‟s Conflict/Ambiguity matrix of policy implementation 36
Figure 2.5: The 5 C Protocol 39
Figure 3.1: Investing in a BBBEE policy destination 102
Figure 4.1: Organisational Structure of SDF 127
Figure 6.1: Fire Destruction before and after Acquisition 173
Figure 6.2: BBBEE Scores for the Measured Entity 174
Figure 6.3: Role of BEE Verification Agencies in BBBEE Implementation 175
Figure 6.4: Implementation Strategy of the Forestry Company 176
Figure 6.5: Features of a Genuine BBBEE Certificate 191
Figure 7.1: Information Flow within e-BBBEE Implementation 209
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LIST OF TABLES
Table Number Page
Table 3.1: Components of the Generic BBBEE Scores and Weightings
for the Forest Sector 66
Table 3.2: Elements For Qualifying Small Enterprises (QSE‟S) 67
Table 3.3: Activities that Constitute an Enterprise Development 89
Table 3.4: Forest Sector BBBEE Generic Scorecards 92
Table 4.1: Values of SFM 107
Table 4.2: Forest Plantation Distribution by Province 112
Table 4.3: Forest Plantation Ownership in South Africa 113
Table 4.4: Scope of Poverty Alleviation in the Forest Sector 116
Table 4.5: Minimum Wage for Forestry Sector from 2016 to 2019 117
Table 4.6: Targets and achievements of NEP 1970-1990 (in percentage) 134
Table 4.7: Percentage of Bumiputera educational enrolment between
1980 and 1985 136
Table 4.8: Employment of Bumiputeras in various professions in 1995 138
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TABLE OF CONTENTS
Content Page
Declaration i
Abstract ii
Acknowledgements iv
List of acronyms v
List of Figures ix
List of Tables x
Table of Contents xii
CHAPTER ONE: INTRODUCTION 1
1.1 Introduction 1
1.2 Background to the Study 3
1.3 Problem Statement 5
1.4. Aim of the Study 6
1.5. Objectives of the Study 6
1.5.1 Primary Objective 6
1.5.2 Secondary objectives 7
1.5.3 Research Questions 7
1.6 Significance of the Study 8
1.7 Clarification of terms 9
1.8 Chapter organization 10
1.9 Conclusion 11
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CHAPTER TWO: LITERATURE REVIEW 12
2.1 Introduction 12
2.2 Theoretical framework 12
2.2.1 The theory of policy cycle 12
2.2.2 Empowerment as public value orientation 15
2.2.3 The Advocacy Coalition Framework approach to policy implementation 19
2.3 The concept of Policy implementation defined 22
2.3.1 Evolution of policy implementation studies 23
2.3.2 The first generation 24
2.3.3 The second generation 24
2.3.4 The third generation 25
2.3.5 The Top-down approach to policy implementation 25
2.3.6 The Bottom-up approach to policy implementation 29
2.3.7 Combined approaches to policy implementation 33
2.4.1 Matland‟s Types of Policy Implementation 37
2.5 Critical variables determining the success of policy implementations:
The 5 C protocol 39
2.6. Conclusion 45
CHAPTER 3: LEGISLATIVE FRAMEWORK OF THE STUDY 47
3.1 Introduction 47
3.1.1 the Apartheid Economy 48
3.1.2 The Apartheid Economic Model 49
3.1.3 Disempowerment of Black Africans 52
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3.1.4 The End of Apartheid System 55
3.2 The BBBEE Policy 58
3.3 Empirical Review 63
3.4 Elements and Requirements of FSC Generic BBBEE Codes 64
3.4.1 FSC Targets under the Ownership Element 68
3.4.1.1 Barriers to the Ownership Element Implementation 70
3.4.2 Component 2: Management Control of the FSC 10 BEE points 73
3.4.3 Component 3: Employment Equity 15 BEE points 76
3.4.4 Component 4: Skills development 15 BEE points 80
3.4.5 Component 5: Preferential procurement 20 BEE points 82
3.4.6 Component 6: Enterprise development- 15 BEE points 86
3.4.7 Component 7: Socio-economic development - 5 BEE points 90
3.5 The Amended Forest Sector Charter of the BBBEE Act (Act No. 53 Of 2003) 91
3.6 Bottlenecks to FSC Implementation and Verification 93
3.7 Penalties for the Contravention of the BEE Amendment Act No. 46 of 2013 96
3.8 Effects of the BEE policy implementation on businesses and
Foreign Direct Investment 97
3.9 Conclusion 103
CHAPTER 4: BEST PRACTICES IN THE FOREST SECTOR AND CASE STUDIES 104
4.1 Introduction 104
4.2 International Best Practices On Sustainable Forestry Management 104
4.2.1 Sustainable Forest Management 105
4.2.2 SFM in Germany 108
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4.2.3 SFM in China 109
4.3 South Africa‟s Forest Sector: Basic Facts 112
4.3.1 SFM in South Africa 113
4.4 Contribution of Forest Sector in Rural Communities 115
4.5 Local Economic Development: A Review and Case Study of Amahlathi Municipality 119
4.5.1 Constituents of LED 120
4.5.2 Stutterheim Development Foundation (SDF) 126
4.5.3 The Inception Phase: 1990-95 126
4.5.4 Transformation Phase: 1995-1998 128
4.6 New Economic Policy of Malaysia: 1971-1990 130
4.6.1 Strategies Implemented To Reduce Poverty 132
4.6.2 Strategies to Achieve a Well-Structured Society 135
4.6.3 Restructuring Access to Education 135
4.6.4 Restructuring through Employment of Bumiputeras 137
4.6.5 Reorganization of Society through Share Ownership 138
4.6.6 Successes of the NEP 140
4.6.7 Failures of the NEP 141
4.7 Conclusion 143
CHAPTER FIVE: RESEARCH METHODOLOGY AND DESIGN 144
5.1 Introduction 144
5.2 The Philosophical Foundations 144
5.2.1 Ontological Assumptions 145
5.2.1.1 Objectivism 145
xvi
5.2.1.2 Subjectivism 146
5.2.2 Epistemological Assumptions 146
5.2.2.1 Positivism 148
5.2.2.2 Realism 148
5.2.2.3 Interpretivism 148
5.2.3 Philosophy Adopted in this Study 149
5.3 The Research Design 150
5.4 The Research Methodology 151
5.4.1 Qualitative Method 152
5.4.2 The Research Approach- Inductive Research 154
5.4.3 Purpose of the Study- Exploratory Study 155
5.4.4 Designing the Semi-Structured Interview Themes 156
5.4.5 Pilot Study 157
5.4.6 Gaining access to the organizations and institutions 158
5.4.7 Administering the interview questions 160
5.5 Dealing with Validity and reliability of the Study 161
5.5.1 Credibility 161
5.5.2 Transferability 162
5.5.3 Dependability 163
5.5.4 Confirmability 163
5.6 Target Population and Sample Size 162
5.6.1 Sampling Procedure- Non Probability Sampling 162
5.6.2 Purposive Sampling 163
xvii
5.7 Ethical considerations 164
5.8 Limitations of the Research 165
5.9 Conclusion 166
CHAPTER SIX – RESULTS AND DISCUSSION OF FINDINGS 167
6.0 Introduction 167
6.1 Data Collection 167
6.2 Participants 169
6.3 Data Analysis- Content Analysis 170
6.4 Findings 170
6.4.1 Progress with FSC of BBBEE Implementation 170
6.4.2 Level of Compliance of Measured Entities 176
6.4.2.1 Verifying Ownership Code 178
6.4.2.2 Verifying Management Control Code 179
6.4.2.3 Verifying Employment Equity Scorecard 180
6.4.2.4 Verifying Skills Development Code 181
6.4.2.5 Verifying Preferential Procurement Code 182
6.4.2.6 Verifying the Implementation of Enterprise Development Code 184
6.4.2.7 Verifying the Socio-Economic Development Code 186
6.4.3 Effectiveness of Monitoring Implementation Processes 187
6.4.4 BBBEE Implementation Bottlenecks 189
6.4.5 Recommended Implementation Strategies 192
6.6 Discussions 193
6.7 Conclusion 197
xviii
CHAPTER SEVEN: CONCLUSIONS AND RECOMMENDATIONS 197
7.1 Introduction 197
7.2 Overview of the Study 197
7.3 Summary of Findings 198
7.3.1 Findings from Amahlathi Municipality 199
7.3.2 Findings from the Measured Entities 200
7.3.3 Findings from Verification Agencies 200
7.4 Recommendations 200
7.4.1 Jeffery‟s Economic Empowerment for the Disadvantaged (EED) 200
7.4.2 Madi‟s Black Economic Enablement (BEN) 200
7.4.3 Local Economic Equity for the Disadvantaged (LEED) 204
7.4.4 e-BBBEE 206
7.4.5 Environmental sustainability 207
7.5 Areas of further research 208
7.6 Conclusion 208
8. Bibliography 209
1
CHAPTER 1: INTRODUCTION
1.1 INTRODUCTION
Recent developments in the field of economic empowerment have led to a renewed
interest in BBBEE regarding its ability to capacitate indigent South Africans. This
reawakened interest is evidenced by the numerous catchphrases such as “radical
economic transformation”, “inclusive growth”, “Black Industrialist Programme”, and
“radical economic shift” calling for transformation of the economy. This signals the
eagerness of the previously disempowered to equally access the economic
opportunities offered by the economy as their white counterparts. In response, public
administrators are doubling efforts to bring them on board to bolster economic growth
combined with economic equity. Developing countries including South Africa develop
policies normally necessitated by many years of either colonialism or apartheid as such,
the need for rapid improvement of living conditions of people (Imurana, Haruna and
Kofi, (2014:196). The authors stress that implementation of such policies are
nevertheless confronted with implementation bottlenecks such as lack of capacity,
deficiency of funds and lack of the political will to effectively execute them. Makinde,
(2005:63) emphasizes that policy implementation should be viewed not be seen as a
political football but a process of organizing policy into practice including putting
resources together to convert inputs-financial, material, technical, and human, into
output-public goods and services. The author outlines actions necessary in the
implementation process including giving directives, reforming the policy, disbursing
funds, hiring, training and developing personnel. Edwards III, (1980) concedes that the
bottlenecks can occur when policy implementation tend to be inconsistent with stated
2
objectives, nonetheless a meticulously planned implementation averts much of the
holdups (Quoted in Makinde, 2005:64).
South Africa‟s constitution upholds Justice, non-discriminatory policies, redistribution
and restitution to correct the injustices designed by the oppressive government
legislations and policies of the past. Some of the remedial action policies developed by
the current democratic government include the Affirmative Action (AA), the
Reconstruction and Development Plan (RDP), Preferential Procurement Policy
Framework Act (PPPFA), and Black Economic Empowerment (BEE) (Van Rensburg,
2010:46). These policies seek to formulate strategies to transform the living conditions
of all South Africans particularly the previously disadvantaged, the destitute, and
imposes steps to close the economic gap between the haves and have-nots. Benjamin
et al. (2005: 3) acknowledge that the means of achieving economic equality through
government policies may be disputable but it is only through these comprehensive
policies that can transform the white-dominated economy. Acemoglu, Gelb, & Robinson,
(2007:2) equally believe the transformation of the economy, skills development,
restructuring ownership of businesses, increased productivity are key objectives of
these policies, hence must be sustained, and keenly implemented.
Le Roux & Nortje, (2015:4) contrary to the above, assert that the sustainable method of
confronting the challenges constraining the economy cannot be addressed through
simple implementation of redistributive procedures. In other words, sustained economic
growth is the indisputable mechanism to address the challenge of economic inequality
and it is the responsibility of the government to support various economic sectors to
steer the envisaged growth.
3
1.2 BACKGROUND TO THE STUDY
Forestry management that empowers local communities about and sustains biodiversity
is critical to alleviate poverty and mitigate climate change. In this regard, the BBBEE
has a charter specifically drafted for sustainable forest management with the vision of
opening up opportunities for surrounding communities where forest resources are
situated. Clarke and Isaacs (2004:3), point out that the charter provides a far-reaching
avenue to uplift the rural areas from poverty but equitable share of the proceeds from
the resource remains unsatisfactory and imbalance. The authors further notes that this
imbalance must be confronted to empower local communities.
Besides, Coad, Campbell, Miles, and Humphries, (2008:2) stress that prudent
management of forest resources be it private or public reduces inequality, sustains
livelihoods, conserves natural environment, and improves the lives of indigent groups.
The authors are quick to add that refusal to properly manage these resources to the
benefit of impoverished communities can escalate poverty to a highest level. This brings
to fore the role of policy makers to honourably develop policies to either make the
positive change associated with forest resources a reality or take the back seat to allow
impoverished communities wallow in abject poverty.
The Forest Sector Charter (FSC) drafted about a decade ago is one of such policies to
permit forest communities access to the fortunes that comes with the natural resource.
However, data about the performance of the FSC is scanty and to some extent,
nonexistent. According to a report compiled by the Department of Labour (DoL)
(2015:3) the forest sector has made significant changes in terms of improved working
4
conditions of workers and in rooting out poverty in surrounding communities however
the issue value share, ownership and contract workers has not been fully address.
Explicitly, Amahlathi Municipality is endowed with abundant forest resources yet cannot
quantify the benefits these resources provide them. The question now is that: is forest
firms not complying with the statute or are they not implementing it as required? Is the
FSC not effective enough to bring about the positive change to communities? Is
verification agencies who provide a watchdog function to ensure compliance reneging
on their supervisory role? This study intends to look for answers to these questions in
order to give a vivid understanding of the situation.
1.3 PROBLEM STATEMENT
The Department of Trade and Industry (DTI) gazetted the Forest Sector Charter (FSC)
of the BBBEE in May 2009 and expected companies in the forest sector to meet its
targets by 2019 (Jeffery, 2014:421). The objectives of the FSC was to promote
investment in the sector by providing access to finance, nurture black people to
increase their economic activities in the sector and empower rural black communities
economically through access to land, address rural development issues, proprietorship,
skills and promote sustainable use of resources (FSC, 2009:4). Even though the date
for the current codes has not elapsed, DTI is introducing a new BEE targets for the
sector with an increased focus on the youth, the disabled and women, making it more
difficult if not impossible for firms to achieve. The revised draft code is currently in the
public domain for comments in accordance with section 9 (5) of the BBBEE Act No. 46
of 2013 (Draft Amended Forest Sector Code, 2015:4).
5
Despite this planned policy reform, there is scanty information as to how the forest
sector adhered to the existing policy, the transformation progress it achieved in
developing rural areas, the challenges confronting it and the benefits thereof for firms
that presently complying with the policy. Although studies have been conducted by
many authors focusing on other charters, the FSC is still insufficiently explored. Of
particular importance is the concern that the policy implementation is vague as there are
no well-defined effective implementing agencies and their responsibilities. The core
research problem to be explored is that the FSC implementation has not transformed
the forest sector to meet the objectives set out in the policy and this poses huge
challenge to the sustainability of the sector.
The study will explore how firms in the forest sector are implementing the FSC policy,
identify holdups to the successful implementation of the policy, establish the
effectiveness of implementing agencies and to recommend best practices to enhance
better implementation strategies to meet the ambitions established in the policy.
1.4 AIM OF THE STUDY
The government of South Africa with the backing of the section 9 (2) of the constitution
is legally bound to devise various measures to significantly reduce the challenges of
poverty, inequality and unemployment characterising a segment of the population. This
study is generally aimed at exploring how the BBBEE policy is being implemented to
achieve the goals outlined in the policy. The study intends to untangle the blockages in
the implementation of BBBEE policy with specific focus on the FSC companies in the
6
forest sector, determine the success stories of the compliant companies and assess
their level of responsiveness to the policy.
1.5. OBJECTIVES OF THE STUDY
In order to achieve the aims of the study, the objectives have divided into primary and
secondary.
1.5.1 PRIMARY OBJECTIVE
The research will principally focus on how the implementation of the FSC policy has
either positively or negatively transformed the growth of companies; consolidate the
progress companies have made in applying the policy; and evaluate the effectiveness of
implementing officials.
1.5.2 SECONDARY OBJECTIVES
To achieve the main objectives, the study will pursue the following secondary
objectives;
To ascertain the level of compliance and the improvements forest sector
companies have made in the implementation of the BBBEE in the Municipality,
To unravel the bottlenecks in the BBBEE policy implementation of the forest
sector in Amahlathi Municipality,
To recommend better implementation strategies and approaches in addressing
the gaps experienced in policy implementation of the BBBEE by forest sector
companies in Amahlathi Municipality.
7
1.5.3 RESEARCH QUESTIONS
The questions this study aspires to provide answers to include:
To what extent are forest sector companies adhering to and complying with the
BBBEE policy in practice in Amahlathi Municipality?
Are there any implementation bottlenecks that impede the forest sector in their
quest to implement the BBBEE policy and how are the bottlenecks affecting the
successful implementation of the policy in Amahlathi Municipality?
How is the pitfalls associated BBBEE policy implementation being addressed by
companies in the forest sector as well as the policy makers to create more
value?
1.6 THE SIGNIFICANCE OF THE STUDY
The study has both theoretical and empirical significance. Theoretically, the study will
provide insight into processes that form the basis for successful implementation and
attainment of the BBBEE policy intent. It intends to dissect the current BBBEE policy
implementation with international standard, report any anomalies that will be observed
and recommend best global practices that will in the end complement scholarship to the
knowledge-base of implementation theory. The study will be guided by tested theories
that will lay the foundation for intellectual discourse in policy implementation.
Empirically, the data gathered from the study will determine whether the goals of the
BBBEE policy are being achieved and if all actors are in harmony with one another in
the implementation process. The findings will also determine whether the current
implementation capacity is effective to achieve the policy objectives. This will quell the
8
naysaying relationship among researchers, entrepreneurs, academics, public
administrators and politicians regarding B-BBEE and its implementation. It will
admonish policymakers to move away from purely developing policies toward practically
apply them strictly and rigorously to meet the aspirations of people. This study is
intended to offer the academic means of assessing the implementation of the FSC.
This study will endeavour to clarify all misconceptions, elucidate various avenues for
proper representation of all South Africans by providing best alternatives to its
implementation. The outcome will add to the academic and intellectual base of the
public administration discipline as this research is principally educational.
The study will be imperative to establish whether the existing key elements that are
applicable to the forest sector are actually attainable and if there are any holdups
thereof. This will be starting point for public administrators and policymakers to establish
measures to ensure that these policies are adhered to consistently. This research will
hence go a long way to contribute to fascinating on-going debate among researchers,
legislators, analysts and municipal administrators.
Finally, the conclusions will solely base on theoretical framework and empirical data that
will assist in giving an objective recommendation relevant to implementation processes
in general.
1.7 DEFINITION OF TERMS
Economic empowerment: “a process that increases people‟s access to and control
over economic resources and opportunities including jobs, financial services, property
and other productive assets (from which one can generate an income), skills
9
development and market information” (Economic Empowerment of Women and Girls,
2012. Quoted by Davis, 2014:4).
BBBEE: it is comprehensive, socio-economic process, found in the national
transformation agenda specifically the Reconstruction and Development Programme
(RDP) with the aim of rectifying the inequities of the past by seeking to significantly and
rightfully transferring and conferring the possession, managing and control of South
Africa‟s financial and economic resources to the majority of the citizens (Acemoglu et al.
2007:4).
Measured Entity: “an Enterprise as well as an organ of state or public entity subject to
measurement under the Codes.”
Public policy: Comprise the actions and indecisiveness of government, meaning its
failure to act is itself a policy (Imurana et al., 2014:198)
Policy Implementation: “those actions by public or private individuals (or groups) that
are directed at the achievement of objectives set forth in the prior policy decisions” (Van
Meter & Van Horn, 1975:147).
Public administration: the planning, organising, developing, controlling and
implementation of government policies (http://global.britannica.com/topic/public-
administration/2015/10/03).
Black person: “refers to people who are African, Coloured and Indian South Africans,
that is, all those whose participation in the economy was limited through racially
10
discriminatory laws of pre-1994 governments” (Department of Water and Forestry
[DWAF], 2007: 4).
1.8 CHAPTER OUTLINE
The study begins with chapter one to chapter seven the structure of which is as follows:
CHAPTER ONE
This chapter provides introductory notes the topic of the dissertation. It commences with
introduction, background to the study, and problem statement. The rest of the chapter
outlines the aims and rational of the study, the objectives of the study, significance and
the outline of the study.
CHAPTER TWO
Chapter two reviews literature and provide a theoretical framework to support the
research study. In this regard, the theories of policy cycle, the advocacy coalition
framework and the theory of public value creation will be discussed. It will further
evaluate the definition of the concept of policy implementation, the approaches to policy
implementation, types and factors influencing policy implementation.
CHAPTER THREE
This chapter interrogates the legislative framework of the study. It will deliberate the
factors that triggered the development of the BBBEE policy, define the policy in relation
to the forest sector and assess each of the seven elements of the code with regards to
what it entails.
11
CHAPTER FOUR
This chapter will focus on global best practices in the forest sector by appraising
sustainable forest management in Germany, China and South Africa. It will continue to
uncover the development path of Stuttherheim (the capital of Amahlathi Municipality)
under its years of Local Economic Development (LED). Finally the chapter will discuss
the case of Malaysia‟s National Economic Policy (NEP).
CHAPTER FIVE
The methodology of the study starting from the type of data, the philosophical
viewpoints, the sampling procedure as well as the ethical considerations of the research
will be outlined in this chapter.
CHAPTER SIX
The chapter will present findings to the study, interpretation of the findings, discussion
of the findings and conclusion to the study. It starts with how data will be collected,
identification of participants and how data will be analysed.
CHAPTER SEVEN
The final chapter focuses on the overall conclusion and recommend classical strategies
to effectively implement the policy. It will also specify areas of further research to give
future researchers areas which need further scrutiny.
12
1.9 CONCLUSION
The chapter has been straight-forward in identifying the background to the study,
problem statement, aims and objectives of the study. It specified why the study should
be conducted in the form of significance of the study as well as how the study is to be
organised. The next chapter will review literature about theories of policy
implementation as well as the conceptual framework of the study.
13
CHAPTER TWO: LITERATURE REVIEW
2.1 INTRODUCTION
Public policy without implementation is fundamentally a collection of terminologies,
novels and works of fiction. This section sets off with policy implementation theories to
dissect when, how and why policies are implemented, reformed and redefined. It further
highlights the key concepts in implementation studies with emphasis on relationship
between the top-down, bottom-up and the hybrid approaches. The next section of this
chapter discusses Matlands ambiguity/conflict matrix which lends itself in the types of
policy implementation. Before concluding this chapter, the 5 C protocol to policy
implementation will be discussed.
2.2 THEORETICAL FRAMEWORK
Theoretical framework is relevant to offer a study of this nature a clear focus and
hypothetical foundation for the review of implementation studies as well as the BBBEE
policy. In addition, it sets out the concept of policy implementation to be delineated
within the scope of this study. To this end, the theories of policy cycle, the theory of
public value creation and Advocacy Coalition Framework are deliberated to provide
comprehension to the study.
2.2.1 THE THEORY OF POLICY CYCLE
The theory of policy cycle which was first promoted by Lasswell (1956:525) focuses on
policy as a process with functional stages. The model holds that government policy
processes consists of seven stages specifically, “intelligence, promotion, prescription,
14
invocation, application, termination and appraisal.” Laswell‟s theory is extremely useful
because it sheds insight on the difficult problem of monitoring implementation processes
thus dubbed it the “mother of policy implementation theories” that forms the basis for the
development of variety of policy processes. Howlett & Ramesh, (2003:231) agreeing
with this school of thought, view public policy science as solving problems in an overtly
standard and multi-disciplinary approach. Though researchers (see Jann & Wegrich
2008:43) acknowledge the importance of this theory, several attempts have been made
to reduce the stages to five namely ‗agenda setting, policy formulation, decision making,
implementation, and evaluation‘.
The agenda setting involves identification of social conditions that have fledged into
social problems (mostly identified through research, investigation, or observation) which
eventually advance into “public problem” and need swift intervention of public
administrators and citizens (Kingdon 1995:154). Lemieux, (2002:21) undertakes that
this stage is critical in that any slip-up in specifically identifying the social problem may
impact (negatively) on the entire policy implementation process. In agreement with this
contention, Baumgartner & Jones (2003:10) add that problem identification is relevant in
order to give it the required attention since all social problems cannot be attended to
simultaneously.
The next stage of policy formulation involves the translation of the problems identified
into government plans with the estimated resources to achieve the stated plans (Jann et
al., 2008:43). In making this comment, the authors debate that decision-making process
about formulating policies encompasses solicitous analysis with reference to possible
solutions, merits and demerits prior to their acceptance or rejection.
15
The implementation stage of the policy science is putting into practice the policy
formulated and this is executed by applying the directives from policymakers (Savard &
Banville, 2012:2). It is necessary here to clarify exactly what is meant by
implementation. O‟Toole (2000:266) defines this concept as “what happens between the
establishment of an apparent intention on the part of the government to do something,
or to stop doing something, and the ultimate impact in the world of action”. The essence
of O‟Toole‟s definition exposes two intricacies; first, policies are seldom executed by
policy makers, hence discrepancies may occur; second the enforcement of the policy is
affected by the ideologies, thinking, interests and perception of the enforcer which may
distort the intents of the policy (Megie, 2004:283) both of which may affect the
compliance with the policy.
The policy cycle is incomplete without evaluating the intended projected results and
unintentional consequences that might arise from the policy implementation
consequently the final stage of the policy cycle are evaluation and ultimately,
termination. Savard et al., (2012:2) expound that the intended outcome of the policy
cycle is appraised to determine if the problem has been holistically solved or partially
reduced. Above all, it is a fact-finding and evidence-based procedure to ascertain
attainment of the statement of policy intent. Hood, (2002:24) insists the implication of
this stage is twofold: if the outcome is auspicious, leads to policy-learning and policy
reinforcement; if inauspicious, policy termination, policy reform or policy change is
prescribed. O‟Toole (2000:263) on the other hand differs with evaluation as a stage
noticing that is it on-going process throughout the lifespan in diverse perspective of the
cycle but not restricted to only this stage. Policy is terminated if the intended problem is
16
eliminated or the accepted policy is found to be ineffectual in solving the problem or
difficult to enforce in real world conditions. In short, Geva-May (2004: 309) put the
process of policy termination as “why policies and programs „live on‟ although they have
„outlived their usefulness.‟”
Although this is the most comprehensive account of the theory produced so far, it does
suffer from a number of flaws. One major drawback of this approach is the chronological
pattern in which the implementation process is arranged (Sabatier, 1999:15). Sabatier &
Jenkins-Smith, (1993:121) likewise criticised that real world processes habitually
overlap and scarcely occur in a sequence as explicated by the theory hence impossible
to differentiate among the stages.
2.2.2 EMPOWERMENT AS PUBLIC VALUE ORIENTATION
The theory of public value is a framework developed by Mark Moore in 1995 to analyse
the value created by public administrators to the society (Bromell, 2012:16) through the
development and implementation of policies and has currently become an
administrative philosophy for public administrators. Moore (1995:73) was ostensibly the
first to use and define public value as “a framework that helps us connect what we
believe is valuable . . . and requires public resources, with improved ways of
understanding what our „publics‟ value and how we connect to them”. For Meynhardt,
(2009:4), public value theory is a philosophy that an organisation, be it public or private
is mandated to provide stakeholder value. The above definitions are close to that of
Bozeman (2007: 117) who expresses it as “a complex and broad-based assessment of
an object or set of objects (where the objects may be concrete, psychological, socially
17
constructed, or a combination of all three) characterized by both cognitive and emotive
elements, arrived at after some deliberation, and because a value is part of the
individual‟s definition of self, it is not easily changed and it has the potential to elicit
action”. The definitions articulated by Moore and Bozeman reveal the subjective and
relative nature of what is considered „value‟ in that value is based on individual‟s
background, circumstances, emotions and perceptions.
Nabatchi, (2012:3) cautions not confuse „public value‟ with „public values‟ hence
differentiates that the former is the evaluation of the administrative duties of government
appointees in relation to their impact on the society whereas the latter is the belief
systems, moral standards and principles held by public servants in rendering services to
societies. Put differently, public values are about the ethical conduct of public servants
whereas public value is the result of public management‟s actions and activities
(Witesman, 2016:1). Moore (1995:73) points out that public value is realised only when
public policies, administrative tactics and actions “are politically legitimate, feasible, and
sustainable, operationally possible and practical, and of substantive value to the
citizenry.” Accordingly, Bozeman (2007:13) shift the theory from management-centred
approach to social-outcomes approach regarding: the privileges, prerogatives, and aids
entitled to citizens; the state‟s responsibility and obligations to citizens and vice-versa;
and more importantly, the philosophies underpinning government policies.
The principal notion of the framework is found in what is christened “Strategic triangle”
with three distinct mutually dependent processes illustrated in Figure 2.1
18
FIGURE 2.1: THE STRATEGIC TRIANGLE OF PUBLIC VALUE CREATION
Source: (Moore, 1995:71)
Specify public value: This vertex contextually defines the specific „public value
outcome‟ to be achieved. The first strategy is the specification of public value outcome
indicating the objectives and aims of government policies. According to Benington and
Moore, (2011: 4) value is considered a priority of the society that is believed to be
deleteriously militating against their lives.
Authorising environment: The second strategy is that large proportion of the
population and government must support the policy. The persistent support of the public
to authorise and legitimise the implementation of the policy intent is paramount to
achieving the public value. By the same token, efforts be must aligned with the
stakeholders- stated the public sector, private sector, the community and the not-for-
19
profit sector by „authorizing the environment‟ to support actions needed to attain the
value outcome (Benington et al. 2011: 5).
Operational capacity: The last vertex of the triangle operational capacity highpoints
resources that must be employed to achieve public value. Williams & Shearer, (2011:5)
believe one most important resource that improves operational efficiency and
effectiveness in modern times is technology as well as skilled human resources all of
which are limited in supply. Benington, et al. (2011:5) recommends that capacity must
be built by harnessing and mobilising resources internally and externally to strengthen
operations in order to ensure public policies are altruistically implemented to attain the
desired outcome.
The question that then naturally arises is how public value is created in practice. To
create value, Moore (1995:18) maintains managers must have the liberty to exercise
innovative decision-making skills and that citizens ought to be acquainted with the
public value creation in itself so as to keep them in the value-creation loop. To
guarantee this, Moore emphasise organisational settings must determine managerial
actions, stakeholders such as industry groups must be involved in decision-making
processes that affect their operations and policymakers must repeatedly search for
value-making opportunities within the context of their milieu (Moore, 1995:24).
Critics of this theory highlight that disagreements may arise as to which public value
outcome should be achieved and its subsequent resource allocation may degenerate
into conflicts (Nabatchi 2012:2). The theory fails to point out that community demands
differ at any given period of time. For instance, topmost public value in one community
can be of less importance to other communities. Another confusion that is unaddressed
20
by the theory is that it could not spell out that conflict may rise due to disagreements
with means to achieve the public value.
2.2.3 THE ADVOCACY COALITION FRAMEWORK APPROACH TO POLICY
IMPLEMENTATION
The Advocacy Coalition Framework (ACF) is a theory developed by Sabatier and
Jenkins to manage problems, technical disputes, goal conflict and multiple actors of
policy implementation (Sabatier & Weible, 2012:189). The motive behind this theory is
to close the gap between the perceived differences between top-down and bottom-up
approaches, to infuse scientific knowledge in the policy process (Sotirov & Memmler,
2010:4). The assumption is that policy participants must specialize within ‘policy subsystem’
due to the complex nature of policy-making practically and legally in recent times. Kingdon
(1995:245) conceptualizes a subsystem as comprising of legislators, agency officials,
researchers, journalists as well as other actors representing different organisations and legal
experts who mediate in the subsystem. Sabatier and Weible emphasize that researchers play
pivotal role in policy process because the expert advice offered helps in modifying policy
participants’ beliefs and misconceptions.
Furthermore, the theory proposes that policy change should be thought of only after at least a
decade, because participants’ beliefs are unbroken within this period rendering any change
difficult. Sabatier and Jenkins-Smith (1999:135-136) thus distinguish between mature subsystem
and nascent subsystem. While the former is a set of participants who regard themselves as a
‘semi-autonomous community who share an expertise in a policy domain and who have sought
to influence public policy in that domain for an extended period agencies,’ the latter is a
21
developing system that is experiencing instability in its broader political system and battling with
technical knowhow in the subsystem. Classic examples of nascent subsystems according to ACF
are developing countries characterized by political instability, lack of trained personnel and
prevalence of avarice.
The theory highlight the importance of forming networks within subsystems in order to ensure
success of policy implementation in what is termed ‘advocacy coalitions’ (Sabatier et al.,
2012:196). The coalition established must be devoid of any nontrivial disputes and coordinate
actors to believe in similar policy objectives. Sabatier, (1999:120) argue that ‘advocacy
coalitions provide the most useful tool for aggregating the behavior of the hundreds of
organizations and individuals involved in a policy subsystem over periods of a decade or more.’
The attributes of this theory are traits of policies in practice but has become a source of much
scholarly debate and criticism because it reveals a number of shortcomings. One major drawback
of this approach is that interest groups certainly form coalitions for self-interest purposes instead
of greater interest of the coalition. For instance, nascent subsystems in developing countries trade
in coalitions for voter maximization.
Moreover, although research has illuminated advocacy coalitions as undisputable way of policy
success, coalitions may tend to unite to act as political foes particularly if they have access to
undisclosed funding, resulting in implementation bottlenecks. Another debate triggered by
ACF particularly is the notion that policy change should take a minimum of a decade.
Grin, Hoppe, & Van de Graaf (1997:4) allude that policy change is somewhat
unavoidable and spontaneous process that is triggered by politics or policy subsystems.
FIGURE 2.2: ADVOCACY COALITION FRAMEWORK
22
Source: (Sabatier & Weible, 2012:192)
The above three theories will guide the study but particular attention will be given to the
theory of public value creation as it reverberates well with the aims of the study. The
next section dissects concepts pertaining to policy implementation and its approaches.
2.3 THE CONCEPT OF POLICY IMPLEMENTATION DEFINED
Like any other concept, public policy implementation has received many interpretations
and understandings due to lack of consensus about components of the concept to give
23
it a vivid meaning. Paudel (2009:36) assert that the concept is inevitably exasperating to
define because of the differences in principles, values and institutional settings that cut
across diverse geographical locations. To reduce the degree of uncertainty about this
terminology, it is prudent to start off with defining public policy. According to a definition
provided by Imurana et al. (2014:198) public policy comprises of decisions and
indecisiveness of government, meaning its failure to act is itself a policy. In
unpretentious terms, government policy is its both unwritten and written-down strategy.
Also important are the concepts of policy reform and policy change where the former is
a quantum change involving „the process of improving the performance of existing
systems and of assuring their efficient and equitable response to future changes‟
(Berman 1995: 27) whereas the latter is a minor steady amendment to the policy to
permit innovative ideas (Cerna, 2013:4).
The mind-numbing and intricate aspect of policy cycle after successful policy
development is its implementation. Some of the first implementation researchers to
define the concept were Pressman & Wildavsky (1984: xxi) who delineate it as official-
laid down activities geared towards achieving stated objectives outlined in public
policies. the authors state that it commences with setting up goals, specifying actions of
all actors and continuously interacting with the goals and actions. The most precise
definition that will be adopted in this study defines policy implementation as “those
actions by public or private individuals (or groups) that are directed at the achievement
of objectives set forth in the prior policy decisions” (Van Meter & Van Horn, 1975:147).
Here, the authors specifically named the actors involved in the implementation process
including the government, individuals, groups and organizations who transform and
24
interpret public policies into practice operationally to add sturdy changes authorized by
the policy.
Hill & Hupe (2008:7) posit that policy and its contents can be considerably modified,
significantly expounded and expressively annulled in the implementation stage as socio-
economic and geo-political factors demand. Implementing a policy may achieve the
desired result or totally fail. To avert policies from implementation botch, Bressers
(2004:286) remarks that there must be cooperation between all parties, prevent conflict
between actors, and stakeholders must be willing to learn supportively to promote
coalitions. In an attempt to make distinction between policy implementation in third
world and first world countries, Elezi, (2013:3) stipulates that unlike first world countries
where policy implementation is straightforward because of the incremental nature of
their policy development, third world countries lack the experience, constructive
legacies, effective succession plans and perhaps the overloaded ambition to effect
change for political power.
2.3.1 EVOLUTION OF POLICY IMPLEMENTATION STUDIES
The philosophy of policy implementation is still in early stages but is thought to have
emerged through three different generations: the first ranging from 1970‟s to 1980‟s; the
second from 1980‟s to 1990‟s; and finally the third generation ranging from 1990
onwards (Paudel, 2009:38).
2.3.2 THE FIRST GENERATION (1970’s to 1980’s)
The first generation of the implementation research which emerged in the United States
was based on the assumption that policies once developed, would automatically
25
translate into desired results (Liedl, 2011:6). It used „one size fit all‟ approach, focusing
on applying one policy on multiple locations rather than modifying them to meet
location-specific needs (Goggin, Bowman, Lester, & O‟Toole, 1990:13). Actors thought
to be implementing policies in line with intents of the policy without any consideration for
their efficiency and little attention given to process of implementation as the policy was
only seen as a mere statement (Hill & Hupe, 2002: 42). Pulzl & Treib (2006:89) contend
that although the first generation of policy implementation processes recorded
numerous failures which caused distrust about the implementation studies, it laid the
foundation for theoretical development of the discipline as it raised awareness about the
pessimism surrounding it.
2.3.3 THE SECOND GENERATION (1980’s to 1990’s)
The second generation of the implementation research began theorizing frameworks for
the process and distinguished the relationship between policy statements and their real-
world implementations which served vital lesson for policy analysis (Pulzl et al.,
2006:89). It besides opposed the notion that policy implementation is a simple
straightforward procedure but a complex multifaceted in nature. Winter (2003:206)
disclose that it is during this period that popular implementation theories, top-down and
bottom-up approaches evolved and till now, they are the most popular theories in the
discipline.
2.3.4 THE THIRD GENERATION (1990 onwards)
The third generation combined features of the theories of top-down and bottom in order
to make them more scientific, evidence-based and methodological. To this effect, much
26
emphasis is laid on hypothesis specification, data analysis using suitable procedures of
qualitative and quantitative methods and using case studies to provide empirical
interpretations to investigate the hypothesis. Few implementation studies have so far
achieved this feat but the third generation will witness more scientific approach to policy
implementation as it evolves (Pulzl et al., 2006:89).
2.3.5 THE TOP-DOWN APPROACH TO POLICY IMPLEMENTATION
The theory of the top-down is based on the view that policies are implemented
according to the prescripts of policymakers‟ visions and it is executed by putting in place
specific mechanisms to ensure its success (Paudel, 2009:39). The founding fathers of
the theory Pressman et al., (1984: xxi) succinctly distiguish a relationship between
policy and implementation. According to the authors, to “implement” is a verb which
must have an object like “policy” in order to become a complete meaningful sentence.
The authors therefore distinguish policy implementation as „policies containing both
goals and the means for achieving them‟ (Hill et al., 2002:44).
Difficulties arise when an attempt is made to implement the policy because it gives
scanty thoughtfulness about how the result is achieved (Matland, 1995:146). This
weakness becomes apparent on the field when particularly when the prescriptive
approach to control the process is derisory. Younis & Davidson (quoted by Paudel,
2009:40) points out that this approach puts the capability of policy-makers into test as to
how they control the implementers. Van Meter et al. (1975:451) dispute that Pressman
and Wildavsky‟s studies though very enlightening, provides little theoretical viewpoint.
These authors presented their assessment by suggesting that it is paramount for any
27
policy implementation to consider the extent of change required and the amount of
consensus, implication of which is that „implementation will be most successful where
only marginal change is required and goal consensus is high and vice-versa‟ (Van
Meter et al., 1975: 461). The authors suggested a six-variable interlink model to
produce an outcome termed „performance‟ diagrammatically illustrated in the figure 2.3.
FIGURE 2.3: THE SIX-VARIABLE MODEL OF POLICY IMPLEMENTATION
Source: (Hill et al. 2002:47)
The model resonates well with the top-down theory hence starts with policy formulation
including setting objectives and standards as well as specifying resources. More
clearly, the six-variable models are as follows:
Concise policy objective and standard that provide a starting point and yardstick
for the evaluation of performance;
Required resources, incentives and all inducements are made available and
accessible;
28
The working relationship between all stakeholders must be highly pleasant with
quality;
The capacity of the implementing agency as well as its characteristics must form
classic formal and informal linkages in the policy-making and enforcing process.
The socio-economic, political and technological environment where the
implementation is taking place should be conducive;
The level of knowledge of the implementing agencies about the policy including
their comprehension and understanding (cognitive level); their acceptance,
neutrality and response as well as the intensity of their response to the policy
(Van Meter et al., 1975: 464-72).
Equally, Sabatier & Mazmanian (1989, Quoted in Matland 2013:146) distinctively
separated policy formation from implementation similar to the theories provided by Van
Meter and Van Horn. The analysis of their theory begun with querying the process in a
top-down approach which includes asking interrogative questions as follows:
What is the level of consistency between implementing officials and the policy?
What is the degree of uniformity between the actual policy objectives obtained
and the desired initial policy objectives?
What principal factors bothered the implementation process from achieving the
desired outcome both from the policy itself and the implementing officials?
Which part of the policy was changed and reformed based on the experience of
the implementing officials and policymakers? (Sabatier, 1986: 22).
Proponents of top-down perspective emphasize that centralization of policies enhances
control and manipulation of problems. Furthermore, administrative controls such as
29
budget planning and evaluation are easily streamlined particularly since the policy is
administered and monitored by a single administrative structure with the ultimate goal of
achieving the purpose of the policy while minimizing the deviations (Winter, 2003:213).
In contrast, Matland, (995:147) maintains the key problem with this explanation is
strength of this approach to initiate policies that are consistent with local problems,
generalizable, and cost effective in that the same policy is implemented across similar
situations. Matland therefore advise that policy makers should make policy objectives
clear, reduce implementation bottlenecks by minimizing the number of actors, limit the
rate of policy change as much as possible and ensure that those responsible for policy
implementation stick to policy goals.
Perhaps the most precarious drawback of this method is that top-down approach
assumes policy implementation process as an administrative practice which disregards
the political nature of the process. This approach perhaps undermines the sustainability
of policy outcome of the implementation process as statute framers ignore the
sentiments and feelings of local actors (Cerna, 2013:18). The lack of consideration for
local actors implies that local expertise with indigenous knowledge to propose a focused
policy is overlooked and downplays the distortions consciously or unconsciously
perpetrated by policy implementers.
Besides, May (2003:224) allude that this approach missed the mark for its imprecise
language, complicated structures and for not taking into account the geopolitical
realities of diverse locations. Certainly, it is based on false perception that policy-
makers know all the facts and therefore are the best to offer justifiable answers. In
30
practice however, the justifiable answers are unachievable due to resistance and lack of
compliance (Paudel, 2009:41).
2.3.6 THE BOTTOM-UP APPROACH TO POLICY IMPLEMENTATION
Contrary to the top-down perspective, the bottom-up model begins policy
implementation from the beneficiaries at the local level, conceives implementation as
non-hierarchical but cooperation within networks of implementers known as street level
bureaucrats outside of governmental institutions (Pulzl et al., 2006:92). This approach
develops through the recommendations of policy implementers directly involved in the
implementation process and rejects the idea that policy development and
implementation should be centralized.
The theory of street level bureaucrats which is credited with Michael Lipsky between
1971 and 1980 after a critical analysis of frontline staff in the implementation studies, is
considered a major turning point in the bottom-up theory (Winter, 2003: 214). Lipsky
defined street level bureaucrats as all such public service workers as teachers, social
workers, public administrators, police workers and doctors who implement policies
under the challenges of budgetary constraints and mass processing of clients requests
(Adami, 2014:2). The theory holds that public policy is best understood in jam-packed
offices of public servants contrary to what was agreed on in legislative instruments and
top offices of policy makers (Tsang, 2013:6). Tsang affirms that frontline workers of the
policy implementation on daily basis:
31
Encounter issues of inadequate resources and poor working conditions. For
instance overcrowded classroom for teachers, hostile environment for prison
warders, and inadequate facilities for doctors;
Erratic, disobliging, cynical clients;
Imprecise, uncertain, confusing, vague procedures (Tsang, 2013:6).
(Hill et al., 2002:53) similar to Tsang‟s assertion settle that street level bureaucrats enter
the public sector with some level of commitments however these conditions dash the
hopes of making ideal changes envisioned. Public servants considered to be part of the
administration are therefore oppressed and alienated by the bureaucracy they find
themselves, which results in isolation in the system (Lipsky 1980:76). These challenges
restrict street level bureaucrats from using their discretions in serving policy
implementation beneficiaries which may advertently or inadvertently lead to substantial
modifications or complete nonconformities from the policy document. The modification
or nonconformities may be in the form of:
Alteration of beneficiary needs including delay in benefits, total denial of benefits
and receiving low quality service;
Alteration of job specification resulting in lower standards, reduction in service
features and prolonged service delivery to reduce excessive pressure on public
servants;
Alteration of beneficiary specification including receiving services totally different
from the expected service (Tsang, 2013:6).
Lipsky‟s work has been reused by other implementation researchers to justify the
philosophies of bottom-up approach hence; regarded as the initiator of bottom-up
32
approach. The author settles that street level workers are knowledgeable service
champions in successful implementation even in unbearable conditions, controlling
them in hierarchical order only increases the propensity to more deviations and
alterations. Thus, it is the onus of public administrators to direct the duties of street-level
workers to attain the intended outcomes through safeguarding greater accountability of
bureaucrats that meets policy expectations which simultaneously manage their
autonomy and discretionary authorities (Adami, 2014:6).
Hjern and Hull (1982:107-114) clarify that politics and administration should be
incorporated in the policy process once local skills and circumstances have been
considered. The authors argue that implementation research can solve the lack of
accountability of street-level bureaucrats which could not be tackled by Lipsky. Hjern
and Hull‟s study of this theory is considered to be the most important, but it does suffer
from the fact that mechanisms for ensuring accountability were regrettably left
unanswered by the authors.
The bottom-up theory attracts attention as it is focused more on actors whose ideas
form the root for policy development and implementation; hence it addresses contextual
factors in the implementation milieu. The theory is lenient, easily adaptable contextually,
understands the goals and strategies of actors as opposed to the authoritative stature of
top-down theory (Cerna, 2013:18).
A further look to the literature on bottom-up theory, however, reveals a number of gaps
and shortcomings. First, the bottom-up theory is criticized for its leniency as it is merely
descriptive in the identification of difficulties affecting the implementation process to
33
reach its stated goals (Paudel, 2009:43). Theodoulou, & Cahn, (2004:348) further
dispute that bottom-up theory presents democratic deficit because it treads on the
power derived from electorates by authorities. In other words, the power of local
communities is overstated as implementation researchers argue that the
decentralization proposed by bottom-up theory works best in the context of central
control. Thus, the flexibility and independence recommended by bottom up theory is
relevant if the goals of policy developers and policy implementers are congruent with
little variation. The flexibility leads to poor performance of implementing officials as a
result of great goal adaptation that differ from the intended goals (Matland, 1995:149-
151).
On serious note, promoters of this approach could not expatiate on how to manage
street-level bureaucrats within the framework of the enormous discretion presented by
the bottom-up theory. Yet again, it offers no mechanisms to improve the performance of
street-level bureaucrats even with the advantage of using their discretion. Opponents of
the theory concur that people with poor edification, low technical know-how and poor
social background are neglected from the implementation process as more
consideration is given to skilled, wealthy social elites (Adami, 2014:4).
Adami (2014:4) contend that street-level bureaucrats are fond of rationing services,
impose costs and client differentiation. This manifests itself as a result of the power and
control over resources enjoyed by street-level bureaucrats. The differentiation aspect
takes many forms comprising, creating artificial shortage, depressing participation of
actors, concealing information, and making accessibility impossible while disrupting
policy implementation.
34
2.3.7 MIXED APPROACHES TO POLICY IMPLEMENTATION
As debate between top-down and bottom-up perspectives rages on, policy
implementation analysts concur that synthesizing both theories by picking up salient
principle from each side or the approach to use should fit the purpose. Notwithstanding
the conflict between these theories, they provide a theoretical standpoint for the
implementation theory which has led to the discussion of a mixed approach that looks
more at the practicality part of the implementation process.
The earliest proponent of the synthesizer approach (as it is affectionately called),
Richard Elmore, a bottom-up theorist, petitioned the use of mix approach after taking a
cue from the study of the Cuban missile crisis. In the study, Elmore contrasted and
coined implementation as a system, bureaucratic process, organizational development,
conflict management and as bargaining management. Elmore also provided the rules
for controlling implementation using Lipsky‟s street level-bureaucrats theory as the
epicenter, by advocating the need for a bottom-up comprehension of the policy system
in a process called backward mapping (Fiorino, 1997:252). The idea of backward
mapping is “„backward reasoning‟ from the individual and organizational choices that are
hub of the problem to which is addressed, to the rules, procedures and structures that
have the closest proximity to those choices, to the policy instruments available to affect
those things, and hence to feasible policy objectives” (Elmore, 1983:231). Equally
required in policy implementation and in an attempt to fuse both perspectives is forward
mapping which „consist of stating precise policy objectives, elaborating detailed
means−ends schemes, and specifying explicit outcome criteria by which to judge policy
at each stage‟ (Elmore, 1980: 602). Matland, (1995:151) hails Elmore‟s discussion as a
35
useful tool for policy designers in choosing appropriate approach for implementation but
lacks explanatory direction bearing in mind the complicated nature of implementing
policies as well as the diverse geopolitical and socioeconomic factors in different
locations.
2.4 MATLAND AMBIGUITY/CONFLICT MODEL OF SYNTHESIZING POLICY
IMPLEMENTATION
Matland (1995:146) in his article manages to amalgamate the top-down and bottom-up
approach by proposing that policy implementation should specify the contexts before
deciding which approach to use. Matland opined that refusal to adhere to this and
continuous separation of policy implementation into top-down and bottom-up
approaches perpetuates two broad issues: conflict and ambiguity which forms the basis
for the development of a contingency model, termed ambiguity/conflict matrix (Hudson,
2006:229).
In a stark contrast to Sabatier‟s approach, Matland underscores that policy
implementation analysis should be more concerned with the policy field rather than the
policy itself because policies can tremendously change on the field to the extent of
losing its original form (Hill, et al., 2002:74). Hence, it is more practical to specifically
identify variables that fit the purpose and conditions rather than simply entirely
generalizing variables for all implementation processes (Matland, 1995:153).
The figure below elucidates the four matrix proposed by Matland with Ambiguity and
conflict on the sides. As stated by Spector, (1997:2) conflict arises when there is a
mismatch between goals of beneficiaries and that of the policy implementation outcome.
36
Additionally, the author itemized activities that may engender disagreements in the
implementation process including:
Legitimizing policy: adopting the policy among all actors may be met with
antagonism from a group particularly if the proposed implementation distresses
the status quo;
Building a formidable constituency: Policy implementation requires that all
constituencies must form an identifiable coalition with a win-win attitude
otherwise the ultimate losers may exasperate the process;
Mobilizing resources: Resources must be obtained, organized and allocated to
implement the policy. Limited resources allocation results in incapacity in
implementation that inhibits goal outcome. Limited resources also implies that
capacity may have to be hired from elsewhere which enrages those whose
capacity become redundant;
Modifying existing implementation process: reconfiguration of the existing
implementation processes to accommodate new ideas can be disputed if it
ultimately displaces groups, and disorientate individuals who are accustomed
with the old policy (Spector, 1997:2).
Matland explicates that policy becomes ambiguous on two conditions. First, ambiguity
may arise from inexplicit goals which are when misunderstanding and uncertainty exist
in the policy. Goal clarity is responsible for implementation success, hence an important
component that directly affects the outcome of the process. Second, ambiguity exists
when the means to achieve policy goals is vague. Vagueness occurs when resources
are limited, roles are unclear and when the implementation milieu is so complex, making
37
it cumbersome to select resources, use the resources and their effects on the
implementation thereof (Matland, 1995:157-158).
FIGURE 2.4: MATLAND’S CONFLICT/AMBIGUITY MATRIX OF POLICY
IMPLEMENTATION
Conflict
A
mb
igu
ity
Hig
h
Lo
w
Low High
Administrative implementation
Top-down approach
Political implementation
Top-down approach
Experimental implementation
Contextual conditions
Bottom up approach
Symbolic implementation
Strength of coalitions
Bottom up approach
Source: Matland, (1995:160)
2.4.1 MATLAND’S TYPES OF POLICY IMPLEMENTATION
Administrative implementation: From figure 2.4, the first quadrant in the matrix is
administrative implementation with low ambiguity and low conflict. In this case, the
implementation process is straightforward with fewer disputes and generally, all actors
agree on the need to implement such policies (Spector, 1997:2). Implementation is
hierarchical, goals and the means of achieving them are known plus resources are
distributed by a central authority to achieve the desired outcome. Explicitly, the policy
intent is unambiguous, orders from the central authority are unequivocal and there is
general consensus on task responsibilities among all actors (Hudson, 2006:230).
38
Though the administrative implementation is seen as putting regulations into effect in a
top-down manner, conflict may arise from resource distribution as well as resource
availability. Spector (1997:2-3) resolved that building stakeholder confidence and
enhancing cooperation in resource allocation is paramount to conflict resolution.
Political implementation: Policy may also have low ambiguity but high conflict as in
the second quadrant. Matland maintains that such policies can be implemented
politically where „implementation outcomes are decided solely by power‟ (Hill et al.,
2002:76). The high conflict arises from dissimilarities in goals and means among
stakeholders. In his research, Hudson, (2006:230) finds that the implementation
process becomes a battlefield with low or sluggish compliance. By way of contrast,
Hudson maintains the low ambiguity inherent in the policy makes compliance
achievable. As a result, the success of implementation may to a large extent, depend on
the ability of the central authority to coerce agents to comply with policy goals and the
availability of sufficient resources to maintain the coerciveness over time.
Experimental implementation: Matland expatiates that policies with high degree of
ambiguity with low level of conflict demand „experimental implementation‟, where local
environments are likely to influence much on outcomes as shown in the third quadrant.
The fundamental principle of the experimental implementation is that it is dominated by
contextual factors. Along similar lines, Hudson, (2006:230) argues that outcomes vary
from location to location which makes monitoring compliance incomplete and due to
uncertainties in preferences of actors in resource allocation. The low conflict however
encourages high participation of actors who provide substantial information to
significantly expedite the process (Matland, 1995:166).
39
Symbolic implementation: Despite the high ambiguity of the policy, the fourth
quadrant involves high conflict which requires symbolic implementation. Matland
(1995:168) defines symbolic implementation as „policies that receive substantial
exposure at the adoption stage, but that ultimately have little substantive effect.‟ The
major determinant of such policy outcome is coalition strength. The high conflict is good
for the development of resolution while the vagueness results in variations in outcomes
across various locations. Additionally, the high level of elusiveness results in
proliferation of divergent views which makes monitoring outcomes limited, impossible
and difficult (Spector, 1997:3).
Matland‟s study is considered to provide academic insight into the types of policy
implementation by synchronizing top-down and bottom-up approaches, but it does
suffer from some weaknesses. One major drawback is that the theory which was
originally developed to study implementation processes in a state becomes complicated
when it is applied in a larger context due to the dynamic nature of policies. Another
setback is that the theory woefully fails acknowledge that resources are vital in policy
implementation which differ in magnitude in developing and developed countries.
2.5 CRITICAL VARIABLES DETERMINING THE SUCCESS OF POLICY
IMPLEMENTATIONS: THE 5 C PROTOCOL
In response to the weaknesses of Matland, the 5 C protocol puts forward the view that
the success of policy implementation should be measured in terms of five factors which
then determines the impact of policies on beneficiaries. Brynard, (2005:111) maintains
that policy implementation is a complex administrative process that is shaped by these
40
critical variables rather than a machine-driven or a scientific process with definite
outcomes. The five factors necessary to understanding policy implementation in context
include „content, context, commitment, capacity, clients and coalitions‟ (Cobbah,
2012:32) illustrated in figure 2.5.
FIGURE 2.5: THE 5 C PROTOCOL
Source: (Liedel, 2011:9)
Content of the policy: The content of the policy is the foremost determining factor in
successful or unsuccessful implementation. Najam (1995:38) categorized policy into
distributive, regulatory and redistributive. A policy that is aimed at dispensing public
goods to the broad-spectrum of the population is classified as distributive (Liedel,
2011:9), regulatory policy stipulates policy goals in the form of control with punitive
procedures for noncompliance with the statute and redistributive policy is concerned
with a discriminatory process of shifting political, economic and social power from one
group to another with the purpose of upholding equity and impartiality (Brynard
2005:17).
41
The foregoing discussions imply content determines the acceptance, activeness and
success of the policy. For this reason, the goals, how it relates to the issue and how the
goals will solve the perceived problems must be clearly stated (Pancawati, 2013:76).
Brynard & De Coning (2006: 198) categorized the key elements in policy content as the
“objectives, the real problems to be addressed by the policy and solutions including all
the activities, strategies and solutions needed to put the policy into practice.”
Undoubtedly, Pressman and Wildavsky (1973: xv) opine that implementation is a
continuous network of processes that exist between goals setting and actions to
achieve them. A clearly stated policy starts with a high level of coercive and compliance
strategies to ensure less deviations from the policy intent. Mbaye, (2003:3) innovated
that the innocuous way of maintaining compliance within the policy is building strong
monitoring systems that restrict implementing agencies and that makes defiance
impossible.
Context of the Institution: Institutional context of the policy clarifies how the
socioeconomic, political and legal environment impacts either positively or negatively on
policy implementation (Cobbah, 2012:33). According to Berman (1980: 206)
implementation that does not incorporate the issues of local milieu is likely to produce
inaccurate expectations to beneficiaries. It is argued however that most policies only
address the political and environmental context of implementation regarding
policymakers, policy implementers and policy researchers without considering the local
context of local beneficiaries (Brynard, 2005:17). The danger of this neglect results in
deficient policy learning and limited tracking of the implementation impacts contextually.
To augment institutional context Najam, (1995:42) stressed it is judicious “to identify the
42
key institutional actors and to trace the interest and power relationships between and
within the relevant institutions”. Chimange, (2012:65) identified three tactical reasons
why institutional context is relevant in the implementation process which are as follows:
It assist in identifying the appropriate approach that is relevant for a specific
locality as one size fits all mentality does not work well with respect to policy
implementation;
Contextual framework of locations marks the starting point for the formulation of
policies and their implementation thereof. A policy that is not sensitive to context
creates uncertainties as well as risks in its implementation;
Context informs policymakers about policy change, bearing in mind that locale
changes over time hence the need to change policies to conform to the
transformation.
Commitment of Actors: Government may develop topnotch policies with
unquestionable goals and pass cost and benefit analysis but without the commitment of
those entrusted with implementing the policies, it will result in implementation botch and
catastrophe (Pancawati, 2013:76). While this is factual, Liedel, (2011:10) added that
commitment has been considered by implementation researchers as the single most
important variable that is classified as the lifeline to address implementation dynamics
because it runs from the administrative level through to the bottom. Without mincing any
words, Brynard (2005:18) identified two reasons why this variable is critical:
Commitment is required by street level bureaucrats, top administrators and all
other stakeholders that are directly or indirectly affected by policy
implementation;
43
Commitment serves as the connection between the other four variables (content,
capacity, context and clients and coalitions). Effective implementation can only
be realized if and only if all actors pay attention to these linkages in order to
acclimatize themselves to any bewildering processes.
Capacity of Actors: Resources are necessary precondition for policy implementation.
Capacity in the context of the 5 Cs can be understood as tangible resources which
include human, financial, material, technological, and logistical resources as well as
intangible resources such as the quality of leadership, the level of motivation, the
degree of commitment, the magnitude of alacrity and the superiority of the level of
judgment of employees (Brynard, 2005:19). Brynard argues that government is by far
the most resourced entity which is endowed with the capacity to provide resources to
effectively implement public policies however, World Bank, (2011:110) contends that its
shortcoming has to do with ineffective management and lack of political will to allocate
such resources. This ineffectiveness ranges from corrupt practices, lackadaisical
attitudes, and inflation of prices, lack of probity, less accountability, collusion and
cartels. Comparing the two declarations of Brynard and World Bank, it can be seen that
even though government is the administrator of public funds it encounters issues of
maladministration in managing the funds.
Brynard, et al., (2006:200) shares similar sentiments and calls for a paradigm shift
regarding the nature of government to structurally, functionally and culturally transform
the sectorial stewards in order to guarantee effectiveness. In order to capacitate and
infuse accountability at all hierarchies of the implementation process, Binswanger-
Mkhize, de Regt, & Spector (2010) recommend that:
44
Local governments should be empowered to legally own the resources. In this
way, the communities rather than the implementing agencies become the rightful
owners who then take responsibility of the success or otherwise of the projects;
Empower local governments to devise detailed accountability mechanisms in
place in managing all projects. A contract entitled “expediente technico” which
stipulates the technical details of policies and how funds should be used
including timelines must guide the implementation process. The document
serves as monitoring tool with which the community employs to oversee the
works of the executing agency, the facilitator or the technical agent. Upon
completion of every stage of the project, a certificate is issued to the community
and payment is made if it is satisfied with the implementation outcome;
Funds should be transferred into community account in tranches. The tranche for
each stage must be transferred after completion certificate has been received
and evaluated against the project minimum benchmarks;
The hiring and firing of all technical support and suppliers should be at the
prerogative of the community using well-developed criteria to ensure that the
competent support is appointed;
Local communities must uphold transparency by having capable finance
committees to monitor daily spending of funds. The committee must be sign
checks, present all accounts to community or their representatives. The
community must have external auditors to appraise the purchase and use of
stocks. Cited in the World Bank (2011:110).
45
Clients and Coalitions: The alliances formed by clients can make, break or strengthen
implementation of policies. Warwick, (1982:63) categorically declare that “clients can
speed, slow, stop or redirect implementation.” Interest groups, opinion leaders and other
organizations especially those with voting power have a tendency of securing a
substantial benefit for their members thus, pressure is exerted on the implementation
process that may alter intents. These interest groups should therefore be managed by
identifying the level of power and the nature of their demands to avoid potential conflicts
that may arise from clients.
Another variable worth incorporating into the C protocol is Communication which
according to Brynard, (2005:21) should be singled out as a variable because it is the
means by which all actors can comprehend the entire process. Brynard added that in as
much as English is an official administrative language in most countries including South
Africa, it will be salient to translate policy documents into other local dialects to give a
vivid understanding to all actors.
The 5 C Protocol is useful to transform policy goals into practical delivery of service to
people. For the protocol to be effective, the components must work concurrently to
produce a synergy. These interlace and interconnectedness presents policy makers
with the opportunity to make all variables efficient to produce a combined effect on the
implementation outcome. The theory also implies that local community empowerment
and capacity development are of paramount importance to propel development. In
addition, the variables implies that policy cannot be developed and implemented by
„wait and see‟ attitude rather, policies must be seen as an ongoing process that
changes based on lessons learned from previous implementation stages. The
46
underlining principle is that changes must be induced, identify any blockages and
devise strategies to influence them where possible.
2.6 CONCLUSION
This chapter set out to determine the theories of policy implementation that relevant for
this study. As such, it discussed the theories of policy cycle, public value creation and
advocacy coalition framework while pointing out their strengths and weaknesses. In
addition, the popular theories of top-down and bottom-up approaches were juxtaposed
as well as the mixed approach. The discussion of this chapter also centred on the 5 C
protocol which influences the success of policy implementation. The review that was
based on the discipline of public administration presented accurate explanation of the
implementation procedures theoretically. On the whole, it can be inferred that the choice
of approach to policy implementation must fit the purpose of the policy. The next
chapter reviews the legislative framework of the study.
CHAPTER 3: LEGISLATIVE FRAMEWORK OF THE STUDY
3.1 INTRODUCTION
In the former chapter, existing literature about the study was painstakingly reviewed and
appraised. In this chapter, the BBBEE with its FSC policy will be reviewed and delve
into a number of studies that been undertaken in the field. In terms of Chapter 2, section
25 (1) of the South Africa‟s 1996 Constitution “No one may be deprived of property
except in terms of law of general application, and no law may permit arbitrary
deprivation of property.” This implies that everyone is entitled to their property except if
it can be proven beyond reasonable doubt that such property was accumulated through
47
doubtful means. Section 25 (2) also expounds that “Property may be expropriated only
in terms of law of general application” meaning that legislative measures can be taken
to promote the achievement of equality of the whole or class of persons deprived by
injustices of the times prior to independence. This transformative order by the
constitution is premised from the undesirable legacies of apartheid as such, successive
governments must drastically institute measures to achieve this. It is against this
backdrop that BBBEE was drafted some decades ago.
Hitherto, debate about the policy has gained fresh prominence with many arguing that
its goals are unachievable while others maintain it is doable. The review will therefore
pay particular attention to the Forest Sector Charter (FSC) in terms of section 9 (1) of
the BBBEE Act 53 of 2003. It also intends to elaborate on the bottlenecks hampering
the implementation of the FSC.
3.1.1 THE APARTHEID ECONOMY
The National Party (NP) which rose to power in 1948 intervened and assisted poor
whites in order to achieve economic prosperity through a process of self-help. The
intervention led to an entrenchment of a system of perpetual racial separation and
exclusion, starving majority black citizens the right to housing, movement, and
association. Black political organisations were banned at some point, quality education
and healthcare were meant for only the white skin colour and blacks had no right to
exercise their franchise( Peires 2007:38-41). Ackermann (2000:640) described the
racial segregation as prolongation of slavery except that apartheid was more of neglect
48
and abandonment in which the system controlled persons as to who to associate with,
where to socialize, where to acquire education.
The apartheid system is by definition a process where people of the same nationality
are segregated, differentiated based on colour of the skin, which then promote the
advancement of others economically and disempowered other category economically,
socially, politically and emotionally (Nortje, 1985:21). The policy excluded the black
majority from the active involvement in the economy in the sense that blacks were
denied ownership of property, land and businesses. The system denied them the right
to vote and be voted for. Worst of all, Scarce skills were only reserved for whites while
blacks were only regarded as casual labourers (Hoffman, 2008:87).
M‟paradzi (2007:12) states that the apartheid policy needed black labour to build white
supremacy but at the same time, blacks were the most feared because of their number.
Homelands and townships were therefore created for blacks to fend for themselves and
to provide a pool of labour for whites when needed. There was not major economic
activity in these reserves which were with few or no services except subsistence
farming characterised by overgrazing, land degradation and overstocking (M‟paradzi
2007:13).
Building a common society was therefore never encouraged as the system at the time
categorically indicated that Europeans must be developed in order to remain superior to
non-Europeans. The system further made it clear that whites must maintain the energy
to make South Africa an European country where the right to rule only stayed with
whites (Nortje, 1985:22-24).
49
3.1.2 THE APARTHEID ECONOMIC MODEL
The apartheid economic model emphasised the improvement and enrichment of white
minority in a process of self-determination. The Anglo-Boer War of 1899-1902 followed
by the World War 1 brought devastating poverty and hardship to the Afrikaners. Instead
of waiting for the government intervention to lessen them of poverty, they used their
own efforts to uplift their standard of living (Coleman, 1983:203). Two major insurance
companies, Sanlam and Santam were established in the 1920‟s and thereafter in 1936,
Volkskas bank was formed. Giliomee, (2003:387) narrates that these companies
provided the financial muscle to progress their prosperity and instil savings culture in the
Afrikaners.
In 1939, the Afrikaner people gathered to reiterate the importance of the self-
determination policy in a conference dubbed eerste ekonomiese volkskongres,
meaning, first economic people‟s conference (Jefferey, 2014: 124). Giliomee (2003:437)
asserts that the Afrikaner people believed and maintained that the Afrikaner can support
Afrikaner enterprises to employ Afrikaners but they could not be saved by charity of
public works. To this end, a financial institution christened Federale Volksbeleggings
was established to organise capital for corporate projects. The financial institution
assisted various entrepreneurs and major companies in tobacco, wine and luxury goods
industries.
There was speedy economic growth between 1930 and 1940 in South Africa among the
Afrikaners as a result of this initiative. They dominated almost such field as Iron and
Steel Corporation (Iscor). Iscor which was established to promote industrialisation
50
served as a training school to provide managerial, technical and financial skills to
Afrikaner managers, entrepreneurs, and scientists (Jefferey, 2014:124).
In 1951, there was yet another volkskongres (congress) to report on and congratulate
themselves on the successes chalked in reducing poverty, and their ability to enter into
the mainstream economy by means of successful industries (Giliomee, 2008:765).
Afrikaner commercial farmers also received substantial support after the NP took power
in 1948. Preference was given to them in awarding of fishing, mining and liquor licenses
as well as government contracts including textbooks, directories and public worker‟s life
insurance policies. Nevertheless, state procurement continued to be awarded to English
and Jewish companies while undermining companies of black people (Cargill, 2010:76).
In education, the Afrikaners received massive support and the NP established a number
of Afrikaans-speaking secondary schools, and tertiary institutions with world class
infrastructure. It then began a so called affirmative action in the public sector by
introducing Afrikaans and English as a major requirement in job applications which was
unproblematic for Afrikaners to meet. Cargill (2010:77) reports the affirmative action
was applied at entry-level positions with the prime aim of gradually reducing English-
dominated bosses in the workplace but not to push them away. This strategy worked
well and dropped English supremacy drastically to about 10% in the higher positions in
the public sector.
Giliomee (2008:776) asserts that in their bid to expand to other sectors of the economy,
the insurance giant Sanlam extended their footprint into mining industries. Successively,
expansion was done through Sanlam‟s subsidiaries Federale Volkseleggings and
51
Federale Mynbon (Fedmyn). The premeditated venture of Fedmyn into the mining
sector assisted the Afrikaners to purchase Anglo American Corporation‟s share of
General mining. The mining company later grew into Gencor which ranked second to
Anglo. BHP Billiton, the London and Melbourne based corporation subsequently
acquired Gencor in the 1990‟s to make them among the largest mining conglomerates
in the world (Hirsch, 2005:216).
Jefferey (2014:126) put forward that the business became a success because of the
financial strength provided by Sanlam, thus Fedmyn received no government support in
purchasing the shares. Perhaps, the acquisition was prosperous because the Afrikaners
at the time had over a decade of experience, methodological savoir-faire and technical
know-how in mining (Giliomee 2008:777). They therefore managed to add value to the
company and to the country at large. For instance, their technological know-how led to
an innovative way of producing oil from coal by the then Sasol; this was a remarkable
achievement by all standards (Cargill, 2010: 76).
3.1.3 DISEMPOWERMENT OF BLACK AFRICANS
The above achievements did not come without a loss to other group of people in South
Africa. There seems to be no compelling reason to argue that policies perpetuated by
both NP and its predecessors did little to tolerate black people. The Afrikaner policy of
self-help created white control of the economy at the detriment of indigenous black
citizens. Besides, research (see Hoffman 2008:89; Burdzik and Van Wyk 1987:122))
shows that then constitution of Republic of South Africa Act 32/1961, together with the
Electoral Laws Consolidation Act 46/1946 barred blacks from party politics as
52
categorised in the Population Registration Act 30/1950. Recent study reported by Van
Rensburg, (2010:27) indicate that the underdevelopment being witnessed today in black
communities was the outcome of the colonial and apartheid legacies which denied them
access to land, jobs, and entrepreneurship since 1910 until early 1990.
Unquestionably, Whites came to be the custodians of about 90% of the country‟s
resources at the expense of blacks, resulting in a steep income disparity between these
groups of people (Burdzik et al., 1987:122). For instance, whites earned close to 10
times more than blacks and in 1989, 52.7 % of blacks lived in shackles of destitution as
opposed to 2% whites who lived below the poverty line (Hirsch 2005:2). In fact, Gqubule
(2006b:39) states that the Gross Domestic Product per capita of whites was much
similar to Canada, whilst that of Africans could be likened with least developed countries
such as Congo.
Another policy that wrecked the black community was the introduction of a pass book
that controlled black people‟s movement to or from white areas and before they could
be employed. Anyone without the book could not be employed and refusal to produce it
on demand is tantamount to a fine or imprisonment (International Labour Office,
1966:20-21). Burdzik et al., (1987:144) elucidate that the pass books served two
purposes: to control, police and monitor Africans in white residential areas; and to
guarantee inexpensive accessible labour supply. According to Van Rensburg (2010:29),
the systemic control of blacks through the use of an identity system had far-reaching
repercussions on service delivery, land ownership, and employment. In most rural
African countries, the rural dwellers engage in agriculture to reduce unemployment
while sustaining their source of revenue. In contrast, black South Africans in rural areas
53
cannot fend for themselves as a consequence of lack of land, and the indoctrination of a
black person‟s mind by the apartheid system as labourers (Fallon and Lucas 1998: ii).
Blacks in the Eastern Cape at some point were poised to develop themselves through
self-driven initiatives. This is evident by Innes (2007:51) study that risk-taking peasant
farmers emerged and competed favourably with their white counterparts. During this
period, black entrepreneurs became successful among miners in diamond mining and
were able to compete favourably with their white counterparts. the success of blacks‟
innovative self-help was nonetheless short-lived as it was eliminated by colonial powers
(Peires 2007:44-45).
More so, rural dwellers had inadequate or no access to services such as water, proper
shelter and electricity. Gqubule (2006c:98) acknowledge that while 86% percent of
arable agricultural land representing 16.2 hectares per person belonged to whites, the
black majority owned less than one hectare per person. There was huge deficit in
transport and post and telecommunication infrastructure which were prerequisites for
entrepreneurial development. In the 1990‟s research showed that nearly 74% and 86%
of blacks had no tap water and electricity; and without telephone facilities respectively
(Hirsch 2005:16). Blacks who earned meagre wages spent almost half of their income
on transport as compared with coloureds and Indians because of the distance to their
workplaces as a result of the Group Areas Act 36/1966 which defined people‟s place of
residence based on colour of the skin (Van Rensburg 2010:30).
In trade, industry and company ownership, the Minister of Bantu Administration and
Development through the Black Laws Amendment Act 42/1964, had the vested right to
54
issue a license to blacks which exclusively allowed them to trade in townships with low
income residents. They were prevented from owning manufacturing industries and
wholesales but only the retail sale of provisions, groceries and household accessories.
Licenses were solely endorsed to one business and partnerships with white
counterparts were strictly prohibited (Hirch 2005:16; Gqubule 2006c:92). Worst of all, a
handful of black businesses received support from credit institutions as evidence by the
fact that only about 2% blacks had access to loans and entrepreneurial support in 1990
(Van Rensburg 2010:30).
In the labour market, black labour had no right to determine their salaries, salary
progression and promotions at work because they were not permitted to unionise. As
such, black people were mostly used as casual labour with despicable earnings. Hirsch
(2005:17) reports that out of the 2 250 directors of the 100 listed companies in the
Johannesburg Stock Exchange, only 45 (2%) were black in 1992. This led to the
establishment of the Black Management Forum (BMF) which served as a professional
body to steer the affairs of black workers. Jack, (2007:5-7) comments that the BMF
managed to make the organisation a success despite the banning of all unions except
teacher and pastoral unions by the apartheid government.
In education, the apartheid education policy damaged the academic potentials of
Africans and for that matter, the economic advancement of the country. In 1959,
through the Extension of the University Education Act 45/1959, blacks were prevented
from attending white universities and budgets of black universities were equated to an
amount accrued from black taxes through the Black Education Act 47/1953. In addition,
black universities were located in remote and inaccessible areas leaving students
55
isolated from active participation in economic and political activities in urban areas
(Butler, 2006:80). The then Minister of Bantu Affairs, stated categorically that the black
person is meant to receive training that confines them to their own communities as there
was no place for them in European Communities. Accordingly, the minister crafted
policies which saw a new education system called Bantu Education for blacks designed
primarily for the homelands (Lipton 1986:24). Bantu education was a system which
taught learners how to work for others but not how create jobs for oneself (O‟Regan
1999:17).
3.1.4 THE END OF APARTHEID SYSTEM
The 1976 Soweto Uprising saw some reforms (economic and political) and relaxation of
restrictions on blacks even though observers felt that it was only rhetoric until January
1986 (Burdzik et al., 1987:121) when the president addressed parliament about its
commitment to establishing equal opportunities for all South Africans including blacks.
The policy reforms included the recognition of blacks as citizens of South Africa;
involving blacks in policymaking; uniform identity for all categories of the population; and
ownership of resources (Burdzik et al., 1987:121). The call for economic reforms even
gained a different dimension when the chairman of Harry Openheimer of the Anglo
American Corporation dispute that the economy was on the verge of reaching its fullest
potential, hence structural changes must be made to avoid slower economic growth.
Openheimer went on to state that prospects for economic growth will only be achieved
by equipping blacks with technical skills required by the economy, otherwise South
Africans must embrace themselves with perpetual low growth (Gelb 1991:19-20).
Ultimately, they heeded to the call of the chairman by relaxing policies to create African
56
middle class as a ploy to win the trust of blacks. Black advancement perhaps became a
necessity as international communities further put pressure on the apartheid
government to end the segregation or face sanctions. Underground local trade unions
as well as political organisations contributed to the process of the economic and political
liberation (Iheduru, 2004:4-5).
Analysts also believe that the free market system is the executioner of apartheid as
economic growth led to the demand for skilled labour, and new markets, hence the
elimination of racist employment policies. The apartheid government‟s refusal to adhere
to this truism saw a stifled growth, high unemployment and high inflation (Maseko
2007:75). To illustrate this, until the 1970‟s the apartheid government chalked some
successes in economic growth and relative fiscal stability especially between the post-
World War II and 1974 when Gross Domestic Product (GDP) rose to an average of
about 4.9% per annum (Gelb 1991:4). Between 1963 and 1968 in particular, GDP
hovered around 9.3 percent per annum (Gqubule 2006c:91; Innes 2007:59). Again in
1970, manufacturing and construction sector contributed 28% to the GDP; agriculture
contributed 9%; and mining contributed 10.5%. Unemployment reduced drastically but
not proportionate to wages as income inequality between blacks and whites widened
(Innes 2007:59; Johnson 2009:396).
The discriminatory and apartheid tendencies persisted until growth took a downward
trend in late late 1974 to as low as 1.9% as a result of lack of black income to support
businesses as well as lack of skills to meet the demand for experienced labour in the
economy. Inflation rose to about 13%, unemployment stood high and manufacturing
was unable to create jobs because of low demand (Gelb 1991:4). For instance,
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unemployment rose from 22.5% in 1982 to 32.6% in 1994 and only six conglomerates
possessed about 85% shares on the Johannesburg Stock Exchange (JSE). Also
astonishing was the fact that Anglo America controlled nearly 52% of shares in the JSE
whereas black business had not more that 1% control (Van Rensburg, 2010:35).
The global oil crises between 1973 and 1979 as well as regional events such as the
political and economic liberation of Mozambique, Angola and Zimbabwe in 1975, 1976
and 1981 respectively similarly played a role in putting pressure on the apartheid
government to relinquish power to promote majority rule. In addition, local happenings
including the Soweto uprising of 1976, declining investment and heightened sanctions
against the apartheid government and the heightened debt predicaments of 1985
discouraged the government from continuing the divide-and-rule policy (Gqubule
2006c:94; Iheduru 2004:5).
It can be deduced from the foregoing discussion that it will be unthinkable and
unimaginable to reconcile with the past without some form of compensation to those
previously disadvantaged by the inequities of the past regimes. As mentioned earlier,
political equality, freedom and emancipation will be a dream if they are not
accompanied by economic equality, freedom and emancipation. Economic equality is a
major resource similar to platinum considering the fact that blacks were denied basic
resources including shelter, roads, jobs, electricity for over a century. It will not be a
blunder if blacks demand for restitution and redistribution of all that was attained from
the apartheid system. Black Economic Empowerment policy is therefore a bold step
towards achieving economic emancipation for all South Africans but is its
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implementation achieving its objectives? The subsequent sections will critically
demystify the characteristics and intricacies of the policy.
3.2 THE BBBEE POLICY
BBBEE is a commonly-used concept in economic empowerment literature yet it is
challenging to define precisely due in part to the risk of focusing on narrow economic
development, and incorrectly thinking that it is merely expropriating property of white
people to black people. While a variety of definitions of the term have been suggested,
this paper will use the definition adopted by BEE Commission as “an integrated and
coherent socio-economic process located within the context of the country‟s national
transformation programme, namely the RDP (Reconstruction and Development
Programme). It is aimed at redressing the imbalances of the past by seeking to
substantially and equitably transfer and confer the ownership, management and control
of South Africa‟s …financial and economic resources to the majority of the citizens. It
seeks to ensure broader and meaningful participation in the economy by black people to
achieve sustainable development and prosperity” (Acemeglo et al., 2007:4).
The essence of this definition is that the legacies of apartheid must be dealt with and
the surest process of dealing with it is through an empowerment of black people as
prescribed in the constitution. Kleynhans, & Kruger, (2014:2) in reference to the
definition, insist that the central pillar of transforming the economy is the BBBEE with
the aim of rectifying the inequities of the past by seeking to significantly and rightfully
transferring resources to the majority of citizens while restoring dignity as well as self-
respect of those previously disadvantaged by white rule. The authors‟ enlightenment is
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close to that of Van Rensburg (2010:50) who argues that the BBBEE Act (section 1) in
general outlines the policy as the economic liberation of women, workers, black people,
youth, the physically disabled, and people residing in remote isolated areas through
diverse integrated poverty and inequality alleviation strategies that include but not
mutually exhaustive to;
Increasing black people in the regulation, proprietorship and management of
enterprises;
Up skilling and developing the aptitudes of black people;
Attaining equal opportunities for all South Africans in the workplace through
employment equity;
Giving preferences to black companies in the procurement and supply chain
process;
Empowering communities, workers and cooperatives through profit sharing
initiatives;
Investing in black managed companies to reinstate their self-esteem and self-
respect.
Put differently, Chimhandamba (2008:16) propounds the view that the primary focus of
the policy is achieving equal opportunities that ensure broader and meaningful
participation in the economy by black people for sustainable development whereas
Standard Bank, (2008:2) advocates that it is tool for growth and sustainability of
businesses rather than mere giving away or receiving shares just to meet legislative
requirements of government. The submissions of both Standard Bank and Chimhamba
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suggest that the policy is not to retard economic growth but to strengthen it through
redistribution.
The National Development Plan (NDP) states that political democracy can survive and
flourish if the masses of the people are emancipated from poverty, given land, and
offered with prospects for a better life, hence, attacking poverty and deprivation must be
the first priority of a democratic government (Statistics South Africa (STATSSA, 2014:6).
STATSSA (2014:6) as well specify the two central objectives of the NDP, namely the
elimination of poverty and reduction of inequalities signifying that the plan will be
gauged by the degree to which the lives and opportunities of the underprivileged South
Africans are transmuted in a sustainable manner. B-BBEE is one of the poverty and
inequality strategies that will stimulate the local economy and ameliorate sustainable
growth.
The target group in the policy is mainly black South Africans comprising Africans,
Chinese, Indians and Coloureds with the intended beneficiaries being the physically
challenged, the youth, rural women and workers. This raises questions about who are
actually black people. The policy delineates black peoples as “a generic term for black
South Africans, Coloureds, Indians, and Chinese and who attain citizenship prior to the
date of independence” (Kruger, 2011:209). Kruger further submits that Article 2 of the
Act aims to expedite B-BBEE policy with the following objectives:
To permit involvement of black people in the economy by promoting economic
transformation;
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To enable racial representation in ownership and management of current, new
and potential companies to achieve considerable fairness;
To improve the level of inclusion and access of stakeholders such as community
groups, unions, and individual workers in the activities of current, new and
potential companies;
To continuously assess the participation of black women as to whether they
possess, and manage current, new and potential companies whiles monitoring
the extent of their access to the economy, and skills development;
To realise sustainable and prosperous development by promoting investment
programmes that lead to all-encompassing and significant participation in the
economy by the previously disadvantaged;
To enable rural communities access to economic activities, property,
infrastructure, proprietorship and expertise;
To make funding and credit facilities available to empower blacks (Kruger,
2011:3).
3.3 EMPIRICAL REVIEW
In the past decade, a number of researchers have sought to examine the effects of
BBBEE implementation in achieving its objective of equal and just society. For instance,
an empirical research carried out by Ngwenya (2007:61) found that the BBBEE as a tool
for reversing inequality and bolstering economic growth has only been effective in
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ensuring a skewed transformation to the advantage of handful of connected black
people and the pace of transformation has been similarly slow.
Two years later, a similar study was conducted by Moyo (2009:64), this time in the
Metal and Engineering sector in Ekurhuleni Region and found that implementing the
BBBEE has little impact in terms of “opportunities, increase in turnover, new customers,
innovative ideas by the new partner and does not help the business to acquire new
contracts” as envisaged by the policy. The author further reported that it was impossible
to comply with the codes due to lack of skilled labour particularly women in the metal
and engineering sector, the implementation of the code results in loss of business focus
thereby impeding business performance rather than improving it. lastly, Moyo records
that apart from the “neglect of existing customers” businesses have less time to attract
potential clients and more importantly lose control of their businesses as a result of
dolling out shares to “strangers”
Moyo (2009:66) made recommendations to these staggering findings mentioning that
“the skills development element should weigh more than ownership and management
control in the scorecard. In the final analysis Black people need skills far more than
some promotions and share ownership that might be fronting.” Moreover, the author
called for a complete overhaul of the policy to foster culture of creativity and innovation
because as it currently stands, black people are lethargically waiting for „BBBEE deals‟
whiles white people are reluctant to new businesses for black people to acquire shares
at a later date.
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More recently, Tshetu (2014:93-104) in a research, analysed the value created for
stakeholders through the implementation of BBBEE. Tshetu specifically ask the
research question: “has value been created for all stakeholders involved?” The study
retorts that the value created by BBBEE could have been realised without its
implementation, implying that the policy is nothing less than a deception. To create
value, Tshetu recommends that the DTI should effectively manage holdups such as
corruption, fronting, and non-compliance. The author also recommends that the DTI
should personally administer the implementation of the policy because at present there
is misalignment between policy drafters, policy implementers and measured entities.
The above empirical literature pertaining to BBBEE implementation strongly suggests
that its implementation gap exists as the policy has unable to create value for
stakeholders, not managed to curtail widening inequality gap, and an artificial distance
is created among stakeholders. Besides, the several studies have been produced about
BBBEE (Tshetu, 2014; Moyo, no; Ngwenya 2007), nonetheless there is still insufficient
data focusing on proper analysis in the rural areas. Specifically, no previous study has
investigated the performance of forestry firms in to ascertain whether value is being
created through the implementation of the FSC. This study will therefore debut research
in the field.
3.4 ELEMENTS AND REQUIREMENTS OF FSC GENERIC BBBEE CODES
The guiding principle that clarifies the implementations of the BBBEE policy is known as
the Codes of Good Practice also known as the Codes (Jack 2007:66). The Codes
provides a starting point for the forest sector firms to develop a charter. As a result, the
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FSC was gazetted in May 2009 in accordance with section 9 (1) of BBBEE Act 53 of
2003 (DTI, 2009:1). The codes are categorised into seven (now five) elements and
provide the standard instrument for fair outcome which is intended to offer black people
the opportunity to own and manage part of existing businesses while concurrently
boosting the establishment of black businesses through preferential and entrepreneurial
development (Cargill 2010:24).
Section 4 (page 4) of the FSC states its objectives as: to change the racial and gender
composition in the forest sector; nurture black-owned and black-managed forestry firms;
use the forestry sector as a catalyst to empower disadvantaged black communities;
promote sustainable jobs; and ensure fair contracting in the forest sector.
Section 5.2 (page 5) advocates for and inclusive empowerment process in the
transformation agenda. Specifically it states that “an inclusive process with the
participation and commitment of all stakeholders in the forest sector, including all
enterprises, whether large or small. Inclusiveness is required both in relation to the
formulation and implementation of the Charter.”
It also promotes economic growth, stating that the current sector players will ultimately
reach its maximum potential if new players are not attracted to it. Along with this
sentiment, section 5 (3) of the FSC stress envisages to “maintain its global
competitiveness and profitability to secure long term sustainable growth.” This growth
according to the policy should be linked to the transformation needs of the rural poor
and lead to the development of small business development as well as increase
productivity of the sector.
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Likewise, The FSC (section 5.4) promotes partnership which was formerly non-existent
in the apartheid economy mentioned earlier. The implementation therefore seeks to
develop partnership between sub-sectors to safeguard interdependence among them in
the sector, between the industry and government and between the sector and local
communities. Successful partnership secures effective transfer of skills, and mentors
black-owned enterprises to thrive in the competitive business environment, provide
financial resources from government and ensure community beneficiation.
The FSC affects all forestry related companies such as timber growers, pole growers,
sawmill companies, charcoal producers, and fibre subsector unless they are Exempted
Micro Enterprises (EMEs) with less that R5 million annual revenue turnover and are
automatically deemed level 4 contributors (Standard Bank, 2008:3). Four out of seven
of the Codes applies to a micro enterprise also known as a Qualifying Small Enterprise
(QSE) with an annual turnover ranging from R5 million to R35 million (Jack, 2007:73).
Moyo (2009:65) in his study of small businesses in Gauteng asserts businesses should
focus on any four of the codes that are easy for them to comply with. This plea was
made in response to small businesses complaints that the requirement of the ownership
element is difficult to meet. Conversely, large companies with annual gross revenue
above R35 million are expected to act in accordance with all the seven elements but
Moyo failed to provide any strategy thereof.
The Codes are legally binding and government departments including state-owned
companies are obliged to choose their suppliers, and clients from BBBEE-compliant
entities, hence a non-compliant firm will find it difficult, if not impossible to operate in the
economy (Standard Bank, 2008:3).
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TABLE 3.1: COMPONENTS OF THE GENERIC BBBEE SCORES AND
WEIGHTINGS FOR THE FOREST SECTOR
Component Weightings
Ownership 20
Management control 10
Employment Equity 15
Skills Development 15
Preferential procurement 20
Enterprise development 15
Socio-economic development 5
Total points (excluding special bonus
points)
100
Source: (Jeffery, 2014:143)
According to the DTI (2003:29) the codes (as in Table 3.1) provide a rudimentary
structure that facilitates measurable targets for the policy‟s three core pillars;
Equity through skills training and employment;
Empowering directly by allowing the less privileged to own, manage and control
companies; and
Developing enterprises and channelling procurement to the less capable
companies to make them competitive, viable and sustainable.
The weightings for ownership and preferential procurement are the highest and have
equal weightings of 20 points. Employment equity and skills development equally have
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weighting of 15 points. The socio-economic development component gives companies 5
points. However, the amended code now has the enterprise development having the
highest point.
TABLE 3.2: ELEMENTS FOR QUALIFYING SMALL ENTERPRISES (QSE’S)
Component Points
Ownership 25
Management control 25
Employment Equity 25
Skills Development 25
Preferential procurement 25
Enterprise development 25
Socio-economic development 25
Total points (for meeting any 4
elements)
100
Source: Department of Trade and Industry (2007: 79)
Jeffery (2014:143) argues that complying with the Codes is not obligatory but
enterprises with low points may struggle to remain in business because they will be
denied government contracts and forest permits. Generally, compliant firms prefer to do
business with compliant firms since it boost their points, legibility and acceptance
(Empowerdex, 2007: 2); hence procuring from non-compliant companies will ultimately
be unproductive and disastrous strategically (Farreira & de Villiers, 2012:12).
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A firm‟s compliance with the FSC therefore has two implications for their operations: the
extent to which firms will accumulate points for transacting business with other firms and
the extent to which it can conduct business with government departments (Farreira et
al., 2012:12). The subsequent discussions will explore each component of the Codes in
detail.
3.4.1 FSC TARGETS UNDER THE OWNERSHIP ELEMENT
As Van Rensburg (2010:75) put it “black people own nothing in South Africa” but are the
majority from Musina in the north to Cape Town in the South and from Namaqualand in
the west to Durban in the East. The forest sector charter aims to transform the industry
between 2009 and 2019 by transferring 30% ownership of forestry companies to black
people (FSC, 2009:8). This target will be a collaborative effort between government and
the industry to provide support such as:
Existing forest enterprises must transfer 25% of their equities to black people but
medium and large firms must transfer additional 5% to achieve a 30% target;
State forests must be reorganized to support black people towards achieving
shares in forestry companies;
Developing existing and potential black enterprises (individually or cooperatively)
to enter into forestry activities such as afforestation and other value adding
activities.
Ensure gender equity by transferring between 10% and 15% of equity to black
women. This special focus on women is to promote their participation in the
forest sector which was previously men dominated;
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Government makes funds available for black people to complete BBBEE
transactions. The Department of Water Affairs and Forestry (DWAF)
represesenting the government through its influence, will negotiate funding for
these transsactions. DWAF will knock on the doors of Departments such as
Department of Land Affairs (DLA), Department of Agriculture (DoA) and the Land
Bank as well as corporations such as Industrial Development Corporation (IDC)
to source funds for emerging entrepreneurs. DWAF will also consult with the
National Treasury to provide funds to establish a Development Fund for the
purchase of seeds, land, and tree planting. This is essential for people not to be
left out as a result of lack of funds. Industries on the other hand, will develop
various financial models to underpin this initiative, propose the financial models
to financial institutions for approval, and recommend insurance models feasible
for emerging growers as this sector is pestered by continuous forest fires (FSC,
2009:8,9,13).
Consequently, the ownership component hinges on the voting rights of beneficiaries
(Jack 2007:119). The share of a company gives the shareholder the right to vote and
one share equals one vote. Having the right to vote implies that the shareholder has
some degree of power to control the company where control is determined by the
number of shares one owns. Van Rensburg, (2010:77) notes that there must be enough
evidence to prove that the black shareholder exercises their own vote otherwise, no
point will be rewarded to the company however, it is worrying to note that the voting
right of many shareholders have been relinquished to the sponsors of their shares.
3.4.1.1 BARRIERS TO THE OWNERSHIP ELEMENT IMPLEMENTATION
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The ownership category of the FSC policy is the most provocative elements of the
Codes. This section will discuss about three of the most pertinent ones that still need
elucidation.
ONCE EMPOWERED, ALWAYS EMPOWERED (OEAE) PRINCIPLE: one contentious
subject under the ownership element is whether a firm‟s BBBEE certificate expires or
not especially when BBBEE investor sells their share. In the Financial Sector charter
code of 2003 for instance, if BEE investors sell off their shares to whites, the measured
entities maintain their full points under ownership (Jeffery, 2014:154). The OEAE is the
principle that gives companies permanent empowerment status even after black
investors have departed from the firm either because of sale or loss of their shares
(Masombuka, 2015:2). Masombuka clarify that certification exists based on the following
conditions;
The black shareholder must own the share for a minimum of 3 years;
There must be some value created whiles share was in the possession of the
black investor;
The point that is obtained from this scenario must not exceed 40% of the entity‟s
overall score under the ownership element (Landsberg, 2013:2).
This has incurred the displeasure of many critics, alluding that the OEAE principle of the
transformation process in the end return the full ownership of the economy to whites.
Gqubule (Cited in Jeffery 2014:155) warned that white firms will hold on to the
certificates and prevent other potential black investors purchasing the shares so as to
benefit empowerment policy. Masombuka (2015:3) perhaps argued that the intended
purpose of any transformation policy is to ensure a sustainable active participation of
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the previously oppressed into the mainstream economy; hence the OEAE principle
limits this objective so it cannot be defended in the BEE jurisprudence and that the
minimum of 30% ownership must be maintained, safeguarded and protected throughout
the existence of the firm. This implies that measured entities must always look for new
BBBEE investors should the existing investor choose to leave the entity in order to
maintain their BEE points in the ownership category.
Khumalo (2015:1) disputes Masombuka‟s assertion, stating that it is unreasonable for a
firm that has empowered a black shareholder economically to lose their BBBEE points
after the shareholder has disposed of the shares. Considering the cost of financial
facilitation and the time involved Cargill (2010:47) rebels that it is irrational for firms to
prepare new transactions anytime a black investor opts out deliberately or
unintentionally. Cargill‟s interpretation overlooks much of the intents of the ownership
element as such Jeffery (2014:155) uphold that the social benefit of the policy will be at
stake if the principle is sustained as it defeats the purpose of the policy which is to offer
black people the opportunity to put forth their influence in economic decisions. Gqubule
admonished BEE investors to avoid the „get rich quick‟ syndrome and focus on asset
ownership as BEE is not similar to gaming club where one makes quick bucks and
vacate, this will be a recipe for disaster for the policy (cited in Johnson 2009:393).
NARROW-BASED BEE: The ownership element has also been criticized for focusing
on selected individuals who acquire BBBEE deals for self-wealth at the expense of
black majority. Precisely, the likes of ANC stalwarts such as former presidential
spokesperson Mac Maharaj; mining magnate and founder of Mamelodi Sundowns
Football club Patrice Motsepe; South Africa‟s deputy president Cyril Ramaphosa; former
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Human Settlement minister Tokyo Sexwale; and others including Bulelani Ngcuka, and
Smuts Ngonyama are major beneficiaries of BBBEE in the past (Jeffery 2014:156). The
author lamented that ordinary black South Africans on the streets are not even aware of
the policy, not to talk of the benefits but only selected ANC members who are already
millionaires continue to benefit from it.
In an attempt to broaden this element, most of the deals between 2005 and 2006 were
transferred to employees of entities but critics contended that such deal was meant to
serve mere retention purposes and an employee who is a shareholder will have limited
influence to affect business decisions. Fortunately, the code now stipulates that only
40% of the 30% share ownership will be accepted in the Employee share ownership
programme (Esop) (Cachalia, 2017:2). Even then, Cargill (2010:160) accentuate that all
these are still narrow-based as they only benefits individuals thus suggested that to
broaden the policy to ensure that it reaches the poor majority of citizens; the shares
should be given to foundations with community service objective; to cooperatives in
societies; and to trusts representing the communities.
THE COST BENEFIT ANALYSIS OF OWNERSHIP: the ownership element where
companies are expected to transfer 30% shares to blacks usually has unpredictable
benefits to blacks and the economy at large as this process is not the creation of a new
company but sharing of existing one. More so, the deal comes with little to no benefit to
the measured entity as most BBBEE investors come with inadequate business acumen
as well as experience yet cost of the transaction is mostly enormous. The economy
eventually shrinks compared to allowing entities to assist black business people
establish their businesses (Cargill 2010:205). Cargill was concerned about the cost of
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BEE deals which stood at R600 billion in 2013 even though this amount is doubtful
because many of the unlisted companies were not included in the figure. Jeffery,
(2014:158) lamented that the amount of money spent on BEE deals can well be used to
improve the infrastructural deficit confronting the country‟ stability.
3.4.2 MANAGEMENT CONTROL OF THE FSC 10 BEE POINTS
It is envisaged that the FSC act in accordance with the Codes of Good Practice under
management control by ensuring that the previously advantaged (black women, black
men, Indians, Coloureds and Chinese) contribute significantly to the management of
forestry formations (FSC, 2009: 9).
Under the management control category, measured entities can obtain 10 points for the
inclusion of black people which allow them a 50% voting right at board level and top
management (Moyo 2009:22). The firm must also endeavour to include at least 40%
blacks at the top management level and bonus point will be earned if about 50% of the
black directors are women (Empowerdex 2007:6). The inclusion of black people at the
board level is vital to ensure their superior participation in the management of firms.
Jack (2007:228) establishes that board members exercise more authority and influence
compared with shareholder hence advocates for more points under this element. A
board member is by definition are people in a measured entity who engage in the
everyday management and control the entity and are normally appointed by
shareholders.
The management element only takes into account top management because both
middle and low-rank management have less decision-making powers that does not
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impact on the strategies of companies (Codes of Good Practice: Schedule 1, Part 2,
Definitions) and due to the fact that he other level of management is dealt with under
employment equity. Senior top management according to the Code is an employee of a
measured entity, such as the chief executive officer, the chief operating officer, the chief
financial officer and other related positions, appointed by the board of directors to
perform the daily operations of the entity, long-term planning, development and
implementation, and takes the responsibility for the overall financial management of the
measured entity. Top management is similarly related to senior top management except
that the top manager is an employee who in addition, holds rights of ownership and
serves on the board as well. Examples of Top Management posts that are recognized
by the Codes are the heads of sales, marketing, public relations, transformation and
human resources departments (Van Resburg 2010:90).
A board member with voting rights usually carries more weight (3 points is allocated to
board members with exercisable voting right and 2 points for black executive directors)
because of their greater tactical influence in the firm. The point by top management
position is 3 with senior top manager weighing a maximum of 3 and other top manager
earning 2 points (Van Resburg 2010:91). Standard Bank (2008:13) points out that
through the Adjusted Recognition for Gender (ARG), the Code lays more prominence
on inclusion of women in management. In this case, the percentage of a black woman is
added to the percentage of black representation divided by 2. Jack (2007:235) praises
this stance and that these differentiations are important to create diversity needed in
most companies, to transform the country into a more equal society and to figure out the
level of black supremacy over strategic operations in companies.
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The number of black executive directors has increased tremendously in recent years.
For exampleEmpowerdex (2012:1) reports that between 2006 and 2012, JSE listed
companies black directors grew from 93 to 177 representing 90%; the number of non-
executive directors jumped to 869 from 392 symbolizing 120%; and lastly in 1992, there
were only 15 black directors though in 2012, the number rose to 1 046 executive and
non-executive black directors, denoting about 7000%.
However, the chairperson of the Employment Equity Commission Mpo Mkeli though
acknowledged the level of improvement, was not impressed with the numbers, pointing
out that the number only represent 4.4% of total black directors in JSE listed companies
therefore it does not call for any celebration (Sibanyoni 2010:1). The South African
Institute of Chartered Accountant (SAICA) CEO Terence Nombembe also put across
that a staggering 75% of directors are still whites with 87% of them being males, hence
a need for more speedy transformation (Timeslive, 2014:1).
Jeffery (2014:159) oppose that the policy has done its bit in bringing transformation to
the economy as both experienced and politically connected blacks have benefitted
immensely and are still benefitting from it. For instance in 2013, the former national
treasurer of the ANC who is a lawyer by profession was board member of not less than
80 companies. Also, before his appointment as the deputy president of the ANC and the
country, Cyril Ramaphosa was sitting on over 50 company boards.
The performance of companies in the management category has been showing a
fluctuating trend in the last eight years. In 2008 for instance, companies scored 62%
(6.2 out of 10 points), then fell to 42% (4.2 out of 10 points) in 2010, and rose to 49%
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(4.9 out of 10 points) in 2012 (KPMG 2013:13). The accounting firm could not provide
any reason for the fluctuations but Jeffery (2014:160) believe that black directors often
lack the skills, the expertise and the experience to effectively manage their assigned
duties. His conviction stems from the evidence presented by the founders of the former
low-cost airline 1Time. The evidence suggested a lack of experience of the BEE
directors as the main cause of their downfall. To achieve a 50% black representation at
the board level, the airline gave 25% ownership to a BEE consortium. Subsequently, yet
without experience, a number of black directors were appointed who later on outvoted
and outnumbered the board. The CEO Rodney James observed that the black directors
without learning the business complexities of the airline industry, made suicidal
decisions, the biggest of which was the killing of the airline‟s cash flow by cutting
operations by 30%. This business decision, coupled with loss of business control by the
experience directors led airline to go insolvent. This illustration of the airline though not
related to the forest sector is highly relevant for measured entities to take a cue from.
3.4.3 EMPLOYMENT EQUITY 15 BEE POINTS
Under this element measured entities must comply with the Employment Equity Act as
contained in the Codes to achieve the objectives of having black professionals in
technical and skilled positions in the sector. Furthermore, forestry businesses are
mandated to continuously report to well instituted Charter Council on steps being taken
to improve workplace conditions. The workplace condition is underpinned by the Basic
Conditions of Employment Act as well as legislations pertaining to fair labour practices
at the Department of Labour. Forestry companies that Fail to comply with this statute
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will miss the opportunity to do business with state forestry companies (FSC, 2009:9,
12).
The category of the scorecard quantifies the number of black employees in each level of
management in a business as set out in the existing Employment Equity Act (EEA)
(Standard Bank 2008:14). The goal of EEA is to promote impartial employment
prospects, just and fair treatment in the labour system by eliminating unfair
discrimination; to safeguard justifiable representation of all categories of the population
in all sectors and to implement corrective measures to balance the unequal labour
system (EEA, No. 55 of 1998:7). This Act, according to industry experts (see Bardien,
2005:23) poses a challenge in that black professionals are in in short supply in certain
industries; hence it becomes a hurdle, if not unmanageable to empower them.
Notwithstanding the hurdles, the government is of the opinion that considering the
domination of white-owned firms in the economy, can only be fair to local communities if
firms are coerced to employ local people. In view of that, Jeffery (2010:275) propounds
that the code allocates 15 points to measured entities on the following conditions:
The firm must have 43% black representation in first phase (from 2009 to 2011)
and 60% black representation in the next phase (2012 to 2019) at senior
management level;
At middle management level, the firm must attain 63% and 75% in the first phase
and second phase respectively; and
At the junior management level, 68% must be achieved by the firm in the first
phase and 80% in the next phase
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A subminimum of 40% is nonetheless required for a measured entity to receive any
point under this element (Van Resburg 2010:94). The scope of the Codes is limited than
that of the EEA in that it does not involve white women and white disabled people
hereafter called designated groups while the EEA considers these groups as
beneficiaries (EEA No. 55 of 1998: sections 13:20). Pretorius, Klinck & Ngwena
(2009:10) lament that this difference creates some level of impediments for firms to act
in accordance with the codes since the same measured entity has to comply with both
Acts but with different beneficiaries.
Except measuring participation of the black people at all level of employment, the
objective of the EEA and the Codes is to ensure income equality (EEA No. 55 of 1998:
section 27). This implies that employees with the same duties, experience and
responsibilities must be remunerated equally and any anomalies be reported to the
Director-General in the Department of Labour by the employers. The EEA emphasise
preference for the formerly excluded but not through replacing white employees with
black, hence Jack (2007:252) argued that the onus rest on government to either create
more jobs or create an enabling environment for the private sector to create jobs.
In the actual measurement process of this element, not all black people in a company
are considered employees. According to the Labour Relations Act 66/1995, an
employee is
Anyone except independent contractor who works for another person, or the
state in return for compensation; and
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Any other individual who assists an employer in rendering or directing their
business.
An independent contractor is freelancer whose duty is to perform a specific work to
produce a specific result; who may employ the service of others to complete a task;
whose work is time bound; whose agreement may continue (provided he/she has a
good replacement) even after death; and whose contract ends as soon as the work is
produced (Worklaw 2006:3). A person falling within this range is strictly excluded from
being counted in the employment equity element as they are incorporated in the
preferential procurement element. Jack (2007:255) follow-ups that persons hired
contractually weigh more (20 points) under the preferential procurement element than
retaining them as employees under the employment equity element. This may be one of
the reasons firms prefer to hire more independent contractors on their payroll to
permanent employees.
The performance of firms in this element has been very dismal and murky. Empowerdex
(2012:6) remarked that averagely, the compliance score was 31% (4.7/15) and 40%
(6/15) in 2008 and 2011 respectively. KPMG (2013:12) also mentioned that firms
categorized this as the most prioritized element in 2011 while 23% regarded it as the
most challenging in terms of implementation. Most of the firms provide the following
reasons for this gloomy performance include;
Except the difficulty in getting a black skilled labour, it is not inexpensive;
Attracting a good competent black managers with technical experience is nerve-
wracking and nail-biting;
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The pool of skilled white labour outweigh blacks who are supposed to be
employed as ratified by the policy (Jeffery 2014:162);
3.4.4 SKILLS DEVELOPMENT 15 BEE POINTS
The FSC acknowledges that for companies to achieve equity in employment and have
effective management, skills development must be of utmost importance. To this end,
companies in this sector must spend at least 3% of their budget on training black people
and half of this should target women and the disabled. This target must be achieved in a
period of 3 years. More importantly, a Sector Skills Plan (SSP), an initiative to provide
forestry employees with the requisite skills required by the sector has been developed
(in collaboration with statutory bodies including South African Qualifications Authority,
SAQA, Forest Education and Training Authority, FETA and forestry firms) for all forestry
firms to comply with. This skills development initiative must gear towards the youth,
women and new employees with little or no skills. It must also target staff engaging in
land reform activities so as to safeguard sustainability in the process (FSC, 2009:32).
Jack (2007:272-273) put forward that this era of globalization, competition and
information and communication technology will not benefit black people until most of
them are reskilled, re-equipped and retrained hence the establishment of Skills
Development Act 97/1998 (SDA) and the Skills Development Levies Act 9 of 1999
(SDLA). With regards to this, approximately 27 Setas including the National Skills
Authority, as well as the Department of Labour (the Skills Development Unit) have been
established to oversee the successful implementation of the training development
programme. All expenditure by the measured entities is refunded once an accredited
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verification agency certifies the successful training of staff (Bowman Gilfillan Attorneys
2010:38).
The 15 BEE points is sub-categorised into Skills Development Expenditure and
Learnerships which are 9 points and 6 points respectively. According to Ngcukaitobi
(2010:39), seven learnerships and skills development programmes are recognised by
the Code which include;
Theory-based institutions with formal assessment and evaluated by the
institution;
Theory-based institutions with practical learning in a firm or a replica of a firm
environment which is assessed formally by the institution;
Practical learning in the workplace that is assessed formally by a professional
body after the awarding of a qualification;
Learning programmes that are contractually work-based and assessed formally
by a recognised organisation;
Learning programmes that are work-based which does not require any contract
but assessed formally by an recognised organisation; and
Informal programmes that are work related;
Jeffery (2014:163) observes that the skills development element is of more value to
businesses compared with ownership element to be specific because adequate skills
are vital to improved productivity, profits, business expansion and more economic
growth. Similarly, KPMG (2014:4) argues that this element is perhaps important to
reduce the adverse skill deficiency that has beleaguered the economy, more particularly
the private sector which has led to thousands of vacant posts left unfilled. In her lecture
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at Georgetown University in 2013, the then leader of AgangSA indicated that about 800
000 vacant post were not filled as a result of skill scarcity (Ramphele 2013:2).
The managing director of Manpower South Africa also observed that the lack of
technical skills has negative impact on both the economy and employment leading to
high unemployment and poverty among the youth (Steyn 2015:1). These comments
even make the skills development element a more strategic business choice. Steyn
(2015:2) stated that about 31% of employers hire either unqualified or under qualified
staff and train them to acquire the necessary skills needed for better-quality productivity
thus it is unquestionable to even increase the point under this code.
3.4.5 PREFERENTIAL PROCUREMENT 20 BEE POINTS
In as much as forestry companies must adhere to the national codes, it is essential that
a report be submitted to the FSC Charter Council about strategies being implemented
by firms to bring sanity to procurement processes. The following interventions are in
place to accomplish this:
The enactment of codes to control the procurement relationship among forestry
companies, contractors and subcontractors. This code envisages bringing
transparency, fairness and impartiality in the supply chain process, as well as in
tendering for contractors to ensure improvement in profit margins for contractors;
The enactment of codes to guide forest grower schemes to maintain fair labour
practices, openness in pricing and ensure business practices that considers the
views of stakeholders;
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The enactments of codes to guide the relationship between small and large scale
charcoal producers and charcoal users in order to bring about stability in pricing,
agree on pricing, prevent collusion with its associated cartels and enhance good
business practices and fairness in business deals (FSC, 2009:12).
The FSC policy envisages that between 2009 and 2016, companies including
government departments should purchase at least 50% of goods and services from
BBBEE compliant firms and by 2019, it should increase to 70% (Jeffery 2014:165). This
suggests that a company must choose its suppliers prudently to improve their likelihood
of meeting these targets.
The preferential procurement category permits firms to score 20 BEE points provided
that purchase is procured from BEE compliant firms. The higher a suppliers BEE point,
the higher the purchasers point and amount to claim (Standard Bank 2008:16).
The preferential procurement element is overseen by the Preferential Procurement
Policy Framework Act (PPPFA) with the mandate to reverse the discriminatory conduct
of awarding tenders to one category of the population on the basis of their experience
and skills. However, Ngobeni (2011:31) suggests that regardless of whoever is awarded
the tender, the contractor‟s work must be acceptable with respect to value, superiority,
obtainability and trustworthiness. In addition, the bid must;
Comply with the specifications and the necessary conditions;
Complete and sign all the approved forms to enable the principal to assess
applicant‟s forms;
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Submit tax clearance and any other requirements needed by the evaluators to
make informed choice;
Prove that it has the ability and ability to implement and accomplish the project in
time (Ngobeni 2011:32).
Apart from Small and Medium Enterprise (SME) Development, creation of new jobs,
promotion of local economic development in municipalities through this element, Van
Rensburg (2010:100) argue that the PPPFA opens up existing markets, develops new
markets and increases black firms market share, thereby reducing their reliance on
government for survival; and increases compliance level of companies to achieve a
greater objective of the policy holistically.
BBBEE Analysts nevertheless stress that black companies perform poorly in managing
contracts and tenders due to lack of experience (Jeffery 2014:166) thereby let the
government down by doing incomplete substandard works. Mokgalapa (2012:2)
bemoans that poor quality work especially in the development of Reconstruction and
Development Programme (RDP) houses has had a debilitating effect on the poor.
People use their blackness and political connections to screw their way through
acquiring tenders which they have no prior experience of, denying the poor of a basic
necessity. Former ANC youth league leader Julius Malema together with his partners
was also one of the beneficiaries of black empowerment deals but provided sloppy
services to the Limpopo province (Jeffery 2014:167-168).
On the other hand, in spite of the incomplete substandard projejects, increased inflated
cost of projects has perhaps been a major feature of BBBEE deals. A typical example of
this was the collusive deals of the 2010 World Cup stadia in which the cost of Nelson
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Mandela Bay, Moses Mabhida, Peter Mokaba, Green Point and Mbombela Stadia were
overpriced (Visser & Allix, 2014:1). Critically, Corruption Watch, (2013:1) laments that
each year, South Africa loses close to R25 billion to corrupt procurement processes and
complains about illegal awarding of tenders to friends of the ruling party has reached
stellar level in recent times. This organisation observed a new trend in the
empowerment process where individuals within the government form Trusts to defraud
departments through BBBEE deals. To illustrate this, Corruption Watch specifically
demonstrates that Mvula Trust Community Work Programme (CWP) is one of such
organisation that was awarded a tender valued at R30 million but could not even pay its
employees let alone deliver on their obligation (Corruption Watch, 2013:2). One of yet
talk about contract was Edison Power which was awarded a contract worth R1.25 billion
because of the director‟s friendship with the ANC president. The company was directed
to install smart electricity meters in Johannesburg and it was reported that other bidders
were far cheaper due to sourcing of components locally unlike the Edison Power which
imported them from the United States of America. Political commentators slam this
practice of enriching ANC comrades in the name of BBBEE (Jeffery 2014:171).
Gildenhuys (2002:605) argues that all potential bidders must be present when tenders
open in order to avoid irregularities but BBBEE deals are applied contrary to the above
basics. Gedye (2015:1) maintains that procurements go wrong because of the violations
of the tendering process, at the pre-tender, tendering and post-tender phases. In
general, Koppelmann (2004:1-8) and Ngobeni (2011:35) highlights that three problems
affect procurement processes: cost, price and innovation and finally established that the
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absence of strategy, absence of methods of procurements, absence of innovations
contributes to the failure of procurement processes.
3.4.6 ENTERPRISE DEVELOPMENT- 15 BEE POINTS
According to the forestry charter, forestry companies must comply with the generic
codes whiles at the same time endeavour to meet the sector target which is the
development of enterprises owned by black people particularly forestry firms belonging
to black women. The sector targets capacitating small enterprises to broadly spread
benefits in the sector for the betterment of rural communities. Importantly, Section 13.2
of the charter states that to ensure proper implementation of this sector code, the
following additional instruments have been set up:
FINANCIAL ACCESSIBILITY FOR SPROUTING BLACK FORESTRY
ENTREPRENEURS: establishing new forest enterprise requires huge financial
burden which can only be recouped after many years. In this regard, a financial
model with flexible payment options is instituted to achieve successful
implementation. Government will in addition, lobby with banks for forest growers
to get better financial and economical insurance deals;
BUILDING CAPACITY OF SPROUTING BLACK BUSINESSES: the sector
understands that providing funds without building capacity of entrepreneurs will
amount to null since that will result in misuse of funds. Support services are to
this end, being introduced to capacitate emerging entrepreneurs in afforestation
financing, planning and management services. Furthermore, DWAF consults
industry stakeholders to embark on support services that assists Small Medium
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and Micro Enterprises (SMME‟s) to educate them on issues ranging from
financing to actual forestry management;
ACCELERATE THE ACCESSIBILITY OF FACILITIES: the sector requires the
use of facilities that are very unaffordable for emerging entrepreneurs hence;
government intends to make these inaccessible facilities such as water
resources, dams, sawmills to make sure no individual is deprived of access to
the sector as a result of financial quandaries. Similarly, the sector aims to make
the application for mill licensing, and afforestation licensing more efficient by
sticking to timelines, publishing requirements and publishing decisions pertaining
to the approval or refusal of applications;
RESTRUCTURE LAND OWNERSHIP FOR AFFORESTATION: land belonging
deceased families, government and other entities will be restituted and
redistributed for afforestation, lease and to be transferred to previously
disadvantaged communities. This exercise will be strictly guided by the
Communal Land Right Act 11 of 2004.
CERTIFYING SMALL GROWERS: this will make them get recognized and get
access to various markets. In addition, government is able to provide assistance
and ensure that the aid gets to them if they are certified;
RAW MATERIAL ACCESSIBILITY: the sector aims to make access to raw
materials by charcoal producers more well-organized. This will be done by
publishing information as to the availability and locations of raw materials (FSC,
2009:13-15).
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Cargill (2012:59) indicates that the main motive for this element is to reduce the high
failure rate of small black businesses but failure rate is not attributable to only black
businesses. Similarly, Van Rensburg (2010:102) affirms that a contribution of existing
white companies to black BEE companies in the form of financial or operational
assistance is the key principle of enterprise development. For instance, the donation of
a vehicle, machinery, advice, consultancy and service to a firm to make it operationally
effective is classified as enterprise development (Standard Bank 2008:18). The Code
categorically specifies that any donation made should primarily assist the firm to
accelerate sustainable development and ultimately the financial stability of benefitting
firm. Jack (2007:322) enunciates the main constituents of enterprise development that
can earn BEE points bulleted in Table 3.3.
The SA Yearbook (2011:138) mentions that SMMEs is roughly 2.8 million and
contribute almost 57% to the GDP, creating approximately 61% jobs. However, SMMEs
face major hurdle in accessing finance from credit institutions, contracting highly skilled
management, going international, acquiring modern-day technology and meeting
regulatory requirements (Abor & Quartey, 2010:224). Generally, entrepreneurs in South
Africa have inadequate skills and the confidence to operate effectively (Rogerson,
2008:70-73) while Olawale & Garwe (2010:729) in his study of small businesses in
South Africa found that only 25% of SMMEs sustain their businesses in the long term.
This calls for the need for small businesses to be inducted with new business skills so
as to remain locally and globally competitive. The enterprise development therefore
makes business and economic sense not only because of its ability to develop firms that
provide ancillary assistance to existing firms but can lead to a viable financial returns to
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the investor, and affords the measured entity (the donor or investor) an opportunity to
meet BBBEE requirements while earning BBBEE points, sustaining jobs and reducing
inequality.
TABLE 3.3: ACTIVITIES THAT CONSTITUTE AN ENTERPRISE DEVELOPMENT
Offering grants and investing in beneficiary firm;
Providing loan to beneficiary firm;
Serving as Guarantor or providing collateral security for beneficiary companies;
Giving beneficiary firms preferential discount and payment terms in the sale of
goods and services by a measured entity;
Carrying out enterprise development of a beneficiary firm through a third party at
the measured entity‟s cost;
Discounts given to beneficiary entities in relation to the acquisition and
maintenance costs associated with the grant to those beneficiary entities of
franchise, licence, agency, distribution or other similar business rights;
Improving the operational or financial capacity of a business through providing
training and mentoring to the beneficiary firm;
Collaborating with government to develop infrastructure in a specific place that
sustains SMMEs.
Source: (Jack 2007:322)
Business analysts nonetheless doubt the enterprise development element of the BEE
claiming that small businesses do not have the requisite skills to acquire and apply the
knowledge being imparted by big businesses hence there must be other forms of
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supporting them which include; building partnership with other small businesses to
amalgamate them for a solid foundation and providing tax holiday for certain period.
Jeffery, (2014:177) recommends that funding agencies specifically National
Empowerment Fund (NEF), National Youth Development Agency (NYDA), Industrial
Development Zone (IDC), Khula SMME Fund, South African Micro-Finance Fund
(SAMAF) and Small Enterprise Development Agency (SEDA) which are in disarray
should be merged as it increases administrative cost of managing the agencies. The
cost incurred in compensating their CEO and chairpersons could be used to support
businesses that are in dire need of funding.
3.4.7 SOCIO-ECONOMIC DEVELOPMENT - 5 BEE POINTS
This element is very vital as its goal is to provide rural communities where forest
enterprises with basic services as well as social amenities such as the road
maintenance, building schools, water provision, and the building clinics. In essence,
forestry firms must adhere to the generic codes.
The Bill of Rights emphatically instructs the state to take any actions it deems
nondiscriminatory to promote socio-economic equality of all citizens. The socio-
economic development of the BBBEE which is the last element of the policy with 5
BBBEE points is one of such moves. Standard Bank (2008:18) defines this element as
entailing the corporate social investment of forestry firms in their immediate
communities which may take different forms including donations, infrastructural
development, scholarships, employment quotas, employee share ownership and
provision of social amenities. Research (see Van Rensburg, 2010:104) shows that the
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donor (the measured entity) as well as the recipient (the community) stand to benefit
immensely from this element as it legitimizes the firm‟s operations, provides security to
the firm‟s property and gives the recipient sustainable access to the profits of the
business.
This spoon-feeding stance of the policy has sparked socio economic debate among
social and economic commentators. Jeffery (2014:80) remarks that social investment in
communities has rather made them become scroungers perpetually waiting for
donations from firms. Contrarily, Standard Bank, (2008:19) differs with Jeffery‟s
assertion, stressing that the main objective of this element is to sustain communities
both economically and socially while benefitting the measured entity. For instance, a
measured entity that provides bursary to brilliant but needy students does not only
benefit the beneficiary but also it also provides a long-term human resource base for the
firm to fall on in times of need.
In terms of compliance, Jeffery (2014:180) maintains that this element is much
convenient for Qualifying Small Enterprises (QSEs) as well as big companies because it
is viewed as voluntary way of giving back to the communities.
3.5 THE AMENDED FOREST SECTOR CHARTER OF THE BBBEE ACT (ACT NO.
53 OF 2003)
The Amended Forest Sector Charter (AFSC) came into effect on 21st April, 2017 with
the goal of easing the sentiments of stakeholders in the implementation of the former
charter. The major observable amendment in the AFSC is the amalgamation of
employment equity into a single management control element. Similarly, preferential
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procurement is merged with enterprise development now called enterprise and supplier
development.
Another noticeable change in the AFSC is the ownership element which has been
increased from 20 points to 25 points. This has been criticized by BBBEE pundits
(Jeffery, 2014:199) and labeled it as cementing of „institutionalised corruption‟ since
entrepreneurs are legally forced to surrender part of their hard-earned efforts to
individuals. Experts stress the need that more emphasis should be placed on enterprise
development; thus welcomed the increase in weighting of the element. It is believed that
eventually, the entire BBBEE must be shifted to enterprise development. This way,
innovation will be enhanced while simultaneously creating more jobs to meet economic
goals of the government.
TABLE 3.4: FOREST SECTOR BBBEE GENERIC SCORECARDS
Element Weighting Code series
reference
Ownership 25 points + 12 bonus points FSC 100
Management Control 19 points FSC 200
Skills development 20 points + 5 bonus points FSC 300
Enterprise and supplier
development
43 points + 6 bonus points FSC 400
Socio-economic development 5 points + 3 bonus points FSC 500
TOTAL 112 + 23 bonus points
Source: (AFSC, 2017: 14)
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3.6 BOTTLENECKS TO FSC IMPLEMENTATION AND VERIFICATION
The FSC policy with its entire Codes more especially the preferential procurement
policy is plagued by the problems of fronting. The DTI (2005:3) defines fronting as any
dishonest practice that contravenes the codes of the policy as a result of firms‟
desperation for BEE certifications. Such deceitful practice allows firms acess to
incentives that are enjoyed by fully complied firms. According to the Corruption Watch
(2012:1) fronting constitute fraud which is misrepresenting a person to divert their
benefit to oneself, as oppose to corruption which is the misuse of public office office for
private gain. Company fronting takes the following forms:
WINDOW DRESSING: This occurs when black people are inhibited from
significantly contributing meaningfully to the company‟s decisions, policies and
laws but are part of the compny in principle. Their appointment is just symbolic to
attain BEE points. The core activities are set aside for the prime directors (DTI
2005:5);
BENEFIT DIVERSION: Since the firm has figurative directors and prime
directors, benefits accrued from BEE which is supposed to have gone to black
people is diverted or reduced. This process of benefits not reaching the intended
beneficiaries according to the policy is termed benefit diversion. Benefit diversion
perpetuates the menace of inequality (Bowman Gilfillan Attorneys, 2010:43);
OPPORTUNISTIC INTERMEDIARIES: firms mostly engage in dodgy
arrangements with other firms to take advantage each other‟s satisfactory BEE
status. In some instances, the opportunistic firm‟s identity is kept secret, terms
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and conditions are not negotiated, hence the benefit becomes one-sided (DTI
2005:5);
DISCRIMINATION: Another pressing challenge confronting the smooth
implementation of the policy is the perceived discrimination that is raising its ugly
head in the empowerment process. Manbanga (2007:13) agree that coloured
population feel sidelined as the majority black population in the ruling ANC are
the major beneficiaries of tenders and procurements in the public sector. Blacks
are alleged to be the only beneficiaries of the empowerment policy as evidence
by the number of wealthy black people in recent times. Women as well have
continuously registered their dissatisfaction at the manner in which they are
relegated especially with regard to executive positions and how they are
relegated due to patriarchy. In 2008 for instance, women only occupied 14.6% of
directorship posts 18.6% were in executive positions (Duffett, Van der Heever, &
Bell, 2009:93). BEE supporters oppose that corporate businesses have
aggressively started incorporating women in their executive positions (Zondo
2008: 2) and Empowerdex (2008a:7) indicated that black women directorship has
been improved by a whopping 80% since 2006.
Fronting, in view of Myburgh (2012:2) is more sophisticated than policymakers can
imagine but was quick to defend that companies engage in fronting because there are
little to no black firms to apply for tenders. This view is however a tolerance of a
misconduct and unethical business practice because skilled firms can rather partner
with less skilled firms to tender for contracts for mutual benefits rather than exploitation.
McDonald (2015:1) attributes that some tenders are won with strongly bloated BBBEE
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points but the companies are not capable to deliver on their mandate, hence it is open
to manipulation and deviousness. Examples of this abuse and opportunism according to
Corruption Watch (2012:2) include but not limited to the following:
The racial background of an employee may be manipulated by a company;
A black person may be employed in an executive position but with less salary
compared and authority compared with industry standards;
A company may list black people as shareholders but with ambiguous roles and
to a certain extent, are unaware of their duties;
At strategic decision-making level, black people are considered ceremonial and
not allowed to participate as such
A fully-fledged white company may be having false non-existent black
shareholders.
The BBBEE policy has moreover been tagged as narrow-based transformation (Duffet
et al., 2009:93) and tends to ameliorate the lives of handful of black people but not all
blacks as insinuated by many BBBEE proponents (Hoffman 2008:10). Since its
inception, empowerment deals that have been signed and executed are over 300 million
rands, the benefit of which went to selected well-connected privileged blacks or black
businesses (De Klerk, 2008:23). Even though companies like Multichoice, MTN,
Nedbank, Sasol, Baloworld and FNB have tried to broaden BBBEE benefits to poor
majority black people at discounted share prices (Sutcliffe 2007:26), this is merely sale
of shares which black people do not even hear of due to lack access to current
information and the menace of digital divide.
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3.7 PENALTIES FOR THE CONTRAVENTION OF THE BEE AMENDMENT ACT NO.
46 OF 2013
The BEE Amendment Act otherwise known as the Broad-Based Black Economic
Empowerment Amendment Act, No. 46 of 2013, has made significant amendments to
the Act of 2003. Prominent among the changes is the issue of fronting which is now a
criminal offence (Sebati 2015:1). The Act classifies that a person is guilty with regard to
the BEE policy if they knowingly:
Indulge in fronting practices;
Falsify an enterprises BBBEE status;
If a BBBEE verification agency or a commission is furnish with deceitful
information (Jeffery 2014:188).
The Amendment Act defines knowingly as definite facts, where the facts are obtained
from either a thorough investigation or other measures that proves beyond reasonable
doubt that the actual knowledge is realistic. As pointed out earlier, the Act criminalizes
fronting and anyone or any firm that is found guilty of fronting may be liable to not more
than 10 years in prison if they are natural persons, if not a natural person a maximum
10% of the firm‟s annual turnover will be charged (Sebati 2015:2). In addition, the
offender, be it a person or a business will be listed as tender defaulter, will not be
allowed to transact business with any public entity or department for a duration of 10
years and their contract terminated outright (McDonald 2015:2).
These penalties are however without condemnations as Business Unity South Africa
(Busa), though generally welcomes the fines, but objects to a turnover-linked penalty.
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Rather Busa is of the opinion that the fines must be sternly related to the disputed
contract because a turnover-linked fine will discourage investment which can result in
job losses (Cited in Jeffery 2014:189). The Banking Association of South Africa also
argue that outright termination of contracts due to fronting may result in lawsuits in the
form of judgment debts and the funders of companies will lose their indirect investment
(Jeffery 2014:189).
To oversee and promote compliance as well as arresting the challenges of
contraventions of the policy, the Amendment Act has established a supervisory body
referred to as the BBBEE Commission. The responsibilities of the Commission are to:
Ensure that companies adhere to the BBBEE act;
See to it that private and public sector are strengthened to collaborate with each
other to abide by the objectives of BBBEE Act;
Receive grievances concerning BBBEE implementation;
Investigate and respond to the grievances;
Collect, scrutinize and examine how the private sector, and public departments
are faring with BBBEE compliance (Hassan, Luckett & Ismail 2014:2).
3.8 EFFECTS OF THE BBBEE POLICY IMPLEMENTATION ON BUSINESSES AND
FOREIGN DIRECT INVESTMENT
The BEE policy has been existence for more than a decade and there has been mixed
reactions regarding its repercussions on businesses. Whereas businesses believe the
targets are impracticable, some analysts believe there is abnormal emphasis on the
drawbacks of the policy. Apart from economic transformation, BBBEE promoters
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suggest that it stimulates economic growth. According to Le Roux et al. (2015:18) the
amendments of the BBBEE policy has the following business advantages:
It speeds up the career growth opportunities of black people. This is achieved
through training, apprenticeships, skills development and job opportunities. This
creates black professionals that will be of asset to the company, other companies
and the country;
It provides an incentive for the private sector to willingly commit their revenue to
the development of black staff. The skills attained will empower beneficiaries to
be innovative, creative and inventive which will improve their entrepreneurial
abilities;
No business can operate without adequate and stable factors of production.
Businesses cannot function even with the most skillful entrepreneur, without land
and capital. The policy provides leverage for young black industrialist to source
funds, thereby empowering them to financial independence;
It improves the marketing success of companies as major state departments are
obliged to procure from small black businesses. Going global by small firms is
mostly problematic and meeting all requirements is time-consuming. With the
introduction the policy, small black firms are able to even access international
markets through the aid of DTI;
Community development will be improved through the upgrade of such
infrastructure roads, community halls, libraries, schools, bridges, tap water and
electricity. The standard of living of communities will be elevated and enhanced
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due to the introduction of poverty alleviation strategies brought about by some of
the companies.
Fauconnier & Mathur-Helm (2008: 1–14) and Milazi (2008b: 8) however stress that the
adoption of the codes does not necessarily imply companies willingness to uplift the life
of the poor but a formality to meet the requirements of the policy. Interestingly however,
meeting the requirements will automatically translate to economic upliftment of
communities.
Agreeing with the above argument on the benefit of BBBEE, Standard bank (2008:3)
proclaims that the BBBEE point of companies determines the decisions of lending
institutions in approving loans. Hence, if a firm is BBBEE compliant it will go a long way
to influence the amount to be offered by the bank. Except financial resources, firms are
provided with training and mentoring to assist them in their business success.
The financial institution also declares that BBBEE compliant firms have a better chance
of landing themselves in tenders than non-compliant firms. If factors such as price,
quality and product offering of competing firms are equivalent, BBBEE compliant
becomes the only yardstick to determine which firm should be awarded the contract.
The bank finally comes to an understanding that the policy is the only sound approach
to bring black majority of South Africans into the mainstream economy considering the
many decades of their neglect. Kleyhans et al., (2014:5) maintain BEE compliant firms
are certain about the safety of their investments and property because it includes local
indigenes. Expropriation of businesses by government or revolt by the community
against the business will therefore be reduced since they are directly or indirectly
shareholders.
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The policy has conceivably been criticized for hampering economic growth of Foreign
Direct Investments (FDIs) and its tendency to empower certain group of people. The
high cost of doing business in the country has drastically increased since the inception
of the policy as a result of the need to comply with it (Jack 2006: 19–23). More
specifically, Turok (2006:59–64) maintain that the implementation of the policy and its
associated investment risk is frightening, however Duffett et al. (2014:92) acknowledge
that long term benefits outweigh the short term operating cost.
It is argued that the code does not result in real growth because it focuses on
redistribution of economic resources from one category of the population to another (Le
Roux et al., 2015:18). Skilled South African labour who does not meet the prerequisites
of BBBEE will be jobless or unable to seek job easily, hence may be forced to migrate
to developed countries to seek greener pastures, leading to a slowdown in the transfer
of skills within the economy (Mathe 2008:16).
The cost associated with the execution of BBBEE will discourage FDI into the country.
This is because the return on investment will have to be shared among BBBEE
beneficiaries which is not the case in non-BEE destinations (Butler 2006: 83). The BEE
policy is not detrimental to FDI‟s as speculated by analysts but rather, a beneficial
companion of foreign investors. The declaration of their BBBEE status always has
positive impact on their brand (Wolmarans & Sartorius 2009: 180–193). In fact, in their
research about the success of the policy, Duffett et al., (2014:93) report that 44% of
Europeans were optimistic about the policy where only 35% disliked the element of
ownership.
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Le Roux et al., (2015:18) emphasizes that the new BBBEE codes will ultimately reduce
the investment prospects of South Africa which has long been labelled as an excellent
investment destination buttressed by Figure 3.1. A rational businessperson who invests
in South Africa immediately loses 51% of their investment due to a requirement of
BBBEE. The remaining capital for the investor is only 49%. To overcome the loss of
51% and also achieve a return of 10%, 61% growth will be required. From business
point of view, this is unrealistic growth unless the cost will be transferred to consumers
who are supposed to be empowered economically. To maximise profit, cogent
entrepreneurs will invest in destinations (such as Botswana, Angola, Rwanda and
Mauritius) where their original investment and 10% return on capital are owned and
retained.
Mathe (2008:16) further maintain that the above scenario will force business magnates
to move their capital to politically stable countries with judicious policies. Empowerdex
(2005:8) counteract that FDI has improved through BBBEE as evidence by the
increased black middle class, increased economic participation of black people in the
economy, and improved skills development of black people, all by the courtesy of FDIs.
Mathe (2008:16) however refuted this by pointing out that economic growth is at all-time
low and poverty is on the rise. This signifies that the BBBEE policy is certainly either not
working or not being implemented in the approved manner.
The BBBEE can best be described as redistributive policy as its goal is to ensure
redistribution and restitution of the economy to blacks at the expense of whites, hence it
will be worthwhile to expatiate it particularly because of its contentious nature
(Chalekian, 2014:6). This contention stems from the idea that there must be economic
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evenhandedness in the economy. Under this policy category, the proletariats,
bourgeoisie and the haves are obliged under legislation to allocate their wealth,
companies, property and the like to the have-nots (Anderson, 2003:7).
FIGURE 3.1: INVESTING IN A BBBEE POLICY DESTINATION
Source: (le Roux & Nortje 2015:18)
This is enforced in two ways: through coercion and administrative authority from the
government (Chalekian, 2014:6). This type of policy is mostly debated because it is
either ineffective or the rich get richer through the process. For instance, Randall
(1985:68-69) observe that empowerment programmes for farmers in the form of farm
subsidy benefits commercial farms far more than subsistence farmers, thereby waning
the objective of empowering small-scale farmers. Anderson (2003:7) argues that the
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haves devise any means to remain powerful and wealthy regardless of the tactics that
will be invented.
3.9 CONCLUSION
This chapter intended to review the BBBEE policy in conjunction with its forest sector
charter hereby known as FSC. This chapter discussed the reasons for the formation of
the policy which is mainly poverty, unemployment and inequality that remained after
independence. It perhaps uncovered the hard truths about the implementation of the
policy, the challenges and benefits thereof. Summing up, it can be concluded that in as
much as the policy remain in force, its benefits to local communities has been
nonexistent.
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CHAPTER 4: BEST PRACTICES IN THE FOREST SECTOR AND CASE STUDIES
4.1 INTRODUCTION
The preceding chapter reviewed the implementation of BBBEE policy, presented
empirical literature and as well assessed both the negative and positive consequences
of the policies implementation on communities, measured entities and the economy at
large. This chapter which is an extension of the previous chapter intends to analyse
best practices in the management of forests globally with emphasis on Germany and
China. Other sections of this chapter evaluate the contributions of the forest sector in
uplifting disadvantaged communities. It will finally assess the successes of the
Municipality under study during its LED years and the economic empowerment model of
Malaysia
4.2 INTERNATIONAL BEST PRACTICES ON SUSTAINABLE FORESTRY
MANAGEMENT
In modern times, Sustainable Forest Management (SFM) has become a standard for
managing forests due to continuous dwindling of forest resources, the threat of global
warming and their ability to provide raw materials sustainably into the future. This
section reviews social, environmental and economic benefits of sustainable forest
practices while evaluating empowerment practices of forestry companies globally with
emphasis on cases in Germany and China.
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4.2.1 SUSTAINABLE FOREST MANAGEMENT
The term SFM embodies a multitude of concepts involving sustainability and
management making it imprecise to define. In its simplest form, SFM is defined as
managing forest resources sustainably to assure symbiosis between humans and
ecosystems. According to the International Tropical Timber Organisation (ITTO,
2018:1), SFM is “the process of managing permanent forest land to achieve one or
more clearly specified objectives of management with regard to the production of a
continuous flow of desired forest products and services without undue reduction of its
inherent values and future productivity and without undue undesirable effects on the
physical and social environment”. For Price and Isaac (2012:13) SFM “maintains and
enhances the long-term health of forest ecosystems for the benefit of all living things,
while providing ecological, economic, cultural, and social opportunities for present and
future generations.” A further definition is given by Freeman and Allen (2012:2) who
describe
SFM from ecological point is “active forest management that integrates timber
production with intrinsic, environmental, social, cultural, and economic benefits to
ensure that all these values are maintained for current and future generations.” In
embracing the above, it can be understood that conventional definition of SFM is lacking
and organisations define it to suit specific needs; nonetheless, the fundamental
undertone of the concept is that forest management must avert inconsiderate intentions
that threaten biodiversity. The definitions perhaps stress the need for sustained forest
output such that tree planting and tree harvesting should not exceed each other but
leaving lasting legacy on surrounding communities. The Canadian Council of Forest
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Ministers (2006. Cited in Price et al., 2012:13) stipulate the six principles the principles
of SFM in practice comprising: biological diversity; ecosystem condition and
productivity; soil and water; role in global ecological cycles; economic and social
benefits; society‟s responsibility.
With reference to the definition, the Department of the Marine and Natural Resources,
(2001:11) in Ireland identify and classify the environmental, economic and social values
in order to achieve the key components of SFM examples of which are listed in Table 1.
For the purpose of this study, the economic and social values listed by the department
include: unrelenting timber production, broad-based profit making, catchment area
development, provision of relevant social amenities and safety. In Australia however,
Schirmer, Mylek, and Morison, (2013:5) highlight that socio-economic value hovers
around beneficiation within the entire value-chain. The essence of beneficiation is that
local communities must be foremost in “local employment opportunities, advertise
vacancies through local channels and indigenous community networks and purchase
goods and services from local suppliers and employ local service providers” (Freeman
et al., 2015:29).
In fact, previous studies about SFM accentuate rural communities lose farming land as
a result of forestry activities as such should not be neglected in the proceeds accrued
from it (Kearney and O‟Connor 1993:6). Schirmer, (2010:11) conversely disagree with
Kearney and O‟Connor view noting that current literature shows that local communities
are major beneficiaries of forestry firms. Burton, Messier, Adamowicz, and Kuuluvainen,
(2009:238) agrees with Schirmer but criticize the inability of the author to point out the
difficulty facing forestry firms in meeting the requirements of conservation, inter-
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generational equity, efficiency in resource use, and the inclusion of timber and non-
timber values concurrently.
TABLE 4.1: VALUES OF SFM
Environmental values Economic values Social values
Soil
Water quality
Landscape
Ecological and
scientific values
Cultural and
archaeological
values
Biodiversity
Forest protection
and health
Sustained
productivity
Commercial viability
Economic
Empowerment
Beneficiation
Rural development
and farm forestry
Amenity and
recreation
Safety
Other community
values
Source: (Department of the Marine and Natural Resources, 2001:11)
Literature on forestry reveals that forestry as an economic activity is not only timber
supplier but also deliver physical benefits including climate change reduction, soil
protection, habitat for flora and fauna, and safeguarding water quality as well as socio-
economic benefits ranging from job creation, recreation and cultural functions for
communities (Chakravarty, Ghosh, Suresh, Dey, and Shukla, 2012:11). Unsustainable
forest management therefore has the potential to produce distressed mechanisms to
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enhance the prevalence of greenhouse gases, reducing economic viability of rural
communities and extinction of wildlife just to mention a few. Contreras-Hermosilla,
(2001:77) warn against illegal forestry activities that may endanger the conservation of
forests such as improper certifications, over-exploitation and lack of community
beneficiation. In their detailed analysis of biodiversity and threatened species
management framework, Powell and Sedunary, (2013:10-15) stressed the need for
effective implementation of country specific legislative frameworks to ensure
compliance.
4.2.2 SFM IN GERMANY
Germany has been at the forefront of SFM for over centuries when rampant
deforestation and the resultant reduction in forest products. Consequently, a “forest
economic policy” was enacted giving the problem utmost responsiveness (Nieblein,
1985:12). According to Mann, (2012:70) stakeholder participation of SFM in Germany is
non-negotiable process whose sentiments reign supreme just as the legal owners of the
forest. In a broad sense, the interested parties may be categorized in the following
cluster:
The state: policymakers, local bylaw policymakers, local government etc.;
Forest sector owners;
Workers unions;
Civil society groups: Environmental conservation NGO‟s who protect and
preserve implementation of policies (Alemann, 1996).
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Being a member of the United Nations and the European Union, the country develops
its SFM policies in reference to the prescripts of these organisations. In view of that and
considering the need for sustainability, its National Wood Promotion Charter aims to
significantly increase the domestic production of wood, with the sole purpose of
stimulating job creation in remote rural areas where large chunk of forests are located
(BMELV 2004:22). Another policy developed within the regulations of European Union‟s
Strategy on Biodiversity Conservation is the National Biodiversity Strategy (NBS) (BMU.
2007, 17) which aims to clarify SFM processes through amending Federal Forest Act
(FFA) and regeneration of forest resources. In addition, German states enact local
forest laws so as to pursue the aforementioned policies. Dirkson, (2008:4) opine that “all
needs of the private owners are balanced against the general public‟s needs and
decisions are made by authorities in this manner, with the overall function and structure
of the forest in mind.” The state laws may vary in terms of what forest value to achieve
but the minimum objective mutual to all the local laws is the attainment of NBS as well
as the FFA. This micro-forest policy development otherwise known as the bottom-up
approach at the local level plays important role in advancing the plight of local
inhabitants with a view to reaping the triple benefits of environmental, economic and
social values.
4.2.3 SFM IN CHINA
China‟s economy has been flourishing rapidly in the last decade which increases
demand for forest wood to meet the demands for the booming economy. Unlike
Germany however, China‟s forest management is distinctly top-down with state
dominance in forest policy development with robust centrally funded implementation of
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policies. Despite limited citizen participation, the World Bank (2010:4) reports that
China, a country characterized previously by deforestation has been remarkably
efficacious at forest regeneration than many other developing countries. Mann
(2012:79) allude that the country‟s regeneration programmes have matured to the
extent that it presently focuses on forest quality instead of quantity. The backdrop of this
massive improvement in forest management is attributed to the drafting and
implementation of forest sector policies including Natural Forest Protection Program
(NFPP), Conversion of Cropland to Forests Program (CCFP), Key-Shelterbelt
Development Program, Sandification Control Program, Wildlife Conservation and
Nature Reserve Development Program (WCNRDP) and Forest Industrial Base
Development Program (FIBDP) (Xiao, Dai, and Zhang, 2010:6).
It is noteworthy to mention that China‟s state-driven approach to policy development is
steadily being decentralized as a result of pressure from conversation NGO‟s such as
World Wide Fund (WWF) and Greenpeace yet most of the participants focus on nature
preservation with little on emphasis on working condition of forest workers (Yang,
2005:48). A possible reason for participants‟ inability to promote labour unions is partly
due to ineffective democratic institutions in the country. The forgoing discussions reveal
the focus of China‟s assertiveness in achieving SFM but it is mainly narrow-based
because whereas, it is focusing on achieving environmental values it completely
abandons economic and social values. To confirm this, Li and Zhu, (2007:30) recounts
the implementation of the NFPP had inexpressible ramifications on local dwellers
ranging from layoffs, job losses, income losses to labour redundancy.
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Operationally, the implementation of SFM in a top-down approach by China‟s policy
makers records several organizational gaps and shortcomings. Existing literature(Mann,
2012:93: Turnbull, 2007:6-64) on China‟s SFM points out some of the problems
encountered in the extant approach as follows: disputes among stakeholders emanating
from non-equal access to forest resources with its accompanying inadequate benefit
sharing; the state‟s inability to augment financial resources to manage and hire qualified
environmentalists and forest scholars; and lastly transparency by the state is at its
weakest level thus legal frameworks are fraught with.
The above assessments bring to fore are a number of similarities and differences
between Germany‟s and China‟s SFM implementation. Comparably, Both countries
aspire to attain a „safe environment‟ through the preservation of biodiversity, conserve
existing forests, regenerate desolated land and minimize injurious repercussions of
climate change. Another similarity worth noting is the formation of formidable policies to
spearhead the change envisaged with the hope to concretize the environmental values
of SFM.
Conversely, a notable difference between China and Germany is the activeness of
citizen participation. Whereas organized interest groups actively participate in forest
policy processes in Germany, China allows passive citizen participation. In addition,
Germany prides itself with professional forest expertise contrary to China which lacks
capacity.
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4.3 SOUTH AFRICA’S FOREST SECTOR: BASIC FACTS
South Africa is a „forest scarce‟ country which requires strategic and sustainable
management to abate the extinction of forest resources in the country. Out of the nine
provinces in South Africa, five of them can boast of plantation forestry signifying the dry
nature of the country leading to scarcity of forest resources. As a matter of fact, out of
the five provinces, only Natal and Mpumalanga provinces have the biggest chunk of
about 80% (Table 4.2).
TABLE 4.2: FOREST PLANTATION DISTRIBUTION BY PROVINCE
source: (DoL, 2015:15)
In terms of land ownership, the DoL (2015:15) reports that the state owns roughly 30%
(See Table 4.3) of land whereas approximately 70% are privately owned with about
50% owned by large corporations. The 50% owned by large corporations in a private
land makes the implementation of AFSC problematic as it is thought to be extortion of
their property. Nonetheless, privately owned forests are more inclined to comply with
legal statutes to achieve the principles of SFM.
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TABLE 4.3: FOREST PLANTATION OWNERSHIP IN SOUTH AFRICA
Ownership category Employers % area
Large growers-
private land
Sappi, Mondi, Mondi Shanduka,
Hans Merensky, PG Bison, York,
Masonite, Bedrock fibre resources,
Realtile Timrite
48,7
Large growers-
State land
MTO, Siyaqhubeka, Amathole
Forestry Company, Hans Merensky
11,4
SOE Komatiland Forest 10,1
Medium growers 19,2
Small growers
State owned
(municipality
owned)
6,8
Source: (DoL, 2015:15)
4.3.1 SFM IN SOUTH AFRICA
South Africa is a developing country yet it has potent institutions that upholds rule of law
similar to advance countries. Correspondingly, South Africa‟s forestry management is
backed by strong policies and acts to achieve environmental, social and economic
values enumerated in Table 4.1 (page 107). According to Fisher, (2002:2) forest
resources in South Africa are managed on participatory governance approach with the
government gradually withdrawing from ownership in the context of BBBEE. This
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implies that state-owned forestry is leased by means of strategies that seek to spread
forestry enterprise benefits to majority of people particularly in rural areas while
achieving SFM principles. The BBBEE in the forest sector, now known as the Amended
Forest Sector Charter (AFSC) drafted specifically for forestry firms seeks to attain the
said objectives.
The country‟s exuberant forest sector comprises of multi-layered stakeholders such as
the government, statutory bodies, trade unions private sector, individuals and NGO‟s
who are consulted with regard to the drafting, amending and implementation of policies.
Signatories to the current AFSC for instance, are made of key government departments
including: Department of Agriculture, Forestry and Fisheries (DAFF), Department of
Trade and Industry (the dti), Department of Rural Development and Land Reform
(DRDLR), Department of Water Affairs and Sanitation (DWAS), Department of
Environmental Affairs (DEA), Department of Public Enterprises (DPE), Department of
Labour (DoL) and Industrial Development Corporation (IDC) (AFSC, 2017: 137).
Bodies consulted in the private sector include: Forestry South Africa (FSA), South
African Forestry Contractors Association (SAFCA), Paper Manufacturers Association of
South Africa (PAMSA), Sawmilling South Africa (SSA), South African Wood Preservers
Association (SAWPA), and South African Utility Pole Association (SAUPA) (AFSC,
2017: 137).
Labour unions participation is paramount to represent and defend the plight of workers
and advancing their working conditions for collective bargaining. The prominent in the
sector consist of Chemical Energy Paper Printing Wood and Allied Workers Union
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(CEPPWAWU), Congress of South African Trade Unions (COSATU), and Food and
Allied Workers' Union (FAWU) (AFSC, 2017: 138).
Lastly, statutory bodies play central role in harnessing, negotiating, and resolving
conflicts among participants ensuring that partakers do not falter in implementing the
charter. Bodies identified in this category are as follows: Commission on Restitution of
Land Rights (CRLR), Fibre Processing and Manufacturing Sector Education and
Training Authority (FP& MSeta) as well as National Forests Advisory Council (NFAC)
(AFSC, 2017: 137). Participation of actors in South Africa is resemblance between
German forest sectors in terms of democratizing the process. Conversely, a precarious
distinction exists between Chinese and South African forest sector management. The
critical uncertainty in South Africa‟s participatory forest sector is whether the views of all
actors are incorporated in the development of policies or merely symbolic.
4.4 CONTRIBUTION OF FOREST SECTOR IN RURAL COMMUNITIES
The drafting of AFSC of BBBEE Act of 2003 signifies government efforts to transform
the economies of rural areas in an equitable manner and suggests the significance of
forests to the wellbeing of rural areas (Kaimowitz, 2003:45). There is vast wealth of
evidences highlighting the contribution of the forestry sector to the economy of the
country. To begin with, it is imperative to define the scope of forestry with respect to the
AFSC. Section 3 of the AFSC defines forestry activity as large and small scale activities
that concerns with the plantation, growing, transportation, harvesting and processing of
trees. Specifically, this entails sub-sectors such as forest plantations, forestry
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contractors, fibre subsector, sawmills, pole producers, charcoal producers, and state-
owned forestry companies.
Successful implementation of the AFSC reduces abject poverty. Succinctly, Clarke and
Isaacs (2005:8) argue that forestry drastically alleviates poverty in two dimensions:
poverty reduction and poverty prevention (See Table 4.4) where the former “lifts people
out of poverty” and the latter “prevents people from falling deeper into poverty”
TABLE 4.4: SCOPE OF POVERTY ALLEVIATION IN THE FOREST SECTOR
Poverty reduction Poverty prevention
Capital accumulation Safety mechanisms
Wealth generation Welfare function
Economic growth Poverty mitigation strategies
Capital accumulation Reduction of vulnerability
Source: (Clarke and Isaacs 2005:8)
Coad, Campbell, Miles and Humphries, (2008:5) reason that forests provide a
diversified income source for rural dwellers, controls soil erosion and for recreational
purposes yet insist that its rate of improving quality of life is dawdling. Moreover,
although research has illuminated the ability of forests in poverty alleviation, several
other studies proves otherwise. A case study undertaken in Zululand about a decade
ago found that workers were undernourished, dehydrated and mentally and physically
exhausted owing to manual harvesting processes. The bark strippers of woods similarly
lamented the meagerness of salaries that result in perpetual poverty particularly after
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sending some remittances home (Clarke, et al., 2008:23). It is the onus of the AFSC to
address this predicament proves to be mammoth tasks.
The forest sector in South Africa can contribute immensely to the Gross Domestic
Product (GDP) provided that AFSC is sustained. A report recently published by DoL
(2015:12) uncovered that in 2013, forestry contributed nearly 25.5% to the GDP of
agriculture. The report also revealed that forestry contributes about 4,4% to KZN,
approximately 3,7% in Mpumalanga, almost 1% in Eastern cape and Limpopo
provinces. The transformation of the sector under the AFSC has the propensity to
improve the GDP and stimulate local economic development.
Besides, the forest sector is a major of employer of labour force in rural areas hence the
AFSC intends to augment it by preventing exploitation of workers. This can be achieved
by effective monitoring both at the local and national level. DoL, (2015:14), reports that
the major employers in the forestry sector are Komatiland, Sappi and Mondi South
Africa.
TABLE 4.5: MINIMUM WAGE FOR FORESTRY SECTOR FROM 2016 TO 2019
Source: (Labourguide, 2017:1)
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In addition, the salaries of forestry workers have progressively improved (Table 4.5)
since aligning it with that of farm workers in 2013. In their report, DoL (2015:28)
discovered that the minimum wage is progressively closing the economic gap between
the rich and the poor, and between contract and fulltime workers. The implementation of
the minimum wage and the adjustment thereof by forest owners has immensely
improved welfare of workers. Clarke et al. (2004:28) however, posits that such
explanations tend to overlook the fact that large portion of forest workers are on
contract, which provides unstable income as well as pension funds leaving workers
economically weak. This is consistent with findings of Shackleton, (2004:27) who
divulge that medium and small forest owners unable to adhere to the skyrocketing
minimum wage hence exploit contract workers on daily basis. Outrageously,
unemployed rural dwellers troop in to the access these jobs given the severe lack of
jobs in these areas. This discussion brings to fore the importance of verification
agencies to effectively master the art of monitoring the process. According to DWAF
(2005:4-10), the indirect contribution of the forest sector to the rural poor is of two types:
basic needs provision and a safety net in times of adversity.
Basic needs provision: the forest sector operates in remote areas of the province
where road infrastructure is in bad shape all year round. The companies bear the full
burben to construct, upgrade and maintain roads to transport their produce with local
communities having unlimited access to it at no cost to the state or municipality. Except
this, forest sector firms partner with government to provide primary health care and first
aid services to its employees. Above all, some firms provide free housing and transport
to all employees, saving them time, money and helping to sustain family bonds.
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Conversely, Shackleton, (2004:28) describes DWAF‟s findings as overambitious in its
claims because “many forestry subcontractors provide food rations, housing and
transport to employees but with a trade-off of lower cash wages.”
Safety net function: DWAF finds that though not quantifiable, forest sector firms serve
as bedrock for workers in times of unforeseen calamities providing some sort of security
for workers. In other words, the firms assist in school fees, provide scholarship, and
assist in burial and funeral of workers. Clarke et al. (2004:28) disputes this contention
pointing out that some of the safety nets are available to permanent workers but
contract workers who make up the majority of workforce in this sector seldom enjoy
these forms of benefits. Effective implementation of the AFSC can therefore, strengthen
some of the good practices and reduce unethical practices in the sector.
4.5 LOCAL ECONOMIC DEVELOPMENT: A REVIEW AND CASE STUDY OF
AMAHLATHI MUNICIPALITY
This section provides synopsis of the study area specifically outlining the history of the
Stutterheim from its LED years to becoming a capital of Amahlathi. It also highlights its
development feats as well as challenges through this period. Since its inception, The
BBBEE policy has received all the necessary financial support yet its ability to
drastically reduce the triple challenges of poverty, inequality and unemployment
particularly in small towns has been lethargic (Le Roux & Nortje, 2015: 10) hence, a
need to chart or to revisit developmental initiatives such as Local Economic
Development (LED). This section also takes a brief appraisal of LED concept and
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contextually reviews its successes in Amahlathi Municipality so as to understand the
power of local people working in unison to improve lives.
4.5.1 CONSTITUENTS OF LED
LED has gained international currency as a standard developmental strategy hitherto
lacks a generally accepted definition. Largely, LED is about local municipalities, local
investors, foreign investors and not-for profit organisation taking control of development
projects. Zaaijer & Sara (1993: 129) defines LED as “essentially a process which local
governments and/or community based groups manages their existing resources and
enters into partnership arrangements with the private sector, or with each other, to
create new jobs and stimulate economic activity in an economic area”. A further
definition is given by Keal, (2008:15) who describes it as a local policy initiative directed
at attracting new businesses, growth stimulation, and human capital development with
the sole purpose of empowering local communities. Similarly, The World Bank
describes local economic development as: “The purpose of local economic
development (LED) is to build up the economic capacity of a local area to improve its
economic future and the quality of life for all. It is a process by which public, business
and nongovernmental sector partners work collectively to create better conditions for
economic growth and employment generation” (World Bank, 2010, in Baird, 2010:17).
Blakely and Leigh (2010:75) from development indicator point of view concede that
development that mainly focuses on pure growth is insufficient; as a substitute, standard
of living, quality of life, human and physical development must be incorporated in the
development cycle. Although differences of opinion still exist, there appears to be some
agreement in the above definitions that LED denotes promoting innovation, stimulating
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entrepreneurship, and working collectively at the local level. The definitions identify that
self-reliance, job creation, partnerships to make maximum use of available resources to
deliver services to localities.
While LED initiatives are not new phenomenon, its development and implementation
processes differ between developing and developed worlds. According to Parker,
(2004:22) LED in advance countries like the United Kingdom and United States of
America place emphasis on large projects, huge investments and gigantic businesses
spearhead by local industrialists. In contrast, in developing countries the focus is on
“community-based initiatives, utilizing indigenous skills and seeking primarily to ensure
survival, rather than participation in the global economy.” Parker argued that the
approach taken by developing countries emanates from the lack of basic services;
prevalence of natural disasters including drought, floods, veld fires and diseases; and
ineffectiveness of top-down approach to development. While it is factual that inadequate
basic services and natural disasters contribute to this approach, Nel and McQuaid
(2002:9) insist that the basic services inadequacy is the result of decades of
colonialism, apartheid and segregation. In current times however, LED policies are
established in response to external forces and trends including: the emergence of
decentralisation which aims to empower locals while reducing that of the central
government; increasing globalised world forcing economically marginalised locals to find
innovative means of survival and to reinvent themselves to compete in the new world; a
shift away from local industrialisation to local innovation that requires responsively
accessible local leadership; and continuous miscarriage of macro-policies to meet local
goals and aspirations (Isaacs, 2006:11). LED in third world countries therefore focuses
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on drafting micro policies that affect small area for effective monitoring and evaluation of
outcome while assessing impacts of its implementation on local beneficiaries.
Nel et al. (2002:5) mentioned that stakeholders in LED initiatives work in agreement to
produce the required result of developing local municipalities without the need to
segregate citizens based on their colour or race. These actors initiate projects, provide
both the financial and human resources, source funds and unanimously provide the
indispensable leadership to ensure the success of the project. This directly contradicts
the tenets of BBBEE which neglects local communities, fails to specify its stakeholders
and premise from the notion that local communities lack the expertise to manage their
own affairs. In essence, LED encompasses the doctrines of bottom-up processes to
empower, capacitate and enable local communities find sustainable remedies to their
common problems.
Development scholars hold the view that LED does not happen in a vacuum, instead it
relies on a strong link among key agencies, influential people and businesses for
progressive development. In his dissertation on LED, Baird (2010:26) stress that the
views hold by academics contending the parasitic posture of businesses in LED is
uncorroborated; rather businesses are key partners who assume significant
responsibilities for effervescent success. These actors initiate projects, provide both the
financial and human resources, source funds and unanimously provide the
indispensable leadership to ensure the success of the project.
According to Coffey & Polese (1984:1-12), the success behind LED inventiveness are
results of variety of strategies. Firstly, the promotion of self-help initiatives propels a
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form of new confidence for local inhabitants in the form of empowerment. Research
shows that poverty and powerlessness are to some extent correlated. In his review of
literature on power and poverty, De Beer and Swanepoel, (2000:33) reported that
poverty in remote locations is due to lack of united front to lobby for resources, and
insufficient information to access resources resulting in ignorance. Empowering such
locations through democratizing decision making, access to information and removal of
suppressive and oppressive forces within the local communities is of utmost importance
to uplift the impoverished.
Secondly, local control of enterprises enhances self-reliance which enables local
municipalities to exploit underutilized resources to their maximum benefit while
increasing self-competence and self-confidence (Fonchingong, and Fonjong, 2003:199).
Burkey, (1993, cited in Isaacs 2006:30) recounts successful self-reliance depends on
factors ranging from: the feeling that individuals are drivers of development, enabled to
apply their knowledge and access financial resources for development in order to
become independent through cooperation. Burkey‟s contention is extremely useful
because it implies active participation of inhabitants in providing labour, skills, and
managing development projects is self-fulfilling. A serious weakness with this argument,
however, is that it does not provide enough details of how an already poverty-
traumatized community characterized by unskilled labour can contribute meaningfully to
becoming self-reliant.
Another strategy that ensures fruitful LED initiative is active participation of local people.
Fonchingong, et al. (2003:204) emphasize the need for people to participate, clarifying
that “rural poor need to become increasingly aware of the socioeconomic reality around
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them, of the forces that keep them in poverty, and of the possibility of bringing about
change in their conditions through their own collective actions.” This in essence implies
participation is a need that must be incorporated in local development projects with sole
purpose of making individuals aware of their current circumstances and finding clever
means of transforming them. Similarly, De Beer et al. (2000:134) equate participation to
power by observing that the power to influence any process is contingent on the level of
participation. Isaacs (2003:30) is probably the best known critic of De Beer and
Swanepoel‟s observation disputing that participation without empowerment is
meaningless since it leads to disjointed participation.
Thirdly establishment of a vibrant locally controlled economic sector to enhance
sustainability. This brings to light the need for LED to quality growth considerations such
as basic needs provision, environmental protection and inclusive growth (Asemah,
Okpanachi and Edegoh, 2013:48). The authors point out that human right laws should
be upheld, local labour must be employed and the process of development should
reduce their carbon footprint. By doing so, stakeholders driving LED can work towards
building common goals such as school development, eradicating corruption and road
development. This results in unparalleled partnerships and outcomes among
stakeholders in order to build social cohesion while supporting the sustainability of LED
projects.
Lastly, the success of LED initiatives is contingent on human capital investment that
capacitates local people to stimulate the application of indigenous knowledge. Isaacs
(2006:29) contend that knowledge acquisition is vital for local residents to stand on their
own at the completion of projects. To this end, the author identified skill transfer,
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capacity building, training and effective communication through establishing formidable
structures such unions for effective information dissemination as best ingredient for
community-based projects.
Despite the factors underpinning successful implementation of LED enumerated above,
Keal (2008:26) maintains that this development path is not in itself a miracle antidote to
local economic problems of municipalities. Agreeing with Keal, Malefane (2009:166)
identify monitoring and evaluation with its unintended unqualified audits as the major
drawbacks to LED. In the implementation stage, the authors acknowledge factors
inhibiting LED implementation as politicization of its implementation, insufficient analysis
of municipal challenges and improper coordination among stakeholders.
More so, a study conducted by Simon (2005:33) reveals that local municipalities in
South Africa continue to decline economically due to neglect as well as rural-urban
migration which cripples these economies with labour shortage. The study further found
that the community spirit required in LED is nonexistent due to bitter legacies of
apartheid imprinted in the minds former divergent groups. Perhaps, whereas literature
argues economic potentials of LED, Tomlinson (2003:113) disputes that LED is just but
one of development lexicons to further subjugate the poor. Of course, development
pundits will probably disagree with this contention but further research (See Nel and
Binns, 2001:355-370; and Piet 2011:33) affirms that LED stakeholders undermine local
legal laws, exploit labour and more importantly entrench poverty within their environs
thus their assumption of upholding a pro-poor posture is capricious.
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4.5.2 STUTTERHEIM DEVELOPMENT FOUNDATION (SDF)
According to Nel (2001:1003) South Africa experienced a quantum leap in LED
initiatives between 1994-1999 which were mainly based in major cities of Cape Town,
Durban, Pretoria and Durban. The pursuance of LED in these cities marked the starting
point for small towns such as Stutterheim to take heed. Stutterheim, the now capital of
Amahlathi Municipality where the study was undertaken, managed its economic
fortunes during its LED years by creating a united front towards the fight against
poverty, crime and racial tensions. Its success was an embodiment of optimism for local
communities nationwide consequently became a prototypical for other municipalities to
emulate. The LED project evolved in two phases: the inception phase and the
transformation phase (Nel et al, 2002:11)
4.5.3 THE INCEPTION PHASE: 1990-95
This phase of the LED project in Stutterheim commenced in the late 1990 and lasted
until 1995 when the inhabitants (mainly black and white) of the town decided to initiate
their own self-help initiative to better the lot of residents. Prior to this period, Nel et al,
(2002:9) narrated that the town could best be described as a war zone between white
and black communities which was triggered by consumer boycott of white business
instigated by apartheid police brutalities. Consequently, the local economy became
physically and economically dead, poverty and unemployment reached all-time high due
to the umbrage in the town. Miraculously, the two opposing decided to bury the hatchet
to improve the deteriorating economic conditions (Tandy, 1992:11). As part of the
reconciliation, Tandy recounts that White businesses pledged to re-employ dismissed
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workers, and leaders from Black communities (Mlungisi and Kubusi Townships) agreed
to sustain and protect white businesses, providing perpetual respite for both divergent
parties.
FIGURE 4.1: ORGANISATIONAL STRUCTURE OF SDF
Source: (Keal, 2008:93)
This long-lasting reprieve aided members to meet (Stutterheim Forum) on regular basis
to create a sense of trust and discuss matters of capacitating themselves. The success
of Stutterheim Forum resulted in lasting reconciliation and later transforming into fully-
fledged developmental project, called the Stutterheim Development Foundation (SDF)
which aim to „give people (black, white, and coloured) the knowledge, confidence and
ability to improve their well-being and that of their communities by sharing our
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experiences‟ (Nel et al., 2002:10). Following this, a section 21 company consisting of
about nine committees was set up to promote, advise, educate and monitor
implementation of SDF‟s projects (Nussbaum, 1997:20). To date, the formation of SDF
is attributed to the influential skills of local leaders of the town including Chris
Magwangqana, Nico Ferreira, Loel Ferreira, Nosimo Balindlela, Miniyakhe Balindlela,
Hamish Scott and Max July.
4.5.4 TRANSFORMATION PHASE: 1995-1998
The SDF received widespread public legitimacy between 1993 and 1995 which saw
major financial and investment institutions such as Development Bank of Southern
Africa (DBSA) and Independent Development Trust (IDT) getting involved (Nussbaum
1997: 5). Nel et al. (2002:13) partly credited the success of this legitimacy to the
absence of local government and the absence of any political party until mid-1990 local
government elections. This implies that debates were constructively directed at
ameliorating the fortunes of the SDF but not for any populist agenda. It also means the
local government elections also produced two centres for development with the then
councilors arguing that developmental activities should be the sole function of local
government while SDF become a partner. Subsequently, SDF was downgraded, its
activities terminated, its social functions became redundant to carry out LED principles.
Notwithstanding the termination of SDF, the project within this period achieved
numerous feats, popular among them being:
The establishment of Stutterheim Business Advice Center to incubate existing
and potential entrepreneurs within the locality;
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Provision of plots for housing development leading to the training of masons and
creation of direct and indirect jobs for people;
Provision of taps for Stutterheim townships;
Establishment of Day-care centres (Nel et al, 2002:12).
Bond, (1998:160) narrate that the above achievements and others were short-lived due
to takeover of the local municipality which was short of capacity to handle SDF‟s
planned developmental projects. In addition, SDF‟s administrative power was
transferred to local government along with its core businesses reducing its fundamental
mandate to merely a development partner of the local municipality. Accordingly, the
drafting of other empowerment policies by the national government such as BBBEE
sidelined whites, local governments, and suppressed foreign investors in development
projects leading to huge resource constraints. The municipality therefore missed the
opportunity to empower its indigenes through SDF.
Despite the successes of SDF until late 1990, it has equally been vigorously challenged
in recent years by a number of writers (See Bond, 1998 and Rogerson, 1999). The
authors criticize SDF‟s inability to significantly reduce abject poverty among black
people. A possible explanation for this may be the high level of poverty in black
communities prior to SDF implementation; as such it could not make a remarkable
impact on majority of people. Critics also note that small businesses that were set up
through funding from SDF could not pass through the set up stage, not to talk of being
sustainable because recipients of the funds were in haste for returns thus left the
businesses for greener pastures.
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4.6 NEW ECONOMIC POLICY OF MALAYSIA:1971-1990
The economy of Malaysia was characterized by their colonial masters, Britain and
Chinese and Indian immigrants who migrated to Malaysia in search of greener pastures
(Mokhtar, Reen, & Singh, 2013:12). Malaysia‟s political and economic stability attracted
many immigrants to permanently settle there and actively participated in salable
activities at the detriment of indigenes who predominantly engaged in primary economic
activities (mainly production of rubber and tin). Foreigners‟ standard of living improved
as a result of the economic activities while the Malays who lived in the periphery of the
country wallow in abject poverty (Abhayaratne, 2002:3). For instance, in 970, the
household income disparity among Malays, Indians and Chinese was wide ranging from
RM276, RM 478, to RM 632(Whah & Guan, 2015:8). The economic and wealth
inequality resulted in ethnic tensions which burst into racial riot with hundreds of people
losing their lives (Singh, 2001:43).
The development and implementation of the NEP became unavoidable considering the
racial tensions that erupted in mid-1969. Other views were that the incipient of the policy
can be credited with the Malay bourgeoisie who pressed for state participation in the
economy to iron out the economic gap between majority indigenous Malays
(Bumiputheras who consisted of about 58% of the total population), and other foreigners
(24% Indians, 7% Chinese and 11% other immigrants) (Whah et al., 2015:8). The 20
year policy plan was enacted to redistribute the country‟s wealth and ultimately reduce
poverty through the improvement of public facilities and creation of employment
opportunities (Mokhtar et. al., 2013:13); and to restructure the societal imbalances in
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order to subdue the notion that one race is superior to the other economically (Case,
1995: 95).
The Malaysian government took the bull by the horn and mapped out the direction that
will achieve the set objectives by taking active role in the allocation of resources to the
previously disadvantaged (The Bumiputheras otherwise known as “sons of the soil”)
(Mandla, 2006:13). The two decades-long plan had in it five-year plans to ensure that
the economy with the society is fully reorganized to the benefit of all. Rebuilding and
reuniting the community was the starting point so the NEP‟s core belief was the idea of
nationalism where no one feels rejected and dejected from the economy that comprised
of 2.4% Malays (Happer, 1999: 368). More clearly, NEP‟s basic philosophy categorically
states that “National unity is unattainable without greater equity and balance among
Malaysia‟s social and ethnic groups in their participation in the development of the
country and in the sharing of the benefits from modernization and economic growth.
National unity cannot be fostered if vast sections of the population remain poor. National
unity cannot be fostered if sufficient productive employment opportunities are not
created for the expanding labour force” (Faaland, Parkinson & Saniman, 1990:14).
The nationalism component of the policy resulted in three outcomes: national unity
which motivated all and sundry to support the policy; an integrated nation with a
common purpose which was to empower the disempowered; and it renewed
government‟s commitment to play its intermediary role in the economy (World Bank,
2004:4).
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4.6.1 STRATEGIES IMPLEMENTED TO REDUCE POVERTY
The NEP was effective in reducing poverty in its entirety and restoring the dignity of all
Malays. Under the poverty reduction component of the policy, public policy aimed at
reducing the prevalence of poverty within the time frame and eradicate it ultimately to
the barest minimum among ethnic groups, rural and urban inhabitants relatively
(Mandla 2006:16). The World Bank (2004:8-21) documents eight strategies
implemented by the Malaysia government to reduce poverty some of which are
discussed below:
Agreed on measurements and concepts: The first step undertook by the
government was to clarify the definition of poverty and how it will be measured.
To limit the scope of the policy, the government upon consulting with experts
defined three concepts: „absolute poverty, absolute hardcore poverty and relative
poverty‟. „Absolute poverty‟ was defined in terms of a situation where households
are unable to afford their basic needs such as food, healthcare, education,
housing, energy, and others. After defining the concept, a poverty line was then
fashioned out using Poverty Line Income (PLI) and Consumer Price Index (CPI).
The PLI is measured using the cost of basic needs, was sporadically revised to
reflect the current price and different PLI‟s were used for different counties due to
differences in average cost of living. „Relative poverty‟ was also conceptualized
as the disparity in income between Malaysian populace.
Diversification of the economy: the government assisted rural folks to
revolutionize the traditional methods of farming to increase output. To achieve
this, those without land and house were provided with land with a well-furnished
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single unit house. Workers in rubber and oil palm plantations were made to own
shares in the plantations. Agro-industries were also established to process the
produce from agriculture. The industrial strategy employed by Malaysia was
prototypes of Singapore, Japan and Korea so it was easy to identify mistakes in
the implementation process (Khoo, 1995: 119). Market centres were created to
enable farmers sell their produce. The government trained and provided them
with equipment to store their products to avoid perishes (Gomez & Jomo, 1997:
27).
The miserable rural poor were targeted: the most wretched rural poor in society
were identified and assisted with extra opportunities to succeed. For instance,
the Bumiputera populace was provided with interest-free loans which were to be
paid back in installments that were spread to over sixty months. The opportunity
offered by the government made them active in the economy. The quality of life
of hardcore rural poor were improved through the provision of toilets, tap water,
mosques, tarred roads, good drainage, and recreational facilities. The
government focused on establishing industries in the village which added value
to the raw materials (Tan 1982:325).
Private sector and not-for-profit organisation involvement: The private sector can
be touted as the agent of development for successful NEP. In addition to the
private sector, NGO‟s played a pivotal role in eliminating extreme poverty in rural
Malaysia through the provision of loans, employment, training and development.
Prominent among the NGO‟s was Amanah Ikhtiar Malaysia (AIM) which was
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known countrywide to provide credit facilities to the poor at no interest or
collateral security (Lim 1985: 50).
The NEP achieved the fastest growth in the history of the country particularly in the area
of poverty reduction. The period witnessed 6.7% economic growth annually to mark the
starting point for the society to be restructured to ensure economic independence
(Abhayaratne, 2002:14). The table 2.12 below presents the targets and achievements of
the NEP with regard to poverty reduction which many pundits attributed to economic
growth as well as increased production (Gomez et al., 1997: 27). Poverty reduction
however did not reduce inequality because as stated earlier, the government‟s
emphasis was on relative and relative poverty (Mandla, 2006:18).
TABLE 4.6: TARGETS AND ACHIEVEMENTS OF NEP 1970-1990 (IN
PERCENTAGE)
1970 Target 1990 Achieved 1990
Peninsula Malaysia 49.3 16.7 15.0
Rural 58.7 23.0 19.3
Urban 21.3 9.1 7.3
Bumipetera 65.0 20.8
Chinese 26.0 5.7
Indians 39.0 8.0
Others 44.8 18.0
Source: Mandla, 2006:18
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4.6.2 STRATEGIES TO ACHIEVE A WELL-STRUCTURED SOCIETY
To consolidate the gains under poverty reduction objective, the policy pressed on to
maintain equity, equality and fairness in the ownership of economic and natural
resources. In this regard, the NEP used public corporations and enterprises to nurture
entrepreneurs and train upcoming managers and business executives (Toh 1982:132-
143); and preferential procurement legislations including the „Industrial Coordination Act
1975 (ICA) and the contentious Petroleum Development Act 1974 (PDA)‟ were
implemented to restructure the society (Chan & Horii 1986:25).
4.6.3 RESTRUCTURING ACCESS TO EDUCATION
The restructuring was nonetheless not smooth because the indigenous Malays had little
or no education compared to their Chinese and Indians. Those few educated ones were
redundant because it did not fall within the skill-needs of the growing economy. The
government therefore admonished Malays to enroll in school in order to make the
restructuring achievable (Mandla, 2006:19). Lee (1999:87) summarized the purpose of
education in the policy as “an instrument for promoting and strengthening national
integration by inculcating a common and shared destiny among the different ethnic
groups, removing racial prejudices and encouraging cultural tolerance, and establishing
the use of a common national language. Thus as an agent of social equality, education
is to promote social consciousness and social justice by providing equal educational
opportunities”. Access to education was accelerated through the expansion of
infrastructure. For instance, the Science University of Malaysia, and the University of
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Agriculture and Technology as well as technical colleges such as Majlis Amanah Rakyat
(MARA) were established (Hirschman, 1979: 77).
Access to education was besides made possible through the provision of loans,
subsidies, quotas, scholarships and bursaries. To ensure that no citizen was left out, in
a bid to making Malay the national language and to equip them with the requisite skills
necessary to attain the objective of preferential employment, the language of instruction
was Malay language (Pong, 1995: 43). The NEP yielded results as enrollment in
education among the Bumiputeras increased at a faster rate as shown in Table 4.7.
It can be observed from the table that the enrolment for 1980 and 1985 increased from
74% to 80% for certificate level, 96% to 98% for diploma level and the enrolment for all
levels increased from 78% to 79% which can be attributable to the expansion of
educational infrastructure.
TABLE 4.7: PERCENTAGE OF BUMIPUTERA EDUCATIONAL ENROLMENT
BETWEEN 1980 AND 1985
Level of education 1980 1985
Certificate 74% 80%
Diploma 96% 98%
Degree 67% 67%
All levels 78% 79%
Source: (Mandla, 2006:23)
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4.6.4 RESTRUCTURING THROUGH EMPLOYMENT OF BUMIPUTERAS
Malaysia aimed to streamline employment to raise the living standard of the poor in their
attempt to restructure society. This was done by ensuring that all job openings in
manufacturing and service industries were equally distributed based on the ethnic
composition of the country but not for only Indians and Chinese (Abhayaratne, 2002:9).
Economic growth in all sectors particularly in the secondary and tertiary sectors was
bolstered with the intention that rapid expansion in the economy would translate into job
opportunities. Another step taken to influence jobs for the economically deprived was
through the nationalization of the banking, plantation and mining sectors of the economy
(Lim 1985: 37). Similar to other objectives, the NEP succeeded in correcting the job-
related disparities inherited by the colonial past. A study conducted by Saravanamuttu,
(2001:103) indicated that about 64.3% of Bumiputeras could be found in the
professional and the technical sector of the economy, about 72.3% were in education,
training and nursing and approximately 36.1% were in managerial positions illustrated in
Table 4.8. Mandla (2006:27) contend that a major holdup to the successful
implementation of this objective particularly the inability to make managerial positions
representative enough was due to the lack of skilled labour among the Bumiputeras.
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TABLE 4.8: EMPLOYMENT OF BUMIPUTERAS IN VARIOUS
PROFESSIONS IN 1995
Bumiputeras Chinese Indians Others
Professional and technical 64.3% 26.2% 7.3% 2.2%
Teachers and nurses 72.3% 20.5% 6.6% 1.6%
Managerial 36.1% 54.7% 5.1% 4.1%
Clerical 57.2% 34.4% 7.7% 0.7%
Sales 36.2% 51.9% 6.5% 5.4%
Service 58.2% 22.8% 8.7% 10.3%
Agriculture 63.1% 12.9% 7.5% 16.5%
Production 44.8% 35% 10.3% 9.9%
Source: Saravanamuttu, (2001: 103)
4.6.5 REORGANIZATION OF SOCIETY THROUGH SHARE OWNERSHIP
Another impressive strategy adopted by the government to streamline the society
towards economic equality was expediting actions to transfer corporate ownership to
indigenes. The policy accelerated this through setting a target ratio of 30:40:30 implying
30% of shares should be distributed to Malays, 40% to Chinese and 30% to foreigners
by 1990 (Mandla, 2006:28). The remarkable part of this target was that it should be
achieved without reducing income of existing shareholders; hence the NEP took
austerity measures to grow the economy rapidly to allow Malays access to shares
(Searl, 1999:67). Bumiputera Commercial and Industrial Community (BCIC) were then
established under which many Bumiputeras emerged as entrepreneurs and
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shareholders. Industrialization and privatization became the cornerstone of the NEP
which led to the purchase of foreign companies and the establishment of small
companies for the continued sustenance of BCIC (Abhayaratne, 2002:9).
Abdullah (1997:11) concur that Bumiputera entrepreneurs who were considered central
to poverty reduction strategy provided the impetus for the realization of a national
development towards identifying all race with economic success. Mandla (2006:28)
added that the Malaysian government led by the then Prime Minister Mahathir
Mohammad established two policies under the NEP to ensure the restructuring of equity
ownership: the Industrial Coordination Act (ICA) of 1975 and the Permodalan Nasionale
Berhad (PNB) (National Equity Corporation).
The ICA was enacted in 1975 to advance the interest of Bumepiteras in the
manufacturing sector by ensuring that all manufacturers excluding those employing not
more than 25 staff must acquire a license. The Act which was a replica of countries
such as Japan, and Korea started by recording the number of indigenous Malaysians
who already engage in manufacturing and were assisted with regard to skills
development, technological assistance (Khoo 1995:119).
Companies which wanted to remain in business must transfer 30% ownership to Malays
or risk losing their license (Searle, 1999: 43). As stipulated in the ICA, companies which
did not conform to transferring ownership must have their license revoked. The ICA
brought much uncertainty to the manufacturing sector especially foreign investors
(Gomez et al., 1999: 246) but led to the establishment of the Heavy Industries
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Corporation of Malaysia (HICOM) which focused on manufacturing of steel, vehicles,
cement and other bulk products (Whah et al., 2015:14).
4.6.6 SUCCESSES OF THE NEP
The successes of the NEP from its inception till date cannot be overemphasized as it
brought real economic fortunes to the target group without neglecting the periphery. The
era of the NEP recorded on average 8.3 percent growth compared with 5.1% growth
rate before the 70‟s (Abhayaratne, 2002:14). The only period of slow growth and
recession was during the financial crisis of 1997 which led to negative growth but the
economy was resuscitated again after the crises to record an average growth of 4.5% in
1999 (Khan, 2002:36)
Another feat recorded the NEP was it ability to reduce poverty to the barest minimum. In
fact poverty was more than halved between 1970 (49.4%) and 1990 (15.0%) and the
difference in poverty between rural and urban dwellers was just around 12% (Malaysia,
1991:151; 1996:204). The standard of living of Malays improved socially basic services
including tap water and electricity was accessible to about 97% of the population by the
year 2000. In the same year access to primary education stood at 96.8% while life
expectancy rate for males and females stood at 70.2 years and 75 years respectively
(Abhayaratne, 2002:16).
The implementation of the NEP offered the Malays a rare opportunity to collaborate with
Chinese and Indian business industrialists to acquire business skills (Emsley,
1996:233). The collaboration ensured efficiency in service delivery, united divergent
groups and reduced ethnic tensions could be triggered by the policy. The unity did not
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only end at business level but also political level, leading to the preservation of lasting
peace and reconciliation (Mokhtar et al, 2013:14).
4.6.7 FAILURES OF THE NEP
The above successes of the NEP were without implementation bottlenecks. These
bottlenecks ranged from ineffective monitoring and evaluation to socio-political
difficulties which were impossible to identify in order find lasting solutions to them. In a
nutshell, the causes of the failures were threefold: politicization, monetization and
accountability.
Politicization of the Implementation Process: One major downside of the NEP was
the inability of the government to effectively manage the resources forcibly taken from
the private sector. After taking control of the resources which were meant for
development, politicians rather used it to win more votes in their constituencies (Ralph,
2005:43). Awarding of contracts and other developmental projects only went to
politicians‟ cronies rather than contractors with requisite skills to deliver. Further, some
politicians practically engaged in business causing conflict of interest because inflated
projects could not be identified and brought down. The policy whose sole purpose was
to take the poor from the shackles of poverty became a cash cow for politicians to milk
the state (Lee, 2004:73). Gomez (1996:145) could not have detailed it well when he
bemoaned that “the current form of wealth distribution appears to indicate that there has
been extensive concentration of ownerships in the hands of an elite minority, not solely
Bumiputras, particularly those with strong political ties.”
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Monetization of the Implementation Process: The implementation cycle was perhaps
characterized by issues of monetization which rather broadened the inequality gap.
Mokhtar et al, (2013:14) defined monetization politics as “getting illegal campaign funds
from the businessmen and rich individuals who in turn desire to benefit from the ruling
party.” In other words, business tycoons provide financial the muscle to sponsor the
political ambitions of some individuals to pave the way for such business moguls to
influence the decision of the politicians (Teh, 2002:339). This process is primarily not
different from state capture since policy makers are denied the free will to fairly decide
on whom to benefit from the state. The major beneficiaries of this process are the
politically connected rich instead of the poor. The repercussion is that people were
appointed in jobs not based on qualification, admission to scarce skills qualification, and
provision of basic services were based on political connection which as a consequence,
benefitted the political privileged (Emsley, 1996:342). For instance, quotas, licenses as
well as subsidies and contracts only went to politicians‟ allies and if they could not
deliver, sell them back to Chinese and Indians. This practice brought untold hardship,
disproportionate inequality and innumerable dissatisfaction among poor (Mandla,
2006:33).
Lack of Accountability: Due diligence in awarding of contracts was never considered
because most contractors were mostly cronies of policy implementers. The state
meddling in the implementation without an independent institution to handle it presented
a major setback which made it impossible for transparency to take center-stage (Lee,
2004:67). Corruption which was not considered felony became rife as policy-makers
were not capacitated to check the veracity of costs associated with contracts even if
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there was glaring evidence of inflated price. This enabled their enterprises to do well in
areas of business. Tipton (1998: 320) stressed that “trust agencies, which were
intended both to provide capital for Malay enterprises and broaden ownership of assets
in the Malay community, were in fact largely unaccountable to their shareholders rather;
they provided a conduit for the distribution of patronage and a source of funds for those
in control.”
4.7 CONCLUSION
This chapter elucidated the concept of LED and how it was implemented in Stutterheim
through SDF. Although its implementation was short-term, it made progressive impact
on the people of the municipality such as provision of basic services and changing the
mindset of opposing violent group into a community-based group, and instilled
confidence within the period of its existence. The findings from this case study suggest
that local communities can develop at faster rate if there is moderation in politics, if it
takes everyone on board and involve local businesses in decision making.
The study analysed cases of Germany and China to assess how each country manages
its forest resources as well as forestry management in South Africa. Lastly, since the
topical problem is about economic empowerment, a case study of Malaysia‟s National
Economic Policy was reviewed to ascertain what led to its successes and what
triggered its downsides. The next chapter presents the research methodology.
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CHAPTER FIVE: RESEARCH METHODOLOGY AND DESIGN
5.1 INTRODUCTION
The preceding section focused on the theoretical and conceptual framework
underpinning this study by reviewing the understandings of authors and academic
authorities in the field of policy implementation to buttress and consolidate the research
project. The outcome of any research is reliant on not only the skills of the researcher
but importantly on the veracious methodology to obtain relevant data that is in
consonance with the research objectives. Research design and methodology is the
cornerstone of the research which forms the basis for a valid, usable and reliable
research result. Put differently, the research methodology is the forerunner of the entire
investigative analysis hence; any discrepancy in choosing the right method may lead to
anomalies and inconsistencies that may bring farfetched outcomes. From the foregoing
deliberations, this chapter will cautiously demarcate the method of the study, the
motives behind choosing them, philosophical foundations, ethical considerations, and
data collection techniques.
5.2 THE PHILOSOPHICAL FOUNDATIONS
Research philosophy is a concept concerning how knowledge is developed and how the
knowledge acquired relates to the study under investigation (Saunders et al., 2009:600).
It should be emphasised that research philosophy plays vital role in shaping the quality
of output both in natural and social sciences because it is the basis to understand how
people view their physical and social world (Bahari, 2010:18). Easterby-Smith, Thorpe,
and Lowe, (2002:27) identify three reasons why research philosophy should be
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incorporated in management sciences: it serves as the foundation for selecting research
design, it clarifies the choice of research strategy and lays down the extent to which the
research result must be used and generalised. The philosophical stance of this research
included epistemology, ontology and axiology which will be elaborated further in the
following sections.
5.2.1 ONTOLOGICAL ASSUMPTIONS
Ontology is the ability to understand reality and how to comprehend the real world.
Crotty (2003:10) defined it as “the study of being”. It is also understood as “what kind of
world we are investigating, with the nature of existence, with the structure of reality as
such” (Guba et al., 1989:83). It also „relates to the nature of reality, that is, what things,
if any, have existence or whether reality is “the product of one‟s mind”‟ (Burrell &
Morgan 1979: 1). Ontological assumptions begin with a question of whether there exist
some issues in the world that must be known and continue to enquire about the true
state of realism (Ahmed, 2008:2). Hay (2002:61), contextualised ontology socio-
politically by asking whether there is any challenge in our social and administrative
world that we might be interested in knowing more about. Snape et al., (2003:14)
profiles ontological postures in two broad terms: objectivism and subjectivism.
5.2.1.1 OBJECTIVISM
It is the view that all social units are real as in natural sciences (Saunders et al.,
2009:110). For instance, poverty, unemployment, inequality are social entities that exist
in reality and affect social actors. It also postulates that social realities have same
meanings external to human minds and interpretation (Hamati-Ataya, 2014:4).
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Knowledge acquisition under this ontological assumption should therefore be
quantitative since social reality is predictable and objective.
5.2.1.2 SUBJECTIVISM
Subjectivism which is mostly associated with qualitative research is a philosophy that
individuals attach different meanings to social phenomena (Remenyi et al., 1998:35). It
is the belief that most, if not all, social actors perceive and therefore create reality based
on their cultural, religious, environmental and social background (Bahari, 2010:23). The
notion here implies that knowledge is based on experience of the individual as opposed
to other views which believe that it is independent of the individual. Reality is therefore a
state of the mind which Morgan and Smircich (1980:492) describe as a „projection of
human imagination.‟ Ontologically, constructivism, a belief that social construction is not
objective but borne out of one‟s personal perspectives which may lead to „multiple
realities‟(Guba & Lincoln, 1989:173, 1994:107) is an extension of subjectivism
(Dieronitou, 2014:6).
5.2.2 EPISTEMOLOGICAL ASSUMPTIONS
Epistemology can be understood as “how we know and the relationship between the
knower and known” (Crotty, 2003:3). It entails how to know and learn about the real
social world and the foundation of the knowledge acquired (Ritchie, Lewis, Nicholls, &
Ormston, 2013:6). Put differently, the experience of one‟s world is the key determinant
of their understanding and interpretation of existing knowledge around them (Weber,
2004: vi). Marsh & Furlong (2002:18-9) concur that “Ones epistemological position
reflects the view of what we can know about the world and how we can know it.” In
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social sciences and management research, issues of epistemology hovers around two
key debates.
The first part of epistemology elaborates the issue about social and natural „truth‟ in a
real world (Maxwell, 2011:9). Unlike the natural sciences which gauge truth as a link
between a theory and autonomous realism, in the social world, truth is tested in a
process of consensus among researchers which is otherwise known as „coherence
theory of truth‟. Differently put, research evidence is considered consistent and true if
different researchers can corroborate the outcome through rationally independent
process. Another premise is that the evidence produced is true report if the
recommendation provided yields the anticipated outcome (Snape et al., 2003:14).
The second assumption about epistemology particularises the researcher versus
researched relationship. The supposition is that people‟s preconceived ideas are
idiosyncratic; contrary to the natural science where a phenomenon is free from
researcher‟s bias thus impartiality is guaranteed. Research in social world is affected by
the research participant being observed and the convenient interaction between the
participant and the researcher. In some cases, research results are „value mediated‟
negotiated or manipulated to meet either the researcher‟s or the participant‟s needs. In
this instance, researchers adhered to 'empathic neutrality' a situation which proposes
that transparency should be the trademark of all research (Snape et al., 2003:14). The
key epistemological standpoints in research are positivism, realism and interpretivism.
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5.2.2.1 POSITIVISM
Positivism is generally used in natural sciences involves working with social realism
where the world is viewed as unpretentious entity and unaltered by the researcher.
Positivism produces law-like results which uses existing theory in a top-down approach
to develop hypothesis. The hypothesis developed undergoes testing and confirmation in
order to be either accepted, refuted or rejected (Remenyi, Williams, Money, & Swartz,
1998:32).
5.2.2.2 REALISM
Realism can be thought of as people‟s beliefs, comprehension and views of the world
differs from what actually exist. More clearly, realism hold that a distinction can be made
as to how people conceive, and perceive the world and reality (Ritchie et al., 2013:4).
Similar to realism is materialism except that materialism is based on the principle that
reality is obtained from material structures such as physical phenomena and economic
structures. It also holds the view that values, dogmas, and creeds do not shape but only
material structures shape the physical world (Hughes & Sharrock, 1997:156).
5.2.2.3 INTERPRETIVISM
It is an epistemological stance that rejects positivism and realism as a viewpoint thus
believes that reality is based on individual understandings (Moriarty, 2011:6).
Interpretivism originates from two scholarly backgrounds which are phenomenology and
symbolic interactionism. Phenomenology is how humans interpret the world around
them while symbolic interactionism views human interpretations as a continuous
process due to continuous interaction with other humans that may result in modification
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of the initial interpretation (Saunders et al., 2009:117). Hussey et al. (1997:54) identified
four characteristics of phenomenology which suited well with this study:
It produces qualitative data which is the research approach of this study;
Data collected is idiosyncratic and information-packed as a result of the
involvement of the researcher in the phenomenon;
The location of such study is typically uncontaminated, unpolluted and unalloyed
to give unadulterated data.
The empirical nature of data collection results in high level of validity.
The emphasis is to contextually comprehend the view, feelings as well as the means of
verbal and non-verbal communication of „social actors‟ (Hatch & Cunliffe, 2006:124).
Lincoln and Guba (2000:168) labelled this position as "relativist" and/or
"transactional/subjectivist", a doctrine that truth, values and verity is not absolute but
only exist in the context of one‟s cultural, historical and societal background.
5.2.3 PHILOSOPHY ADOPTED IN THIS STUDY
The ontological standpoint of this study was subjectivism because humans have
personal ways of attributing meanings to social phenomenon. The research used
interviews method to collect data which revealed diverse responses to the research
topic. Using this method revealed participants‟ personal opinions, feelings, emotions
and sentiments about the social world hence the use of ontological subjectivism.
The epistemological assumption of this study was thus interpretivism because the
research was constructed around social context. Participants‟ responses from the
interviews might have different interpretation and subjective retorts. These variations in
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response and analysis hinged well with interpretivism. The epistemological stance of the
study was interpretivism a viewpoint which believes that reality is based on individual
understandings (Moriarty, 2011:6). The two forms of interpretivism: phenomenology and
symbolic interactionism were employed. While the former is how humans interpret the
world around them, the latter views human interpretations as a continuous process due
to continuous interaction with other humans that may result in modification of the initial
interpretation (Saunders et al., 2009:117). This form of enquiry was chosen because it
afforded the study the opportunity to comprehend phenomenon and perceptions of
respondents. More importantly, (Creswell (2012: 78) argues that it requires small group
of at least 3 to a maximum of 15 individuals to conduct this type of study.
5.3 THE RESEARCH DESIGN
A research design is a plan that paves the way for answering the research problem. It is
a logical plan, which may be construed as the blue print, specifies guidelines,
instructions and procedures to address the identified research problems (Mouton
1996:108). Webb & Auriacombe (2006:589) define a research design as “consisting of
a plan, a roadmap, that allows the researcher to test the validity of his/her hypothesis or
answers his/her research questions, taking into account the factors that he/she believes
might affect the relationship between the dependent and independent variables.” Yin
(2011:75) added that research design can be categorised into logical and logistic
phases. The logical phase of the research design is expanded as involving linking the
research questions with research problems, connecting how data will be collated with
how it will be analysed which strengthens the accuracy of the research outcome. The
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logistical phase entails organising, scheduling, coordinating and allocating resources to
manage the research from start to end.
This project begun with a clear research problem which was aligned with the research
questions. Collection of data (selection of respondents) was solely based on the
questions the research sought to answer. It therefore targeted industries currently
implementing the Forest Sector Charter of the BBBEE by approaching specific
industries engaging in forestry and wood processing. BBBEE verification agencies were
identified and formed integral part of the research project. Lastly, the municipality in
which the abovementioned respondents are located was also approached to get a
sense of their role in the implementation process.
5.4 THE RESEARCH METHODOLOGY
How research is conducted, together with the conjectural and logical expectations upon
which the research is grounded and the repercussions of these, for the approaches
accepted is termed research methodology (Saunders, Lewis & Thornhill, 2009:595). “It
is a philosophy of the research process, which includes assumptions, and values that
serve as bases of research and standards that the researcher uses in interpreting data
and reaching conclusion” (Welman, Kruger & Mitchel, 2005: 64). It is noteworthy to
mention that this research is to seek what is happening, to query and interrogate the
implementation of the BBBEE policy. In Public Administration, three methods of
research are recognised to achieve this: quantitative, qualitative and mixed methods.
The appropriate method to achieve the purpose of this research was qualitative
(research that is nonnumeric) (Saunders et al., 2009:480).
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5.4.1 QUALITATIVE METHOD
Qualitative research is based on words, non-standardised, and analysed through the
use of concepts (Dey, 1993:28). Agreeing with Healey & Rawlinson (1994:123-145), this
research is qualified, describable and unpredictable; hence no predetermined answers
can be provided for the questions. Using qualitative method to explore the research
generated reliable outcome with conviction, valid and binding results that can be applied
in comparable settings and situations. Creswell (2007:37) distinctively describes
qualitative research as “a type of educational research in which the researcher relies on
the view of participants, asks broad, general questions, collects data consisting largely
of words (or texts) from participants, describes and analyzes these words for themes,
and conducts the inquiry in a subjective, biased manner.” Qualitative research is the
most versatile and diverse approach and exist in numerous areas of studies from
anthropology through linguistics to social sciences including public administration
discipline (Moriarty, 2011:2). The following characteristics are the primary attributes of
qualitative research:
It aims to provide exhaustive understanding of social realm through thoroughly
interpreting circumstances both social and material, by giving meaning to human
practises, perceptions and antiquities;
It uses small but salient samples purposively selected to comprehend social
reality;
Data is collated through the active participation of the researcher and the
respondents. This interaction allows the exploration of other issues beyond the
scope of the research which can then provide vivid understanding;
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Since the researcher is actively partaking in collecting data, data is usually
detailed, in depth and all-encompassing;
Its analysis comprises classification, categorisation, association, explanations,
and typologies;
The research outcome focuses on interpreting the results in relation to the social
world to be used for the benefit of people (Snape and Spencer 2003:5).
The above attributes implies that the consent of the respondent is vital to ensure that
they willingly participate in the research project. This project used qualitative research
due to the above characteristics and perhaps because; it studies social life in a manner
that avoids static standings; the research strategy is natural but not experimental in that
its flexibleness allows the researcher to link the process to a real-world setting; it
responds to and considers the social context of participants with the researcher playing
contributory role; and it permits the use of observation, interviews as well as primary
and secondary data sources (Snape et al., 2003:5). Using qualitative research implied
that this study espoused the constituents of knowledge, the methods to acquire it
ethically, and identification of ways to reach the research objectives without
compromising on the participant‟s information, and stance (Mouton, 1996:35). The
ensuing sections elaborates on epistemology, ontology and axiology which are the
bedrock of any sound research philosophy and justify how any of them related to this
study.
5.4.2 THE RESEARCH APPROACH- INDUCTIVE RESEARCH
In general, research approaches fall into two: deduction and induction both of which
have to do with how knowledge is assimilated best (Snape et al., 2003:14). Knowledge
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acquired through inductive logic is considered “bottom up” through observation of
patterns of phenomenon in the real world over time and through which a theory or law is
developed (Ritchie et al., 2013:7). Proponents of deductive logic on the other hand hold
that knowledge is assimilated through proposing theories and hypothesis to test
observations hence it is „top down‟ (Blaikie, 2007:87). Simply put, both processes use
evidence except that induction uses evidence to make conclusions using quantitative
data while evidence used in deduction only serve as a reinforcement to make
conclusion using qualitative data. Saunders et al. (2009:124) mention that deduction
inclines to positivism and induction is to interpretivism, accordingly, the research
approach pertaining to this study was induction.
Broadly, inductive research approach “develops theory from the observation of empirical
reality; thus general inferences are induced from particular instances, which is the
reverse of the deductive method since it involves moving from individual observation to
statements of general patterns or laws” (Hussey & Hussey, 1997:13). In addition, the
research intends to understand how the implementation of BBBEE is progressing, the
researcher will play active role in the research process, it permits the researcher to
make amendments in the research process and generalising the outcome is not a major
concern which is related to the attributes of inductive approach. The advantages of
using inductive approach for this study was that it helped to decide on a research
design, which data to collect, where to collect data, and the procedure for analysing
them. It perhaps helped to choose the most effective research strategies that would
work best to answer the research questions. Finally, it allowed the researcher to make
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room for unforeseen resource constraints that might pop up as the research progressed
(Saunders et al., 2009:127).
5.4.3 PURPOSE OF THE STUDY- EXPLORATORY STUDY
An exploratory study is by definition “finding out what is happening, to seek insight, to
ask questions, and to assess phenomena in a new light” (Robson, 2002: 59). The
purpose of this study was exploratory because it clarified our understanding of policy
implementation with emphasis on BBBEE in the forest sector. An exploratory study
employs three principal methods in discovering a phenomenon: through literature
review, interviewing experts or analysts in the field and through interviewing people
actively involved in the phenomenon (Saunders et al., 2009:140). The research
reviewed literature about policy implementation and BBBEE, interviewed experts in the
field and interviewed companies currently implementing the policy in order to give a
vivid meaning to answering the research problem.
A characteristic of exploratory study that inspired the study was that it provided a
superior understanding to the sample under study except that it did not allow the
research outcome to be generalised (Disoloane, 2012:135). Even though, the result of
exploratory study are not generalised, it provided a starting point to investigate similar
situations. For effective exploration, it is relevant to understand what knowledge is and
how to acquire it; hence the study was guided by ontological and epistemological
paradigms.
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5.4.4 DESIGNING THE SEMI-STRUCTURED INTERVIEW THEMES
The interview themes comprised of the seven elements of the BBBEE which are
ownership, management control, employment equity, skills development, preferential
procurement, enterprise development and socio-economic development. These topics
were the starting point for in-depth querying of any bottlenecks in the implementation of
each of the elements. To achieve in-depth data about the topic, the interview was
designed in a „content mapping‟ and „content mining approach‟. Legard, Keegan, J. &
Ward, (2013:148) distinguished the former as designing the interview with the
respondent in mind so as to assist them provide full information and the latter as
designing the interview with the belief of exploration in mind in order to get access to
hidden meanings to respondent‟s answers. Simply put, while content mapping raises
questions, contenting mining dig deeper to probe the questions.
To avoid misconceptions, the questions formulated adhered to the following key
doctrines recommended by Legard et al (2013:153-155):
The questions involved both narrow and broad response from low order to high
order reasoning;
It avoided questions that led the respondent to respond in a way that suit the
interviewer. Leading questions that suggested possible answers were avoided;
The questions endeavored to be clear, less confusing, and straight-forward to
motivate the respondents to the task.
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5.4.5 PILOT STUDY
The interview questions could not be administered without pre-testing it to avert
potential problems that might be encountered by respondents. Pilot-testing then is
“small-scale trials run of all the procedures planned for use in the main study” (Monette,
Sullivan, & DeJong, 2002:9). In the end, the pilot test achieved the following:
It helped to know if some key questions were omitted and if additional questions
could be added;
It assisted to identify the unclear, and vague questions and steps taken to rectify
them;
It checked the level of difficulty of the questions as well as the level of
understanding the choice of language used;
Problem areas that did not address the research problem were recognized, some
deleted, some corrected and redirected towards achieving the research
objectives;
It tested the consistent comprehension of the questions particularly the concepts
that related directly to the BBBEE policy (Collins, 2003: 231; Neuman, 1997:
232).
The pilot study was conducted on a panel consisting of 4 interviewees from the forest
sector but out of the sample frame.
5.4.6 GAINING ACCESS TO THE ORGANISATIONS AND INSTITUTIONS
After piloting the interview questions permission had to be sought from the
organisations. Yin (2011:115) dissected that gaining access to respondents is not a
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mere event but a process that may take days in order for permission to be granted. The
author added that even after access has been granted, it may be lost, or limited, due to
the nature of the topic or the sensitivity of the data required (Saunders, et al., 2009:172)
hence; behaviors that may “wear out researcher‟s welcome” should be avoided.
The research first made contacts incrementally with the organisations prior to
administering the interview. It started with an introductory letter to request access which
also explained the key intents of the study, the prime department that was required for
the study and how data would be collected. The researcher made it clear from the
beginning that all unexpected events would be communicated to the institutions. This
built a good trust and rapport with the organisation which averted the termination of the
access granted.
5.4.7 ADMINISTERING THE INTERVIEW QUESTIONS
After gaining access and overcoming the concerns of the organisation, the researcher
made a date with the relevant person(s) to conduct the interview. Dornyei (2007:140)
admonished researchers to listen but not interrupt participants, be neutral in the process
and set up the interview in a serene environment to avert sporadic interruptions. The
research managed the following as recommended by Alshenqeeti (2014:41) in order to
achieve the preceding concerns stated above:
The power relationship between the interviewer and the respondent was
controlled by ensuring that power implicitly or explicitly exerted was avoided. This
was done by extending the interview time in order to build a good connection;
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The value of the research was conveyed to the respondents to make them
contribute immensely and objectively to the best of their knowledge;
The researcher assured the respondents of the extent to which the outcome of
the research will be used by emphatically promising them to use solely for
academic purposes but not for witch-hunting activities;
The responses were treated and analysed in their natural form without attaching
the researcher‟s sentiments to it;
Each sentence of the interview questions was painstakingly constructed and
worded to convey a forthright comprehension in order to prevent ambiguity.
5.5 DEALING VALIDIDTY AND RELIABILITY OF THE STUDY
Conventionally, the trustworthiness of research in the natural sciences is determined by
the reliability, validity and objectivity of the research instrument. This is exactly so
because the instruments are standardised, straightforward, and forthright in a
quantitative manner. In the management sciences however, the research instruments
produce outcomes in a subjective qualitative approach, as the research is interested in
answering questions about social phenomenon using smaller samples in a non-
standardised approach, the need to evaluate the trustworthiness of the outcome is
therefore of paramount importance (Billups, 2014:2). Generally, data collection through
interviews raises concerns about reliability and validity due to the lack of standardisation
of the method (Silverman, 2007:43) hence a method quintessential to such studies is
trustworthiness.
Trustworthiness is the extent to which a research report is certified to be true and valid
by whoever reads it. More concisely, Gunawan, (2015:10) clarified “a research to be
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trustworthy if and only if the reader of the research report judges it to be so.” The
objective of this study was to achieve the above feat, thus four categories (credibility,
transferability, dependability, confirmability) of trustworthiness was upheld.
5.5.1 CREDIBILITY
Credibility which is internal validity in quantitative research is the ability of the research
findings to be truthful, believable and holistically representative (Billups, 2014:2).
Gasson, (2004: 95) intimated that “how we ensure consistency in the research process
and how we communicate to others that we have done so” is credibility. Credibility is
therefore at the heart of trustworthiness since it removes interviewer bias (interviewer
imposing their beliefs, parochial interpretation of responses and where non-verbal
behaviour of the interviewer affects the responses of the interviewee); and response
bias (caused by perception issues, unwillingness to disclose sensitive information and
time factors). The researcher employed two methods to attain credibility: „prolonged
engagement‟ and „member checking.‟
The researcher developed intimate relationship with the respondent organisations to
ensure sufficient comprehension of the natural settings. The researcher actually
immersed themselves in the values of the organisations prior to conducting the
interview. This lengthy commitment made it possible to believe the responses from the
respondents. With member checking, the preliminary report was checked and reviewed
by respondents to assess whether the report reflected their opinion. Discrepancies
identified were corrected and deleted where appropriate.
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5.5.2 TRANSFERABILITY
Transferability (generalizability or external validity in quantitative research) is the ability
of the research report to apply in comparable situations (Shenton, 2004:69). Lincoln and
Guba (1985:306) noted that “by describing a phenomenon in sufficient detail, one can
begin to evaluate the extent to which the conclusions drawn are transferable to other
times, settings, situations, and people.” Even though the research did not aim at
generalising the outcome as it is qualitative and due to the smaller sample size, it
safeguarded transferability. This was made possible by ensuring that adequate
information about the context of the research, processes involved and the research
instrument (including information about the researcher) was made bare.
5.5.3 DEPENDABILITY
Shenton, (2004:71) expounded that dependability relates to reliability and it is the ability
of a research to produce a true or similar replica of the original report if the same data
collection method is used. This consistency is important to produce trustworthy findings
and was incorporated in the research through the use of external auditors, otherwise
called external researchers from the university who provided alternative viewpoints on
the research outcome.
5.5.4 CONFIRMABILITY
Confirmability in qualitative research, known as objectivity in quantitative research are
the steps taken to ensure that the findings of the research are based on the
respondents characteristics instead of researcher‟s inclinations. Confirmability is the
idea that “findings should represent, as far as is (humanly) possible, the situation being
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researched rather than the beliefs, pet theories, or biases of the researcher” (Gasson,
2004: 93). The researcher remained as neutral as possible and strengthened the
dependability of the research in order to avoid superimposing any biases in the analysis
and interpretation of the study.
5.6 TARGET POPULATION AND SAMPLE SIZE
Saunders et al. (2009:212) define population as “the full size of cases from which a
sample is taken.” Similarly, it is in the form of a pool where a sample is chosen using the
appropriate sampling procedure so as to enable generalisations. Due to time and
budget constraints, the study did not use the entire population but a sample was
collected. The target population for the study included all BBBEE compliant forest sector
companies at Amahlathi Municipality, BBBEE Verification agencies and officials of
Strategic and Development Planning Department from Amahlathi Municipality. In total,
15 participants from three organisations partook in the study. In the municipality, the
target population was senior managers who were 6 in sum but 4 samples were drawn
for the study. From the BBBEE verification agencies, the study targeted only certified
auditors with BBBEE accreditation. The auditors were about 8 in total and the total
sample frame was 5. Finally, the transformation departments of measured entities were
targeted. Out of the total of 11, 6 samples were chosen for the study.
5.6.1 SAMPLING PROCEDURE- NON PROBABILITY SAMPLING
Qualitative research requires an in-depth understanding of a study, as such statistical
representativeness is of less concern; the sample is small-scale and deliberately
chosen to suit the qualitative enquiry (Ritchie, Lewis and Elam, 2003:78). In this regard,
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non-probability sampling technique was used to select the sample in order to thoroughly
meet the objective and answer the research questions. Non- probability sampling is
when not all the sample is given equal chance of being selected (Saunders et al.,
2009:596). Specifically, purposive, sampling techniques was used because the FSC
companies usually have characteristics similar to other companies hence; a judgmental
selection of respondents in the industry will provide the needed data to gain the
theoretical insight for the study.
5.6.2 PURPOSIVE SAMPLING
Van Manen (2014:353) define purposive sampling as “the notion used to indicate that
interviewees or participants are selected on the basis of their knowledge and verbal
eloquence to describe a group or (sub)culture to which they belong.” Yin (2011:311)
concur with the Van Manen by delineating the concept as “the selection of participants
or sources of data to be used in a study, based on their anticipated richness and
relevance of information in relation to the study‟s research questions”. Both definitions
boil down to the subjective nature of selecting samples in order to objectively study a
phenomenon. This suggests that the selection is non-random, judgmental, and
deliberate, permitting the researcher to hand-pick respondents based on their
proficiency and „fitness for the purpose‟ of the subject being studied (Etikan, Musa, &
Alkassim, 2016:2). The advantages of using purposive sampling method include the
following:
It focused on the best sample, eliminates unsuitable ones allowing the research
to be forthright;
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The process is consumed less time as it dealt with a small-scale and limited
sample size;
The findings were highly representative in comparison to other methods of
sampling as it selected candidates with the requisite knowledge to give up-to-
date data about the subject;
To some extent, the results of the research from purposive represented the view
of the general population due to rigorous nature of identifying respondents;
The willingness of participants to participate allowed them to explore the topic in
detail in a thoughtful and insightful approach (Etikan et al. 2016: 2).
Patton (2002. Quoted by Saunders et al., 2009:237) made an assumption about
purposive sampling that makes it even more reason why it was selected. The
assumptions are that; if the selected companies have difficulties in the implementation
of the FSC, it is highly probable that it will happen everywhere in the sector, and if the
process is comprehensible, it is highly likely that it will be generally comprehensible in
the sector.
5.7 ETHICAL CONSIDERATIONS
The researcher acted within the required ethical policy of University of Fort Hare by
observing the confidentiality clause of all respondents. In light of this, ethical clearance
was obtained from the University‘s Research Ethics Committee (UREC) before
commencing the research. The study also endeavoured to act within the required
policies of all organisations involved in the study. The purpose of upholding ethics
during the interaction with all cases in the study was to build trust with the participants;
to inspire respondents to be honest to the best of their knowledge; to protect the
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organisations from which respondents were drawn from all forms of harm and to ensure
that participants‟ freedom was protected.
Except seeking approval from the companies, actual participants were made to read
and sign the consent form permitting the researcher to conduct interviews them. Even
though respondents were specifically selected, a consensus was built with them to seek
their approval. A consent form was then issued which had in it the following clauses:
The approximate duration of the interview session;
A declaration to reduce all forms of risks (physical and emotional) that might
pose a risk to participants;
The right of the researcher to clarify questions;
Assurance of the extent to which their views and opinions would be used and
shared;
The freedom of respondents to take a break or postpone the interview due to
circumstances beyond their control.
This helped to instill some confidence in the interviewees to respond freely, removed
awkwardness and discomfort. As far as possible, the research ensured fairness and
inclusivity in the identification and selection of participants in the research. To this end,
respondents were selected based on their knowledge of the research topic irrespective
of their age, race, colour or gender.
5.8 LIMITATIONS OF THE RESEARCH
The limitation of the study was the lack of previous studies in the research area which
posed a challenge to the review of literature. At best, most previous studies focused
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broadly on the BBBEE policy or other sectors but not in the forest sector. Other
research in the forest sector too narrowly escapes studies around the charter. The
research aimed to study the FSC between 2009 and 2019. However, the charter was
amended in 2017 yet forestry firms had not fully migrated to implementing it. The
researcher therefore had to conduct the study based on the previous charter.
Another limitation worth mentioning in this study is the difficulty of companies to disclose
their BBBEE information. This is due to fear of being considered noncompliant or due to
motives known only to the firms. This resulted in the selection of less sample size for
the study even though this did not qualitatively affect the research outcome.
5.9 CONCLUSION
This chapter highlighted the epistemological and ontological assumptions of the study
as well as the research design. It discussed why the qualitative research was adopted
and why semi-structured interview was employed to collect data and as well indicated
the research approach of the study. The study did not conclude without highlighting the
ethical assumptions of the study. The next chapter presents the analysis, findings and
discussion of data.
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CHAPTER 6 - RESULTS, DISCUSSION AND INTERPRETATION OF FINDINGS
6.0 INTRODUCTION
The preceding chapter provided a discussion of the research methodology and
sampling technique used in this study. This chapter intends to analyse, discuss and
interpret findings from the data collected. It commences with the data collection
technique employed and how data was analysed. It then presents the analysis of the
primary data collected from three groups of respondents through semi-structured
interviews. The first category of data was collected from Amahlathi Municipality‟
Strategic Planning and Development Unit, followed by data from a measured entity
within the forest sector from Amahlathi Municipality and lastly data from BEE
verification Agencies.
6.1 DATA COLLECTION METHOD- INTERVIEW
The data were collected by using semi-structured interview (face-to-face interview) in
which respondents were asked relevant questions directly linked to the research
objective. Data collection under qualitative research includes interviews, observation,
documents and group discussions however, considering the empirical nature of this
study; semi-structured interviews were suitable for collecting data. Semi-structured
interviews are less standardised interviews that are qualitative in nature (King, 2004:13).
Using this approach gave the researcher the opportunity to probe the topic in its entirety
(David, & Sutton, 2004:87)).
Prior to conducting the interviews, the researcher personally went to organisations to
inform them about the purpose of the study, and asked permission if they could
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participate in this research voluntarily. In other cases, a phone call was made asking
them to participate in the study. Due to the sensitive nature of this topic in connection
with the disclosure of their empowerment data, organisations were unwilling to
participate thus critical case sampling method was employed. In total, fifteen
participants from three organisations (six from measured entities, four from the
municipality and five from verification agencies) partook in the study. Those who were
invited to take part in the research agreed after being assured of the confidentiality of
the process. The interviews were recorded and noted with their permission and each
took nearly 30 to 45 minutes.
The interview allowed a list of themes and questions to be covered based on
organisational or respondents context. The interview was also non-directive, more or
less informal in nature, not predetermined and gave the interviewee ample freedom to
freely express themselves. This method permitted the researcher to list major issues
related to BBBEE that served as a guide to conduct the interview. It besides, afforded to
modify, change and ask more questions depending on the direction of the respondent.
This flexibility made the interviewee direct the process and give adequate information
about the complexities of BBBEE policy implementation. More clearly, the merits of
using interview to gather data were that:
Despite its time consuming nature, its return rate was high;
Even with less anonymity, it was real and not based on hearsay;
Although criticised for its small-scale nature, it provided the platform for collecting
in-depth uncontaminated data about the respondents‟ beliefs regarding the topic
under study;
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It afforded the researcher the potent to observe and collect non-verbal data
which is rarely available with questionnaires method (Ho, 2006: 11).
In addition, data collection through interviews ensured that the study acquired first-hand
information from the field, promoted high level of personalised data relevant for the
research topic, provided avenue to explore further on the topic, and rendered the
opportunity to clarify any incomprehensible questions (Gray 2004: 214).
6.2 PARTICIPANTS
The participants were made of respondents purposely selected from measured entities,
BBBEE verification agencies and the local municipalities where the study was
conducted. The total number of respondents from these organisations was fifteen who
were interviewed in groups and were mostly in senior positions selected mainly to offer
outstanding professional experience to unpack the topic under study.
Amahlathi Municipality‟s sample was drawn from the Department of Strategic and
Development planning which: Coordinates all agricultural activities within the locality;
Nurture Small and Medium Enterprises and Cooperatives; Develops Local Economic
Development (LED) policies; Promotes forestry within the area; Stimulates the use of
municipal land effectively. Measured entities were drawn from BBBEE level 3 compliant
firms. Due to limited number of firms implementing the FSC policy and lack of interest in
disclosure of BBBEE status, the researcher relied on specific measured entity which
was voluntarily willing to participate in the study. BBBEE verification agencies were
selected similar to the procedure used in selecting measured entities.
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6.3 DATA ANALYSIS- CONTENT ANALYSIS
Data analysis „is a process of resolving data into its constituent components, to reveal
its characteristic elements and structure‟ (Dey, 1993:31). Content analysis technique
was used to analyse data. According to Balyer (2012:583), „this type of analysis usually
aims to analyze similar data on a topic and comment on it‟. Firstly, the researcher
listened to the recordings and notes once more to safeguard the authenticity of data.
The large data was not categorized based on interviewee‟s understanding of FSC
implementation. The categories were then reviewed to merge and collapse some
categories. Elo, and Kynga (2008:107) affirmed that “the purpose of creating categories
is to provide a means of describing the phenomenon, to increase understanding and to
generate knowledge.‟ To ensure a thorough analysis, the data was reviewed multiple
times in order to confirm statements, identify patterns and classify contradictions made
by participants. The data was organized into five broad themes namely: Progress with
BBBEE implementation; Level of compliance of measured entities; effectiveness of
implementing officials; Implementation bottlenecks; and suggested implementation
strategies.
6.4 FINDINGS
6.4.1 PROGRESS WITH FSC OF BBBEE IMPLEMENTATION
For the purpose of the study, the progress of companies refers to the value measured
entities have achieved from the implementation as well as the impact thereof on
beneficiaries. In this context, the view of the participants from the municipality was that it
is uncompelled to implement the BBBEE policy but empower the local community as a
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fiduciary duty. In other words, the policy does not make provision for local municipalities
to actively participate in its implementation process as it is only meant for businesses.
However, it sees the need to be recognised in the process so as to afford them the
prospect to empower the poor in their locality. In its effort to implement to participate in
the empowerment process, it established the Keiskamahoek Irrigation Scheme- a
successful partnership between amadlhelo and Seven Stars Coop that produces milk to
supply to clover. Another successful empowerment project is Rasmeni Farms- led by
selected women in the municipality to produce chickens on large scale for sale to
surrounding local community. The interviewees commented that these and other
smaller projects in the municipality have drastically uplifted the living conditions of
majority black people in the area. It was also clarified that „black people‟ were the major
beneficiaries of most of these projects.
FIGURE 6.1: FIRE DESTRUCTION BEFORE AND AFTER ACQUISITION
Source: (Primary Research Data, 2017)
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Respondents from the measured entity indicated that their BBBEE status has led to a
partnership with Amathole Forestry Company (AFC) which is state-owned. The merger
has led to a drastic reduction in fire outbreaks in both entities as shown in figure 6.1.
Secondly, it paved the way for the establishment of a Trust called Amathole Workers
Trust which is a share ownership scheme aimed at advancing the economic dignity of
black employees by permitting workers to own shares in the company. Participants
stated „The trust currently owns 10% share in the company with great prospect for
growth in coming years‟. Furthermore, figure 6.2 shows the BBBEE scores of the
measured entity based on the previous FSC.
FIGURE 6.2: BEE SCORES FOR THE MEASURED ENTITY
Source: (Primary Research Data, 2017)
To elicit information about the role of Verification Agencies in the implementation
process, interviewees were asked about their role. The study established that
verification agencies are staircase between DTI and measured entities that corroborate
the authenticity measured entity records (Balance sheets, financial statements, etc.).
Diagrammatically, Verification agencies feature in the implementation process as in
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FIGURE 6.3: ROLE OF BEE VERIFICATION AGENCIES IN BBBEE
IMPLEMENTATION
Source: (Primary Research Data, 2017)
Figure 4.3. Starting from top, The DTI, after developing the policy, tasks South Africa
National Accreditation System (SANAS) which develops the criteria for accreditation.
SANAS plays important role as it is the quality assurance body for the stringent
monitoring of BEE verification processes. BEE Verification agencies, using the
guidelines set out by SANAS verifies the records of measured entities and approves or
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disapproves the records based on available evidence, after which a BEE certificate is
issued.
6.4.2 LEVEL OF COMPLIANCE OF MEASURED ENTITIES
Participants from the measured entity indicated that forestry firms currently
implementing the policy are demonstratively compliant. To confirm this, one interviewee
asserted: „a BEE Committee is set up to assist in monitoring achievement of policy
objectives.
FIGURE 6.4: IMPLEMENTATION STRATEGY OF THE FORESTRY COMPANY
Source: (Adapted from Primary Research Data, 2017)
Board of Directors Formulate Strategy
Strategy communicated to Group Service Manager
BEE Committee collects data
Data submitted to BEE Verification Agency
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This Committee meets once a month together with the Group Service Manager to
assess the effectiveness of measures put in place to attain the goals set. At the end of
the year, a progress report is submitted to auditors who in this case are called BEE
Verification Agencies who based on the evidence available awards BEE points‟. The
process mentioned above is diagrammatically shown in figure 6.4
In response to the question: responsibilities of verification agencies, participants from
BEE verification Agencies stated that they are regarded as the veins of BBBEE policy
implementation because they convey information (including ideas, feeling, and
impressions) from measured entities to policy makers (DTI) and vice versa in order to
improve compliance. Another participant stated: „we substantiate evidences prepared by
measured entities, verify whether the evidences provided are sufficient bearing in mind
that companies may misstate their records and in case misstatement, we ask for more
evidence. If satisfied with the evidence available, a BBBEE score is awarded followed
by a BBBEE verification certificate. We prepare a verification report which provides an
in-depth detail about each element awarded to measured entities.‟ One individual
explained that they provide consultancy and non-consultancy services to companies
including but not limited to the following:
Train measured entities about how to effectively implement the BBBEE policy to
enhance compliance;
Assist companies prepare manuals or policies to guide the implementation
processes;
Educate measured entities on developing management system for definitive
verification;
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Examine measured entity‟s compliance policies and provide non-biased advise
on how to improve on conformance;
Explore opportunities for measured entities to add value to the implementation
process without prescribing it.
When asked about what verification agencies look for in the verification process,
participants discussed the process as follows:
6.4.2.1 VERIFYING OWNERSHIP CODE
The ownership is critical in the achievement of BBBEE scores because proper
implementation of the code can easily translate into the attainment of other codes with
ease. Under this code, Verification agencies peruse through the data of measured
entities to determine if they truly deserve the point awarded themselves. This takes five
steps: check if the net equity is properly calculated and seek evidence about the figures
recorded and write a detailed report on the method used; corroborate that voting rights
and economic interest are accurately represented as required; take steps to prove how
designated groups are calculated and ensure they are not overstated by companies;
collect evidence that points to how complex structures are dealt with, how equity and
assets sales are managed. We take our verifications to South African Revenue Services
(SARS) to obtain sufficient information about the measured entity.
In other forms of ownership including trusts, employee ownership schemes, a review of
some or all of the following variables is required: check if the scheme meets the
requirements outlined in the Codes and verify that black people get the benefits as per
the formula stated; ensure that people who claim to be unemployed provide a proof by
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making affidavits to that effect. If a measured entity states their beneficiaries are the
youth, verify that they within the range of 18 and 35 years. If a measured entity states
their beneficiaries are the disabled, we verify that the beneficiaries are actually disabled.
If a measured entity proclaims their beneficiaries are black people in remote
underdeveloped locations, verify that by seeking letter from their traditional leader or
confirming their postal addresses. For QSE‟s two main items are checked: voting rights
as well as economic interest.
6.4.2.2 VERIFYING MANAGEMENT CONTROL CODE
Participants commented that verification of the management control code is
straightforward using the verification manual in conjunction with the sector codes.
Agencies compare the measured entity‟s points against the allocated management
control score. The investigation commences by requesting EEA2 and EEA4 forms
submitted by the measured entity at Department of Labour. Check if the race, gender,
level of management and appointment of the Board are not overstated or understated
and to abate any form of fronting. Interviewees listed the following steps further:
Distinguish between top management and senior management of the measured
entity and ascertain if the entity‟s management are only senior management or
top management so as to spell out which weighting point to allocate;
Avoid double counting by ensuring that the measured entity‟s senior
management qualify for points under Code 200 or Code 300 but not both;
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Ensure that measured entities classify their management levels into categories
such as senior top, other top management, etc. if not classified, the verification
agency is obliged to classify the management before points allocation;
Request for personal information including identity document or certified copies
about the directors and managers from the measured entity;
Randomly select some board of directors to have a thorough discussion
regarding their job description to determine if their roles are executive or not;
Obtain information from the Department of Labour regarding appointment
records of directors and their participation on the board to ascertain whether
they are executive directors or nonexecutive directors;
Determine black directors and management roles by means of comparing their
remuneration with their white counterparts, their voting rights and obtain
evidence about any restrictions that may hamper their right to vote;
In order to confirm whether the scores are accurate, calculate the number of
directors and check how many are black, how many are women and how many
are non-executive;
Corroborate the formulae and weighting points used by the measured entity
whether they correspond with the management control scores;
6.4.2.3 VERIFYING EMPLOYMENT EQUITY SCORECARD
The starting point to verify this code is to request the EEA1 bearing employee‟s
signature and medical information indicating any employee with disability as well as
EEA2 and EEA4 forms from Department of Labour submitted for EEA. In addition,
determine if race, gender, physically challenged, and level of management of
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employees are stated accurately. Verification agencies ensure that the entities meet the
40% target for each of the two five-year periods. No score is allocated if entities fail to
achieve the sub-minimum for the periods.
Under this code, measured entities must categorize management into senior, middle
and junior management. „We equate middle management to junior management in
situations where measured entities management is not properly categorized,‟ a
participant indicated. Request employees‟ files from the employer (in this case, the
measured entity) and compare it with the EEA1, EEA2 and EEA4 form to see if any
irregularities exist. Employees file should have the following details to make verification
relaxed: a copy of id, job specification, appointment letter, promotion letter (if
applicable), employee band and other information relevant to simplify the process. All
employees labeled as disabled should be physically verified by the verification agency.
This can be confirmed by using the EEA2 and EEA1 forms or by obtaining information
from the disabled employee‟s doctor.
6.4.2.4 VERIFYING SKILLS DEVELOPMENT CODE
As a requirement, companies below R500, 000.00 need not comply with this code but
verification agencies still verify SARS certificate proving the exemption. Agencies see to
it that measured entities comply with this code but also with SDA including the Skills
Development Levies Act, register with SARS and the measured entity must have a
SETA. The measured entity should perhaps, have a skill development plan in place
indicating how their black workforce are re-skilled, report annually to their SETA. After
confirming that the above are in place, verification agencies now do a counter proof by
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first requesting for the APM201 form which is an evidence that the measured entity has
either internal or external skills development trainer to assist it. Next, we confirm from
the specific SETA whether the measured entity is registered with them. In addition,
obtain the following from SETA: annual training report, approval letter permitting the
entity to implement its own programmes and that these programmes are targeted at
black employees. Moreover, agencies collect evidences to ascertain whether
scholarships, bursaries and any form of financial assistance is classified expense on
skill development. It is important to note that the expenses are still recognised.
Verification agencies then turn their attention to evidences of expenses on skills
development in the form of invoices, deposit slips or records in their accounts.
Additional evidences include: training agreement contract between the employee and
the measured entity; request for attendance register specifically for training activities be
it internal or external training and check that the training activity falls within the learning
Programme Matrix.
6.4.2.5 VERIFYING THE IMPLEMENTATION OF PREFERENTIAL PROCUREMENT
CODE
Just over half of those who answered this question reported that the purpose of
verifying the implementation of this code is to determine if measured entities procure
their materials from BBBEE compliant firms, establish that the suppliers of the
measured entity meet the criteria stated in point 2.1 of the preferential procurement
code and establish if the points awarded are calculated correctly. ‘We besides collect
evidence to determine if measured entities expenditure on this code are not overstated;
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certify that appropriate documents for preferential procurement is being used and ratify
the BBBEE recognition level of suppliers as this determines the point to be awarded to
the measured entity‟ participants added.
Verification agencies establish whether the measured entity accurately calculated the
total expenditure by obtaining either their audited financial statement, a copy of
management account or income statement or any other information that assist the
assessment. An individual stated: „We also trace the source of the goods and the date
of the purchase to establish if the transaction took place within the time-frame under
scrutiny.‟ Once the source of goods are located and marked, verification agencies
confirm that measured entities apply items stated in paragraph 5 of the preferential
procurement code. These items include purchasing from public entities that meet the
requirements in the Public Finance Management Act (PFMA) specifically schedule 2
and 3 entities; and procuring from monopolistic suppliers, labour brokers and imported
items. Next, ascertain whether measured entities made the appropriate exclusions listed
in paragraph 6 of the preferential procurement code some of which is not purchasing
from schedule 1 public entity.
If the measured entity imported some goods, it will be excluded in the total spend and it
must provide reasons for purchasing abroad rather than local. As a matter of fact, „the
policy promotes local procurements unless such components are not locally produced,
the component is a material needed for value addition and the imported brand and its
specifications differ from local substitutes‟ interviewees underscored. In such situation,
the measured entity must have all the relevant documentations such as importer
registration and VAT declaration both from SARS.
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Following this, the calculations of the measured entity with respect to their
procurements are validated by:
Requesting proof of transaction between the measured entity and BBBEE
suppliers.
Determining the BBBEE compliance level of the supplier to ascertain the
weighting points to allocate;
Cooperating with measured entities to factually determine the quantity of goods
supplied (in rand terms) by the BBBEE supplier in order to be certain about the
figure used by the measured entity;
Making certain that BBBEE compliance level of suppliers has been incorporated
correctly by measured entities in calculating their score;
Randomly selecting some suppliers to verify their compliance level as stated by
the measured entity;
6.4.2.6 VERIFYING THE IMPLEMENTATION OF ENTERPRISE DEVELOPMENT
CODE
Prior to commencing the verification, verification agencies verify their official papers to
ensure that the key principles are acted upon to attain the general objectives of the
BBBEE. Using standard valuation method, verification agencies assess the calculations
to give their verdict as to which amount should be excluded or included and settles on
acceptance or rejection of the cumulative recognition of the code. When doing
verifications, interviewees asserted „we collect sufficient data to make informed decision
about points to allocate for meeting the enterprise development code. We then
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determine the points awarded themselves (measured entities) is equal to the weighting
points and any bonus points that apply to the code,‟
Sufficient evidence is also collected from the beneficiaries of measured entities to verify
their BBBEE status as claimed by measure entities. Evidences collected are applied to
categorise the contributions of measured entities into category A or B. Verification
agencies must also check if the recipients qualify as beneficiaries set out in clause 3.2.4
of the codes and substantiate that all assistance have no ulterior motives except for
developmental, sustainable nurturing, financial independence and operational
enhancement purposes. As a requirement, the enterprise development should last for a
minimum of five or more years. If beneficiaries do not conform to the above, no points
will be allocated to measured entities under this code.
In the actual authentication process, verification agencies take a thorough perusal of
entities‟ audited financial statement dating back to five years to confirm the form of
developmental initiative taken to succour beneficiaries. Respondents added „we further
collect sufficient evidence to confirm beneficiaries‟ BBBEE status and their qualifying
category. The evidence collected is also used to prove the identity of shareholders of
the beneficiary entity to confirm if they are truly „black‟ as defined in the codes. If not
satisfied, we request to see actual persons.‟ In cases where the identity of beneficiaries
cannot be validated, the points already allocated by the measured entity will not be
upheld. Agencies then scrutinize the written agreements between the measured entity
and the enterprise development beneficiary to see if they meet the requirements in
annexure 600 (A) of the Code. Finally, check that measured entities subtract VAT
amount from the contributions made by the measured entity.
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6.4.2.7 VERIFYING THE SOCIO-ECONOMIC DEVELOPMENT CODE
In this verification process, Verification agencies assess the investments made by
measured entities within their immediate communities and whether they comply with the
calculations procedurally. The process is begun by determining whether points
measured entities allocated themselves using standard valuation method is accurate.
Using the Codes of Good Practice as a reference point, verification agencies gather
sufficient evidence to confirm which contributions should be regarded socio-economic
development and which one should be excluded or assigned to other Codes. It is also
their responsibility to check that at least 75% of the contributions benefit black people as
defined in the codes.
Verification agencies ascertain that the activities of measured entities under this code
facilitate viable access of the previously to the mainstream economy. „It is important to
note that measured entities‟ points is out rightly revoked if it is found that black people
have been partially or entirely misrepresented. We again check that contributions
included in the calculation of measured entities within five years after the inception of
the implementation of the code,‟ respondents stressed.
In the actual verification process, the verification agencies request for financial
statements (preferably audited one) for the years under review. It may perhaps obtain
evidence by any legal means possible to substantiate the claims about the number of
black people recorded in the measured entity‟s records. Some of the legal means of
obtaining evidence in this regard may include letters from a school if the beneficiaries
are students/learners, a letter from a hospital if beneficiaries are patients, old age
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homes if the beneficiaries are old people and from an orphanage if the beneficiaries are
orphans. The verification agency proves the blackness of beneficiaries in all these
evidences even if it means seeking an autonomous view about the identity of the
beneficiaries. Contributions to beneficiaries with dubious or unsubstantiated identities
are excluded instantaneously from the calculations under the Socio-economic
Development code. If satisfied with their identities, as well as the written agreements
between beneficiaries and measured entities, the agencies give their verdict as to
whether they complied with annexure 700 (A) of the code. Verification agencies subtract
VAT from any transaction in instances where measured entities factor in VAT in their
calculations.
6.4.3 EFFECTIVENESS OF MONITORING IMPLEMENTATION PROCESSES
When participants were asked: who is responsible for monitoring implementation of
BBBEE policy in the municipality, majority commented that BEE policy is not
administratively binding on the municipality while other respondents commented that the
municipality does not have the authority to query which company is complying with the
policy or how companies are complying with it. Consequently, no department is
assigned to oversee the implementation and administration of BEE in the municipality
including other municipalities nationally.
In response to the question: „have you ever been invited to give ideas about what
should be included or excluded from the policy as a municipality?‟ the municipality
emphatically stated: „As I stated earlier, local views do not feature in the development of
the BBBEE policy even after its revisions on many occasions, policymakers still bypass
local communities.‟
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Respondents from verification agencies were asked about transparency in reviewing the
records of measured entities and they emphasised: „we strive to be impartial in our
dealings so as to avoid losing our accreditation and maintain a professionally working
relationship with our clients. We remain neutral, independent, transparent, fair and
open-minded irrespective of the fees we charge clients. We maintain agency-customer
confidentiality at all cost and identify all threats to impartiality including self-interest, self-
review, familiarity, intimidation, threats and ensure that we do not fall victims to them.
Our decisions are solely based on evidence provided and conclusions based on the
BBBEE verification manual which is our guiding principle.‟
To test their effectiveness, the agencies were asked how they detect fronting and
responded that identifying fronting is multifaceted due to various forms of it.
Notwithstanding the complications, agencies do their utmost best to detect them and
take necessary actions taken to reverse any harm caused. Agencies identify fronting in
one or more of the following actions:
Take a complete review of the company in its entirety by reviewing the ownership
structure with its subsidiaries to ascertain if there is any conflict of interest;
the measured entity‟s organizational structure is reviewed in conjunction with job
description of each structure;
Identify and scrutinize documents to see if managers and directors are not
deceptive but perform their jobs at the measured entity.
Inspect documents to confirm that the job description at the measured entity is
the same for all race and remuneration framework are based on qualifications,
experience etc.;
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Peruse through the minute book of directors of measured entities to ascertain if
the entire race is given the opportunity to make strategic decisions;
Interview physical persons about their role at the measured entity
Inspect human resource department‟s records to query any doubtful sudden
appointments or resignation of directors and managers.
6.4.4 BBBEE IMPLEMENTATION BOTTLENECKS
When posed the question about holdups to the policy implementation, participants from
the local government lamented the exclusion of municipalities from verification of
measured entities. Participants stated: “Government is failing the previously
disadvantaged." Interviewees posited that black-owned forestry companies in the
municipality generally struggle to grow their businesses. For instance, Amahlathi has
got abundance of forest divided into two: Commercial forestry, classified as the „Big
Guns‟ in the industry and the smaller firms, mostly black-owned struggle to sustain their
businesses. One participant added that „Even if the municipality puts a tender as
required by supply chain, it is these „Big Guns‟ that meet the requirements as a result of
their huge financial muscle hence; benefit from the tender at the detriment of smaller
forestry firms.‟ Another individual remarked that forestry is major employer in the
municipality and since there are insufficient job opportunities within the locality, workers
are exploited due to the large pool of labour. The majority of those who responded to
the above questions felt that the policy is narrow but not „broad‟ as perceived by
policymakers. „For now I can say the policy does not represent the previously
disadvantaged until it is decentralised. For instance, if it is decentralised big contractors
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can be forced to subcontract to smaller firms, mentor them and leave a lasting legacy in
local economies‟ one participant decried.
Measured entities on the other hand allude that the continuous changes in the sector
codes affects and subsequently erodes the successes achieved previously. Coming to
the codes, the ownership code is challenging because a greater percentage of black
people who are target beneficiaries do not have sufficient income to purchase the
percentage required by the policy. „The company itself is family owned business so it is
even not possible to relinquish it to people at no cost,‟ a participant indicated. The
other most perplexing code is meeting the skills development element due to the
number of staff they employ (over 1200 employees). One interviewee stated „the
intricate part of this code is that if we invest more on training, it may affect payment of
staff benefits such as bonuses. The more people we hire, the more problems you
encounter, meaning we must use machinery. We are thus, forced to downsize by taking
automation route but that will have dire repercussions for the community as it relies on
these firms for jobs.‟
„The procurement policies is built on the principle that suppliers should provide goods at
lowest cost, quality and efficient but these attributes are very difficult, if not impossible to
find among black suppliers due to financial constraints‟ another individual
acknowledged. Employment equity element posed a challenge due to lack of skilled
forestry experts in the municipality. Measured entities mentioned that this is one reason
they employ immigrants.
According to verification agencies, the major bottleneck militating against the policy is
how to curb the proliferation of fraudulent BBBEE certificates due in part to the benefits
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that come with having the certificates. A common view amongst interviewees was that
companies must familiarize themselves with a sample BBBEE certificates (figure 6.5)
and its features thereof in order to make informed decisions while some advised to
contact the verification agency appearing on the certificate to verify the authenticity of
certificates. Some interviewees alluded it is the responsibility of companies to do their
background checks about the credibility of verification agencies before sourcing their
services and report any misrepresentation to the BBBEE Commission.
FIGURE 6.5: FEATURES OF A GENUINE BBBEE CERTIFICATE
Source: (Primary Research Data, 2017)
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To this end, the following are some of the few tips participants pointed out in forged
certificates:
The items on the certificate is haphazardly arranged;
The resolution (clarity) of the logo is low, blur and fuzzy;
Details such as email address, telephone number, VAT registration number,
SANAS registration number incorrect;
Either certificate is not signed or certificate signed but missing authorized
signatory name;
BBBEE Points allocation is incorrect.
6.4.5 RECOMMENDED IMPLEMENTATION STRATEGIES
When asked to suggest better implementation tactics, about 70% of those who were
interviewed at the municipality indicated municipalities should be included at least in
monitoring measured entities to bring a remarkable success. A small number proposed
that the policy should be decentralised to capacitate municipalities to draft own
empowerment programmes. Since forestry is the major employer in the municipality,
participants encouraged wood cutters to form coops in order to have one voice as a
collective to negotiate better wages. Besides, with a formidable co-op, the government
can recognise and support them with equipment, finance and risk management. Other
clarifications to this question included „We currently have primary and secondary coops
at the municipality. The primary coops cut the logs and the secondary coop‟s
responsibility is to link the products to markets. The primary coops have one
representative at the secondary coop to coordinate and report all matters back to their
members.‟ Furthermore, the municipality has taken it upon itself to capacitate small-
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scale forest growers to acquire business and negotiation skills. To this end, it is
continuously engaging with Small Enterprises Development Agency (SEDA) to train
emerging growers with business and negotiation skills.
To promote inclusive growth, measured entities proposed: “we need stability in the
policy as the incessant changes in its objectives do not bode well with us; there must be
reward for employing more staff rather than penalising us for our inability to meeting the
skill development code. If the policy continues on this trajectory, we will be forced to
take capital-intensive route. Companies should be given the liberty to train workers
based on company needs instead of BBBEE policy needs.”
6.6 DISCUSSIONS
The views of stakeholders about BBBEE implementation in the forest sector were
evaluated in the study and a number of results obtained. The study found that the policy
follows a top-down (centralisation) approach that is policies are developed at the top
and imposed on companies without making any alterations to its implementation. In
addition, local municipality ideas are excluded from the policy which militates against
the successful implementation of the policy. Makinde, (2005:66) however, pointed that
centralization places policies in silos, disregard the concerns of all stakeholders but only
top officials who carved the policies. More importantly, Berman (1980: 206) believed
that implementation that does not incorporate the issues of local milieu is likely to
produce inaccurate expectations of beneficiaries. The lack of consideration for local
trepidations (economic, political, socio-cultural settings) renders implementation
attempts null and void. The gap between policy makers, implementers and beneficiaries
widens when less decentralization exist (Ali, 2006:8) because it fails to infuse local
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initiatives relevant for specific context (Memon & Wheeler, 2000:3). This is evident by
continuous disconnect between local economies and policy makers as the former feels
isolated from the process.
Comparing the two results from measured entities and the municipality, it can be seen
that financial constraint is a major bottleneck in empowering the previously
disadvantaged yet agree that the policy intent is laudable. Besides, the policy has rarely
any clear-cut strategy to curb the exploitation of workers particularly in rural areas.
Instead, it is mainly focused on achieving equity and skill development of workers with
little emphasis on remuneration of the workers in general. Precisely, the BBBEE policy
overemphasizes equity between black and white people with less concern about
whether white workers are remunerated competitively well.
The interview with Amahlathi Municipality indicates that the BBBEE policy with its
implementation process is inherently political implementation in reference to Matland‟s
Conflict/Ambiguity matrix of policy implementation (Matland, 1995:160). This is
because the policy intent is unambiguous as local municipalities concur those
oppressed by apartheid should be empowered. It is the means by which this intent
should be achieved that generates a source of conflict, thus implemented politically
where „implementation outcomes are decided solely by power‟ (Hill et al., 2002:76).
Hudson, (2006:230) believe that the success of the implementation may nevertheless
depend on the ability of the central authority to coerce measured entities to comply with
the policy goals (Matland, 1995:164). Accordingly, the economic value envisaged will be
unachievable.
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Based on the responses from the interviewees, it can be inferred that the successful
compliance of the policy by forestry companies has created little economic value to
companies and beneficiaries than expected which can be compared with Moore‟s
(1995:18) assertion that the reason for lack of value is the inability of forestry firms to
participate in developing the policy, lack of free will operate and lack of the policy to suit
specific locational and environmental needs.
According to Sabatier‟s (1999:120) ACF, policies must be implemented for a period of at
least ten years before reforms can be made. This allows policy subsystems (socio-
economic conditions, public opinion, policy perceived impacts) to be aggregated within
the timespan. This cannot be said of the BBBEE policy as reforms continue unabated in
less than a decade. The policy initially had seven elements and as companies moved to
acclimatise with it, changes have been made hence; it is now reduced to five elements.
Besides, Government promised in the FSC to make funds available for black people to
complete BBBEE transactions. The DWAF represesenting the government through its
influence, will negotiate funding for these transsactions. It perhaps declared that DWAF
will knock on the doors of Departments such as DLA, DoA and the Land Bank as well
as corporations such as IDC to source funds for emerging entrepreneurs. Moreover,
DWAF pledged to consult with the National Treasury to provide funds to establish a
Development Fund for purchase of seeds, land, and tree planting. Industries on the
other hand, will develop various financial models to strengthen this initiative, propose
the financial models to financial institutions for approval, and recommend insurance
models feasible for emerging growers as this sector is pestered by continuous forest
fires (FSC, 2009:8,9,13). However, the above promises have not been fullfilled as
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respondents substantiated that BBBEE transactions in the forest sector are at standstill
due to lack of finance. It is highly ominous and ill-omened to learn about the
government not complying with a policy it personally developed.
Cargill, (2010: 205) criticized the notion of sourcing funds for individuals to purchase
shares of a private company for self-benefit at the expense of the masses. The
ownership element where companies are expected to transfer 25% shares to blacks
usually has unpredictable benefits to blacks and the economy at large resulting in
unsolicited lending. More so, the deal comes with little to no benefit to the entity as most
BEE investors come with inadequate business acumen as well as experience yet cost
of the transaction is mostly enormous. The economy eventually shrinks compared to
allowing entities to assist black business people establish their businesses (Cargill
2010:206).
Jeffery (2014:160) cautioned companies regarding the implementation of the
management element as its haphazard implementation may lead to incompetent
management that may take calamitous decisions. Another concern is that if more under-
qualified directors are employed, they will outnumber skilled directors whose opinions
may become unpopular as the inexperienced directors will outvote and outnumber the
board. These suicidal decisions may lead to insolvency of measured entities.
Steyn (2015:1) observed the lack of technical skills among black people in the economy
resulting in high unemployment and poverty among the youth and companies struggle
to retain skilled workers due to competition hence; the need for skills development. In as
much as skills development code is strategically essential, measured entities believe
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the policy should permit companies to decide on the number of staff to train instead.
The measured entities posited that they are labour intensive (employing over 1200 staff)
so it is costly to meet the requirements set out in the policy.
This encounter with verification agencies laid bare revelations about BBBEE
implementation tactics that are unknown to the public. The generic code with its
accompanying monitoring devices is the best policy that ensures that implementation
and monitoring are conducted simultaneously. Based on the findings and the
testimonies of these agencies, it can be concluded with surety that implementing
officials are highly effective due to the rigorous selection processes. In his Strategic
Triangle of public value creation, Moore (1995:71) highlighted operational capacity as
one most important ingredient for achieving value. BBBEE verification agencies spell
victory for the implementation of the policy as most of them have the capacity to perform
the verification tasks due to the stringent application and selection processes. The skills
exhibited by the agencies ensure that measured entities adhere to the prescript of the
policy. Williams & Shearer, (2011:5) however admonished that skilled human resource
alone does not improve operational efficiency and effectiveness in modern times but
technology.
6.7 CONCLUSION
The analysis of data in this chapter made intriguing revelations about the policy worth to
be deliberated. The analysis revealed that municipalities have been relegated from the
implementation yet most measured entities are found within their milieu. Compliance by
companies is to a certain extent favourable but the continuous policy reforms and policy
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changes does not brave well with the future of the policy. The role of BBBEE verification
agencies in ensuring successful implementation of the policy were emphasized,
pinpointed and identified. The study exposed how BBBEE verification agencies identify,
and detect fronting, features of fraudulent certificates and how they corroborate the
findings of measured entities. The most significant findings emerging from this study is
that even though forestry companies are complying with the prescripts of the policy, its
positive impact on local communities socially and economically is scanty. The
succeeding chapter intends to provide the overall conclusion and practicable
recommendations for the study.
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CHAPTER 7: CONCLUSIONS AND RECOMMENDATIONS
7.1 INTRODUCTION
The preceding chapter shed light on how local governments, measured entities and
Verification agencies contribute to the successful implementation of the BBBEE policy
by way of interviews and analysis. This chapter outlines summary of the chapters,
findings from the study, highlight the overall conclusion of the study based on research
questions and research objectives. This will be followed by workable recommendations
based on the findings of the study will be itemized. Finally, areas of further research as
well as conclusion of this chapter will be presented to summarize the salient facts of this
chapter.
7.2 OVERVIEW OF THE STUDY
This study seeks to critically review Broad-Based Black Economic Empowerment Policy
implementation in the forest sector in amahlathi municipality. Chapter 1 constitutes the
introduction, background information, the statement of the problem, the research aims,
objectives and research questions, the chapter organisation, definition of concepts and
the significance of the study.
Chapter 2 gives a theoretical foundation that pertains to the researcher‟s investigation,
as well as the evaluation of concepts. It is composed of the theoretical framework for
the researcher‟s study and a detailed review of implementation studies. It entails the
various generations of implementation studies and the top-down and bottom-up
approaches to policy implementations.
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Chapter 3 seeks to review the BBBEE policy with emphasis on the FSC that pertains to
forestry firms. It starts with the administration of the apartheid economy, discusses the
motive behind developing the policy as well as the constitutionality of it. Each element of
the code is thoroughly discussed to uncover the challenges, bottlenecks and
opportunities being encountered by measured entities and verification agencies.
Chapter 4 focuses on international best practices in the forest sector and analysis of
case studies. Principally, it gives overview of the forest sector management in Germany,
China and South Africa. It then looks at the then Stutterheim LED policy and Malaysia‟s
NEP.
Chapter 5 discusses the methodology underpinning the study. It deals with the research
philosophy of the study and the paradigm that is adopted to achieve the research aim
and objectives. It is mentions that the qualitative research method is espoused to
investigate the study. The target population, sample size and sampling procedure are
also highlighted.
Chapter 6 presents the researcher‟s findings, the analysis of the findings and
discussions about the findings. It starts with how the data is collected and analysed
before presenting the findings in themes.
Chapter 7, which is the final chapter for this study, provides a summary of the findings,
conclusions, as well as a workable recommendations and areas for further research.
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7.3 SUMMARY OF FINDINGS
Findings from the study are presented separated among the selected stakeholders of
the policy- agencies, the municipality and measured entities.
7.3.1 FINDINGS FROM AMAHLATHI MUNICIPALITY
The study established that local Municipalities have been side-lined from contributing
meaningfully to the implementation process, thus a gap exists between the local
municipality with its local people and the BBBEE policy implementation. It also found
that the policy is implemented in a top-down approach resulting in the municipality
unable to attain the social and economic values promised by the policy. Finally it found
that financial constraints prevent black people from benefitting from the policy.
7.3.2 FINDINGS FROM THE MEASURED ENTITIES
The entities under review was a BBBEE Level 3 contributor denoting a spend
recognition of 110% procurement recognition with 75 BBBEE points. The implication is
that the measured entities can claim the original amount plus 10% if they procure goods
and services from any BBBEE supplier. The study also found that finance, lack of skills
and continuous policy amendments presents a bottleneck in the implementation
dynamics of the policy. Lastly, labour intensive measured entities find it unbearable to
meet the skills development element due to high cost of training. These results suggest
that the value envisaged has not been fully met.
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7.3.3 FINDINGS FROM VERIFICATION AGENCIES
The study found that verification agencies are effectively monitoring the implementation
of the policy. It however found that the use of technology is non-existent in monitoring
the process. Finally the study found that agencies are hired by measured entities to
verify their BBBEE status which presents a huge temptation for both parties to conspire
with each other.
7.4 RECOMMENDATIONS
The preceding recommendations are made based on the findings from the literature
review, empirical study and finding from the primary research. The recommendations
are made to the government, verification agencies, measured entities and specifically
the forest sector charter
7.4.1 JEFFERY’S ECONOMIC EMPOWERMENT FOR THE DISADVANTAGED (EED)
Jeffery 2014 (409-413) shifts from the blackness of individuals to the consideration of all
disadvantaged South Africans (citizens and permanent resident) because the colour
„black‟ is not synonymous with being „disadvantaged‟. Simply put, definition of
„disadvantaged‟ person should not be race-based due to the exploitation of the concept
by politically connected elites in the past and in recent times as evident in the literature
review. A disadvantaged person according to Jeffery should “use income and other
socio-economic indicators of development to gauge who is truly poverty-stricken to
reduce the emphasis on race classification”. Jeffery added that unlike BBBEE, EED‟s
aim to provide the preconditions for poor people to properly take-off. These
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preconditions include uninterrupted schooling system, quality tertiary education that
prepares students for the world of work, business and entrepreneurship.
7.4.2 MADI’S BLACK ECONOMIC ENABLEMENT (BEN)
Madi (2016:184-216), a believer in the creation of enabling environment for South
Africans proposes a new paradigm in the policy implementation title Black Economic
Enablement (BEN). According to the author and academic, BEN is a constructive
process with much emphasis on disadvantaged black people that support all South
Africans regardless of race to have equal access to the economy by ensuring that
people with entrepreneurial abilities are uplifted, opportunity created for all to learn
based on good faith that reduces inequality. Madi further explained this form of
empowerment through the acronym „ENABLEMENT‟ highlighted below:
ENTREPRENEURIAL DEVELOPMENT: this „E‟ also stands for enterprise development
to denote the importance of creating more entrepreneurs and assisting small
businesses to be sustainable. The proposed policy reform argues that this code should
be credited with the highest point as opposed to ownership, management codes to the
BBBEE policy.
NUMBERS: this denotes the idea that the proposed policy should be supported by large
number of the supposed beneficiaries. The numbers here also denotes that the policy
implementation should benefit as many people as possible, not just handpicked
individuals as who benefit on recurring basis. The policy should be owned and driven by
the previously oppressed to avert „crony-capitalism‟.
202
ACCOUNTABILITY: there should be the notion of accountability in the implementation
of the policy from allocation of resources, monitoring through to evaluation of the
implementation. The author advocated that the lines of accountability should be
impermeable, thick and impenetrable so as to make it impossible for stakeholders to
erase. The selection of beneficiaries and the reasons for their inclusion should besides
be transparent, broad-based and representative. Similarly, agencies tasked with
implementing policies must be accessible so as to bring them to book should they
decline to fulfill their responsibility.
BLACK: the author recommends that in as much as the policy should take all South
Africans along, it should focus much on black people as defined in the constitution as
well as the EEA because poverty amongst black people is gravely higher than other
categories of the population. Empowering black people will bolster the economy
because their improved purchasing power to support businesses of other categories of
the population.
LEVEL PLAYING FIELD FOR STAKEHOLDERS: Power must be evenly distributed
among all stakeholders: government agencies, the private sector, beneficiaries,
measured entities, etc. If the power gap that exists between resource distributers and
resource beneficiaries are not cautiously managed, it will degenerate into corruption.
ENABLE: the post analysis of any empowerment policy implementation should leave
beneficiaries empowered than previously. The empowered individuals, communities and
companies should now be independently strong, entrepreneurially skillful, and
attitudinally resourceful to assist others in terms of jobs, and developing others. Similar
203
to job orientation or teaching others how to ride a bike, the author espouse that
empowering others must also have an end, if not it implies unsuccessful enablement.
Enablement in this sense is “helping people develop the necessary competencies to
manage their own empowerment effectively. When enablement is not part of an
empowerment effort, the effort is likely to fail.”
MONITORING: the author started explanation with the phraseology, „that which you
cannot measure you cannot monitor; and that which you cannot monitor cannot
materialize‟ to wit, vigilance is priority to ensuring the attainment of enablement
objectives.
EMPLOYMENT: With this proposed policy full employment will be attained since the
focus will be on enterprise and entrepreneurial nurturing. Companies with highest job
creation will be given high BBBEE scores, and pay less tax.
NATION-BUILDING: the proposed amendment to the policy implementation also
envisages the incorporation of „nation building‟ for all South Africans. This healing and
reconciliation approach to correcting discriminations and injustices of the past is the
surest way to heal winners, and losers in the implementation process without sense of
self-aggrandizement.
TRANSFORMATION: Transformation in this sense must have attributes of enablement,
meaning every step must be taken to ease the possibility of the previously
disadvantaged to be empowered without entirely disempowering the previously
advantaged. The potential stakeholders in this form of transformation should be any
person with the requisite resources but not just the government driving it.
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7.4.3 LOCAL ECONOMIC EQUITY FOR THE DISADVANTAGED (LEED)
It is recommended that the policy should be reformed to incorporate local municipalities
in its development and implementation. That is to say, instead of drafting specific sector
codes, DTI should direct their energy towards empowering municipalities to draft local
specific codes to capture conditions reminiscent of municipalities dubbed Local
Economic Equity for the Disadvantaged (LEED).
LEED is a pro-growth and poverty reduction strategy drafted from the BBBEE policy to
specifically identify previously excluded South Africans through the creation of enabling
environment to thrive in order to permit equity. The previously excluded is broadly all
South African citizens and permanent resident (black, white, coloured, Indians,
Chinese) who rarely benefited from the apartheid regime. LEED is premised from the
notion that the common enemy is poverty but not the color of the skin. This is a
transformative, redistributive, reconciliatory approach that is in consonance with the
constitution rather than retaliatory or revengeful manner in which the current BBBEE is
being executed. Local municipalities must be endorsed to make decisions concerning
the empowerment of their constituents and be fully resourced to implement them so as
to ensure fair selection of the destitute. Stakeholders of LEED include but not limited to
the following: the government (DTI), local municipalities (including white and permanent
resident persons), development agencies, the private sector (black and white
businesses) to a resilient link should be built between the haves and have-nots to
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access and share resources for the mutual benefit of citizens. Under LEED, local
development agencies are capacitated to monitor the effectiveness of all projects rather
than having some armchair verification agencies far away from measured entities.
7.4.4 e-BBBEE
The role of BBBEE Verification Agencies in successful implementation of the policy
cannot be overemphasized as their responsibilities are paramount to the attainment of
its objectives. This implies that policy makers should commit and invest hugely on them
to ensure that they are capacitated to accomplish this pivotal role. Measured entities
must perhaps find it stress-free to submit files for verification and DTI should be able to
assess the works done by verification agencies. One most important tool that enhances
policy implementation in the public sector and that can link this tripartite alliance is the
application of e-governance which is dubbed e-BBBEE.
E-BBBEE, similar to e-governance is a smart way of implementing policies, clever way
of information dissemination, firmest process of uploading, sharing and saving
documents among policy implementation alliances. Alshehri & Drew (2010:79) classifies
e-governance as “The delivery of government information and services online through
the Internet or other digital means”. Besides, Naidoo (2012:63) defines “e-governance
as public sector's use of information and communication technologies with the aim of
improving information and service delivery, encouraging citizen participation in the
decision making process and making government more accountable, transparent and
effective.”
206
Based on these definitions, e-BBBEE is distinguished as the implementation of BBBEE
policy online through the internet to permit distribution of information among
stakeholders in a transparent and accountable manner. This quantum transformation
will align the activities of the DTI, Verification Agencies and Measured entities
sequentially as portrayed in Figure 7.1.
FIGURE 7.1: INFORMATION FLOW WITHIN E-BBBEE IMPLEMENTATION
Source: (Primary Research, 2017)
This prevents personal contact between auditors and measured entities thus avoid any
financial temptations arising from familiarity with parties. More importantly, e-BBBEE
single-handedly addresses the implementation bottlenecks identified. Successful
implementation of e-BBBEE will translate into the following benefits:
It abridges information processes among the DTI, measured entities,
beneficiaries and verification agencies;
207
It permits potential firms to gather information about how the policy should be
implemented;
It empowers measured entities to fully participate in the empowerment processes
thereby democratizing the BBBEE implementation;
It ensures transparency, and lessens temptations, thereby eradicating
corruptions between verification agencies and measured entities particularly
regarding fraudulent BBBEE certificates;
It reduces cost to measured entities to the barest minimum as they would be able
to track their application online, and print their BBBEE certificate online to spare
them time and travelling cost associated with inviting verification agencies;
It enhances better understanding of measured entity‟s needs, and improves
information sharing among the tripartite alliance;
7.4.5 ENVIRONMENTAL SUSTAINABILITY
The FSC should incorporate elements that reward environmental sustainability and
climate change mitigation strategies in order to meet the three values of SFM (Table
4.1: page: 107) as the policy now only meets economic and social values. Meeting the
environmental value of SFM can lead to expansion of forest cover, sustainable forest-
based livelihoods and biodiversity protection.
7.5 AREAS OF FURTHER RESEARCH
This research focused on BBBEE implementation from the perspective of measured
entities in the forest sector. In future, similar studies could be undertaken in other
sectors of the policy including construction sector, chartered accountancy sector,
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agriculture sector and tourism sector in the municipality to ascertain how these sectors
are faring. It will also be fascinating to conduct a thorough research among companies
that are not complying with the BBBEE charter to specifically identify reasons for
noncompliance, and whether there is any sanction for the defiance. It is important to
note also that the research did not take into account the living conditions of BBBEE
beneficiaries of the measured entity. A further study into whether beneficiaries‟ standard
of living has changed since becoming beneficiaries of the measured entity
Research can be taken further into the doorsteps of the DTI to evaluate what prompted
them to arrive at the current codes, assess how they intend to implement reforms about
the policy and prove with evidence the successes of the policy in the realisation of its
goals.
7.6 CONCLUSION
It can be observed that the name of the policy which was changed from BEE to BBBEE
was merely nominal but in numerical terms, it is still narrow-based due to its inability to
build social and economic values for stakeholders. The proposed recommendation of
Madi (BEN) is about enabling the poor (mainly black people) into the economy by not
necessarily overindulging them. Jeffery (EED) also believes that privation of all sectors
of the economy including government departments and municipalities will be
sustainable in bringing long-term prosperity than the current BBBEE policy. Finally, the
research recommends LEED as a distinct broadest way to expand the empowerment
programmes to local government comprehensive approach to localize empowerment
processes so as to address local conditions.
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