Economic downturn might derail transformation


There is justified excitement with the new B-BEE Code. However, overwhelmed by the euphoria of the “new dawn”, there are matters that are being overlooked. Depressed economic conditions might make compliance difficult, or might present indifferent organisations with a ‘convincing’ excuse for noncompliance.

Bar the situation improving, if the downturn persists for the next three months, private sector companies might struggle to comply with the revised B-BBE codes which are meant to facilitate transformation. All core areas – enterprise development; preferential procurement, affirmative action, preferential procurement and Corporate Social investments (CSI) – could be affected.

“We cannot develop small enterprises as our business is not in the best of shape. If we do we might close shop,” a COO of some medium-sized company might claim and who would blame him with everybody complaining about the difficult trading environment.

Black-owned businesses looking to benefit more from the revised B-BEE might have to be forced to learn to find innovative means of sustaining themselves outside Preferential Procurement contracts.

Organisations might also have to shelve the employment of Historically Disadvantaged Individuals (HDIs) as their budgets might not allow them to overburden their wage bills.

Another area that is likely to be affected is Corporate Social Investments (CSIs), as spending on ‘worthy’ causes might become a luxury .

All in all, cost containment might be the only way for businesses to ride out the tough times. And, reluctantly they might have to reduce expenditure in different areas.


Leave a Reply

Your email address will not be published.