By Thebe Mabanga
Financial Mail
08 January 2010

Now that President Jacob Zuma has finally set up the broad-based black economic empowerment (BBBEE) council, he and the members may find that they will be operating in an environment radically different from when the council was first mooted six years ago.

The move can be largely credited to the persistence of trade & industry (DTI) minister Rob Davies, who listed the council as a priority when he took office in May, alongside preparing an updated industrial policy strategy ( due to go to the cabinet lekgotla later this month).

The council is set up in terms of the BBBEE Act of 2003, which was signed into law at the beginning of former president Thabo Mbeki's second term in 2004 but never acted on by former DTI minister Mandisi Mpahlwa.

At the time, BEE was all the rage. The country was in the early stages of an economic boom, with pioneering empowerment charters that were driving big companies to search for suitable black partners.

Sandile Zungu - Inner circle

Now, in the wake of a recession that has tested and sunk many empowerment deals, the council will find dampened enthusiasm for empowerment. Recent deals involving big companies like SABMiller and Tiger Brands have been the exception rather than the rule - and in any case many large companies have done their deals and regard themselves as empowered.

The council will doubtless be hearing a more influential voice from the Left, which was marginalised under Mbeki but is now ready to express its scepticism of BEE more vocally.

The council's overall task will be to ask whether a decade of trying to transfer wealth from a white minority to a mixed, but largely African, majority, using a variety of instruments, most notably debt, has yielded the desired results.

Apart from reviewing progress, the council will have to advise the president on initiatives so far, including the implementation of the codes of good practice and the empowerment charters.

This raises the question of whether the council is structurally suited to undertake this task. It draws on various sectors of society, starting with Davies as lead minister and probably chairman in the absence of the president. He is joined by several cabinet colleagues, the selection of whom suggests a strong voice from the part of government that is sceptical of financial markets and their role in BEE funding.

The council is probably missing someone like planning minister Trevor Manuel or finance minister Pravin Gordhan to moderate the influence of Davies or minister of economic development Ebrahim Patel.

There is a small academic presence in Eltie Links of Stellenbosch University and Mohammed Jahed of the Wits faculty of management.

The inclusion of Sandile Zungu, chairman of Zungu Investment Co, appears to confirm his status in the Zuma regime as one of the voices of black business. Ahead of this year's general election, Zungu led the fund-raising and campaigning effort by black business for the ANC. He argued there should be no bailout for empowerment deals, even though one of his own mining deals was under strain.

Zungu tells the FM that setting up the council is "a milestone" for BEE, and serving on it a "privilege".