Transformation of black spending lends itself to cultivating real power and generational wealth. Rick Ed from DoBetter.Business unpacks the Birds of a Feather ideology.
Sweat shop labour proves to be the common factor for disassociation with popular brands, where consumers choose to not support businesses that benefit from slave labour. In a similar way, people have actively supported others with common interests: those who back the same team or those with a common heritage. Kids in school who share common interests – a particular type of music, say – tend to stick together. We socialise with people we feel comfortable with. The downside of such exclusivity means exposure to diversity is limited. Moving out of our comfort zone to try out a new culture, its language and traditions, expands us. People who travel are often more accepting of other points of view and more open to exploring other positions. When it comes to important decisions like the school that we send our kids to, reputation is important. We rely on who and what we know. The same is true for important buying decisions: does this make of car have a reputation for being reliable? Does it keep its resale value? Advertising has taught us that imported is better and apartheid has conditioned us to believe that white is better. Two decades on, many black businesspeople will still trust a white professional over a black one. Reputable black lawyers and accountants still have to fight the perception that superior expertise is to be got at established practices with white names. How do we break this mind-set and give black businesspeople and entrepreneurs the opportunity that they rightly deserve? Established five years ago, the Black Business Council (BBC) has been trying to do for black business what the Broederbond achieved for Afrikaner commerce. But BBC CEO, Mohale Ralebitso, notes that in South African minds, black business is still equated with small business, limiting their access to capital and markets and thus inhibiting growth. As at the end of 2015, according to TimBukOne.com, almost half of the JSE’s top 40 companies (about 80% of the JSE capital) are now controlled by overseas shareholders and the National Empowerment Fund (NEF) says that direct black equity control over the JSE in mid-2014 stood at 3%. Whichever figure you use, black South Africans have little control over their economic destiny through the JSE. Then there’s the legal route. The BBBEE and skills legislations have built-in incentives and penalties but are complex and talk largely to bigger businesses. To date, BBBEE has had a limited impact because many small businesses, black and white, find it too taxing to implement its requirements and maintain their scorecards. It’s a complicated and time-consuming process that is not their core business and they prefer to treat the levy as a tax and write off the possible scorecard benefits. Income tax is the government’s main source of income. Of the R900bn in tax collected by SARS in the 2014 tax year, almost R308bn came from personal income tax and almost R180bn from company tax. VAT accounted for almost R238bn. South Africa’s 16.8-million taxpayers’ spending power is thus a very powerful tool. The bulk of tax is collected from consumers, the same people who make important buying decisions. Additionally, a significant proportion of businesses are informal and hundreds of thousands of employees earn a salary below the tax threshold. Both of these groups can also make an impact by deciding to spend their money with black businesses. There is a multi plier effect at work when South Africans decide who to employ to do a job. When 10 companies choose a black ad agency, and each spends between R10k and R100k, more than half a million rand is injected into the business. It can then hire more staff, contract out work or buy more consumables. Employees have more disposable income. Communities benefit and the economy grows. More importantly, businesses now have the opportunity to grow their expertise and to develop their employees, building their capacity to take on more work and more challenging contracts. And so they share their new-found growth with other businesses, cultivating a symbiotic eff ect. In recent years, there have been a number of uncoordinated “buy black” initiatives. For example, last year Africa is Open for Business author, Victor Kgomoeswana, encouraged the Black Management Forum (BMF) to endorse a “buy black” campaign. But this initiative needed a committed, concerted groundswell of decision makers to swing the tide. Today, searching the web for “buy black South Africa” is discouraging. The only article about supporting black business in South Africa is not a positive one. Yet the opportunities abound: a cursory glance at the members of Kwanele Tshabalala’s Soweto Business Network reveal an exciting list of enthusiastic entrep
entrepreneurs. However, we as consumers still gravitate towards the same suppliers pre-democracy. Commentators enquire about the fact that there is now a sizable black middle class so why are people no longer as determined to strive for the common good as they were two decades ago? Have people become too comfortable? Do we need some outside threat, some force to jog us into collaborating with one another to coordinate our eff orts to support black businesses? There are plenty of NGOs supporting the establishment and growth of small black businesses: Activate!, Awethu Project, Branson Centre, Endevor, Fetola, The Hope Factory… but it’s more than outside help that we need. It has to come from within the community. And we need to extend our scope beyond small businesses. We need a co-ordinated national campaign to persuade people to consciously break out of their comfort zones, to not rely on our only birds of a feather mentality. Can it be done? Yes it can, but it is a slow, deliberate, incremental process. Just talking about it is a step in the right direction. But if each person thinks about where he or she is going to spend their next hard-earned rand, and consciously decides to put it with a black business, we will eventually get there.