The number of black and women business owners has decreased, with the Broad-Based Black Economic Empowerment (B-BBEE) Commission saying that easier methods of funding need to be made available. The commission revealed in its annual report this week that ownership of black businesses has declined by 1.5% from 2020 to 29.5% last year.
“This trend on ownership persists despite the fact that over 500 B-BBEE ownership deals worth over R600 billion in transaction value were reported to the BBBEE Commission since 2017, which deals aimed to facilitate the transfer of ownership to black people,” the commission noted. “There is a need for less expensive and unencumbered funding for black people to make acquisitions that can give real value in the hands of black people, especially from government funding institutions.”
It also said that the amount of money spent on enterprise and supplier development for black-owned small businesses was not reflected in the growth of these businesses. According to the report, there had been a decrease of skills development to 54.8% and skills development and enterprise and supplier development to 46.5%. This was from an average of 60%-61%.
A total of R41.6 billion was spent on skills development and R26 billion was spent on enterprise and supplier development for black-owned small businesses. The commission said this called into question the effectiveness of large sums of money being spent on struggling small black businesses. “Overall skills development maintained growth, but dipped by 5.24% in the final year,” the commission stated.
“Enterprise and supplier development were inconsistent by dipping twice during the reporting period, with a 14.54% drop in the final year. “The inability to match the enterprise and supplier development spend to actual change in the plight of black small businesses makes it difficult to opine of the effectiveness of the R26 billion spend in the year under review,” it said. The report also highlighted that black women’s ownership of businesses decreased by 2.71%.
“The construction sector did not reach their black women ownership target, and neither did the property sector,” said B-BBEE Commissioner Zodwa Ntuli. The report has recommended a centralised fund similar to the Covid-19 Solidarity Fund to facilitate the pooling of available, but unallocated funds. “Such funds could be directed to needy black businesses in general, and black women-owned businesses in particular,” Ntuli said. “This strengthens the need for the 40% set aside of procurement spend for women-owned businesses for growth and sustainability.” The report again strongly recommended that for real and accelerated broad-based black economic empowerment to be achieved, the necessary legislation must be applied consistently by both the private and public sectors.