Black empowerment needs rethinking

11 January 2018 - 16:29
By Sinethemba Mafanya
Diageo plans to identify businesses owned by black women to be integrated into its supply chain. / 123RF
Diageo plans to identify businesses owned by black women to be integrated into its supply chain. / 123RF

Black empowerment has not worked as well as it should.

With the perfect vision of hindsight, it is clear that many empowerment schemes have yielded less than had been hoped, and the main beneficiaries have been a small group of well-connected individuals.

What we have not really succeeded in doing is to create a substantial number of black-owned, entrepreneurial businesses that have the potential, in time, to rival Anglo American, Discovery and the rest of the JSE giants.

This failure to identify and nurture a new generation of black businesses with the potential to scale has also had a negative impact on what is our biggest challenge: unemployment.

Vigorous economic growth - new businesses entering the economy - is what we need to reverse our perilous status quo. I would argue that this kind of thinking has to underpin empowerment initiatives, existing and planned.

All very well to say, you might be thinking, but can it be done? I believe it can.

There are already several such empowerment schemes in place, and we at Diageo SA have recently launched our own, the Diageo Empowerment Trust SA.

Our funding is basically directed in two broad areas.

The first is to identify and nurture black-owned businesses that can be integrated into our supply chain. Such an approach means that we can provide these businesses with the best thing of all: a market into which they can expand.

With the R15-million that the trust has already invested in this initiative, it is targeting to generate R250-million in revenue in five years.

But because these businesses are operating in our supply chain, we obviously have considerable knowledge we can share with them in addition to the funding we supply. We obviously also have a vested interest in ensuring that, as our suppliers, they succeed and grow.

We are working with sorghum farmers in the Eastern Cape as suppliers. A second phase will be to identify businesses owned by black women that can be integrated into our supply chain, from providing agricultural inputs to packaging, bottling and marketing. To this end, the trust has set itself a target of 300 jobs it intends creating in the agricultural sector over five years.

The second broad area of funding is social entrepreneurs. Because these businesses are primarily focused on solving social problems, rather than profit, they are uniquely well-positioned to make the maximum impact on society. To date, the trust has made headway by investing R10-million in the development of social entrepreneurs over the next two years.

Accountability is the final piece of the puzzle. We have put in place a research team to collect metrics to help us establish what effect we have had commercially and economically, as well as socially. - Mafanya is a manager at Diageo Empowerment Trust SA