Retailers lag on empowerment - survey
Jun 24 2009
Retail Wrap >>

Although the study found that 63 percent of those surveyed believed BEE was important for winning new business, Grant Thornton said this was but a slight increase from the 59 percent of last year, which in itself was a sharp fall from 70 percent in 2007. 

A sector analysis also revealed that the retail industry continued to lag well behind other sectors on BEE. This showed that 71 percent of the construction industry (69 percent last year), 68 percent of the services industry (68 percent last year), and 63 percent of the manufacturing industry (52 percent last year) believed that BEE contributed to the attraction of new business. However, only 47 percent of the retail industry shared a similar sentiment (53 percent last year).

Tony Balshaw, the managing partner of Grant Thornton Eastern Cape, said of the findings: "Broad-based BEE implementation has largely remained static over the past 24 months as businesses focus on surviving the tough economic conditions.

"The failure to align public sector procurement with BEE codes gives credence to the view that the largesse of business continues to propel BEE initiatives."

Christopher Gillmore, an analyst at Absa Asset Management, said the low priority given to BEE in the retail sector was because there was no social imperative to embrace it.

"There are no government contracts and therefore government has no influence whatsoever," he said. "It is slow, but it is there. A few of them have been making the right noise and moving in that direction."

Gillmore cited as an example of this an announcement by Edcon in 2005 that the clothing retailer would spend R445 million setting up an employee trust that would house 10.6 percent of its share capital. He said Edcon had not dismantled the structure even when it delisted from the JSE.

Ajay Lalu, a director at Bavura Consulting, agreed with Gillmore, saying the current economic crisis would not encourage the retail industry to propel itself towards BEE because the government had no leverage on the sector. However, he said that he expected the construction industry to do better because it now had a BEE charter. He acknowledged that even in this sector there was still not enough pressure from the government, especially on those small companies whose business was in the private sector.

Source: www.busrep.co.za, 23 June 2009