The effectiveness of Eskom's Black economic empowerment programme in fostering sustainable business : a study into the implementation of the programme in Eskom transmission.

Abstract

This study sets out to test the hypothesis that the Eskom Black Economic Empowerment, as implemented by the Transmission Division of Eskom Holdings Limited, has had only limited success in fostering sustainable businesses. Although Eskom Transmission has been reporting excellent achievements in terms of the programme, the author argues that the performance measures are flawed in that they do not distinguish between small black owned businesses and large international businesses which conform to the Eskom definition of a Black Economic Empowerment supplier. Large companies with at least a 10% black shareholding, and meeting other criteria in terms of skills transfer, black management and procurement from other black owned suppliers could qualify as a Black Economic Empowered supplier. By including spend on such suppliers together with the Transmission spend on small, black owned suppliers, distorts the effects of the programme. The research has highlighted the following concerns: • The most important reason that employees support the BEE programme is because it is a policy requirement; • No development of suppliers apart from the indiscriminate use of price matching and setting aside of contracts; • Supplier assessments are inconsistent and are not always transparent; • Contract conditions and contracting methods are not always conducive to growth and development of small suppliers; • Minimal performance evaluation of suppliers is conducted; • The BEE programme is perceived as being most successful in enriching a few elite black individuals. In addition, it is perceived as having been successful in the creation of non value adding agents for white owned companies;Henk Langenhoven - MComm UKZN 2005 • Very few respondents to the survey indicated that they spend any time on the development of or giving advice to suppliers; • There is a 50% impression that BEE suppliers are capable of taking part in Eskom Transmission business; • A very low percentage of Small Medium and Micro Enterprises and Black Woman Owned suppliers applying for listing in the database are qualified to supply Eskom Transmission; • The very same suppliers tend to win contracts all the time, hence the indication is that there are few new entrants; • Historically, the indication is that the suppliers have generally have been on the database since before the implementation of the BEE programme. They have continuously changed ownership to keep pace with the changing requirements of policy; • The support ofBWO suppliers has come at the direct expense ofSMME suppliers. Recommendations derived from this research include: • Continuing with the current BEE reporting which is external to Eskom, but • Enhancing Key Performance Indicators to include measurements and targets for job creation as well as support of both SMME and BWO suppliers; • Structured supplier development programme with dedicated resources to take ownership of the programme; • Consideration is to be given to the methods of contracting when dealing with SMME and BWO suppliers; • Supplier performance evaluation is to be enhanced for inclusion of a wider spectrum of suppliers and end users.