In two weeks’ time, chartered accountant Vuyo Jack will celebrate the 20th anniversary of the founding of empowerment ‘ratings agency’ Empowerdex, which he established with co-founder Chia-Chao Wu on 16 June 2001, when they had ‘just finished our chartered accountancy articles’.
Jack, who grew up in Dube, Soweto, had initially ‘toyed with the idea of becoming a film director’, according to his entry on the Empowerdex website, ‘before a family friend in merchant banking changed his mind’.
He chose to study accounting – he has a BCom from Wits – on the grounds that accounting is ‘a critical basis for informed economic decision-making, in the sense that it is the central measure of business performance’.
In the years since founding Empowerdex, Jack has risen to some prominence in the empowerment field: he was appointed as a member of the Department of Trade and Industry’s BEE Task Team in 2003 and ‘has advised both government departments as well as various corporates on matters of BEE’.
The company website adds: ‘A director of various companies including the Public Investment Corporation, Vuyo was also appointed by the minister of finance as a commissioner on the Davis tax review committee. He was nominated as a Young Global Leader by the 2009 World Economic Forum.’
By all accounts, the ‘family friend in merchant banking’ who advised against his youthful ambitions in the world of film gave Jack sound counsel.
I have no quibble with his evident successes.
I am interested, though, in his contribution to the recent Sanlam Gauge report on BEE, described as ‘the first report of its kind to deliver insights on sectoral rather than individual company performance, to provide a more defined view of how industries within South Africa are transforming’, and providing ‘a “score” for SA Inc’s overarching progress.’
The report earned considerable media attention when it was released – ‘Business still not making B-BBEE targets, survey finds’, ‘Transformation moving at snail pace across all sectors: report’, and ‘Too few black execs occupy management positions in SA, new report shows’ – though arguably it received insufficient interrogation.
‘No jobs and few prospects’
Set against research by the Institute of Race Relations and the Centre for Risk Analysis – such as The Invisibles: South Africa’s underclass, a report on the lives of ‘the poorest people in society [who have] no jobs and few prospects, little or no education [and no] decent housing and services’ – you can’t help thinking that the enormous, and presumably profitable, effort of subjecting corporate South Africa to elaborate racial accounting is wide of the mark when it is plain that disadvantage is not being addressed, and that BEE – even where it ‘succeeds’ – is an elitist project for the advantaged few.
Which is why one of the things that interested me most in the Sanlam Gauge report was the prominent guest column by Vuyo Jack, titled ‘Ubuntu Capitalism: incorporating value circulations into Western capitalism’.
He begins with the injunction: ‘There needs to be another wave of BEE that involves black people as the key drivers.’
Jack argues that, ‘(in) reflecting on some of the successes, particularly of astute black entrepreneurs who used the opportunities to build great legacies, two key issues have been learned, along with negative aspects that make these lessons even more important’. The first lesson ‘from the BEE journey is the example of Ubuntu capitalism 2.0 at work, which expands to the second lesson: how legacies are created’.
It is a model that seeks to address an apparent shortcoming in ‘Western’ capitalism.
‘The Western form of capitalism,’ Jack writes, ‘consists of value creation and value capture, which requires the investment of attention capital to sustain it. I would add a third element which is “value circulation” – and call this Ubuntu Capitalism 2.0 as a new form of capitalism.’
Turns to allegory
He turns to allegory to flesh out the concept of ‘a system that enables value to be created, to be equitably captured by those who created it, and circulated to ensure sustainability of the ecosystem’:
‘To use an example of planting seeds to develop an orange orchard: value creation is the most difficult part of the process. The seeds that are planted deep in the soil have to be left in the darkness to grow roots and then form saplings. Great attention has to be given to the orchard, such as watering the trees regularly, fertilising the soil, treating trees with chemicals, removing weeds and invasive bushes and protecting the orchard from predators, among other things. When the trees reach maturity, they give forth oranges which have to be plucked to make way for new oranges to emerge in the next season.
This is value creation at work. Value capture happens when the fruits are consumed or sold to others. The value is captured by the farmer who invested her attention capital to develop the orchard. This value can be used to plant more trees in order to develop sustainability. But the farmer can also give some of the oranges to people around her in the ecosystem of the farm. This is important as it not only gives the farmer protection of sorts from grassroots people, but they benefit as well. She must also invest in herself by taking a break and make sure she has the required strength for the next season of oranges. This is her Sabbath. This is known as value circulation, which reinvests the value captured back into the business, while giving strategically to people in the community and reinvesting in yourself, the source of attention capital.’
Here, Jack says, ‘are the elements of creating wealth which can be applied to the framework of black economic empowerment’.
I know little about orange farming and less about accountancy, but I find it hard to believe that either a citrus-producing enterprise or a consultancy could survive, let alone flourish – or hope to leave a ‘legacy’ – if its success, as a business, was pinned on giving oranges, or contracts, away.
Whatever the moral virtues of generosity, they should not be confused with the virtues of capitalism, which lie in generating opportunities, resources, choices and freedoms that enhance the agency, independence and prospects of individuals. They don’t deliver a heaven on earth, but they have stood the test of being the most effective way of overcoming the hell on earth that is the life of people so poor and ill-served that all they can hope for is to depend on the generosity of the successful, as they have no means or opportunity to succeed on their own.
‘Grassroots people’
It cannot be enough to fashion a kind of capitalism that – to evoke Jack’s worrying phrase – can be hoped to offer ‘protection of sorts from grassroots people’.
If ‘Ubuntu capitalism’ really is a thing, then Jack – for whom, remember, accounting ‘is the central measure of business performance’ – owes it to the executives and owners of businesses he is advising to explain how this works in his own business, and describe the dividends which he suggests accrue from the procedure.
South Africa’s legions of poorly educated, penniless and jobless ‘grassroots people’ would no doubt be very interested, too.
[Picture: SUPPLIED/SANLAM GAUGE]
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