Broad-based black economic empowerment as a competitive advantage in procurement in the construction industry in KwaZulu-Natal

Abstract

The aim of this research project was to study the basic understanding the decision makers of construction companies in KwaZulu-Natal had of the Broad-based Black Economic Empowerment (BBBEE) initiative. This initiative has evolved from its origins as a form of affirmative action in the early 1990s into the broad-based initiative embodied in the Broad-based Black Economic Empowerment Act promulgated in 2003 and gazetted in 2007. Research was conducted using a questionnaire to assess the targeted population’s understanding of BBBEE. A census of the 259 construction companies affiliated with the KwaZulu-Natal Master Builders Association (NMBA) at the time of the research was used. The questionnaire was distributed primarily by email and the returns were assessed using statistical methods. The results were also tested as a cross-tabulation based on the demographics and the BBBEE rating of the respondents. The findings showed that although most of the respondents knew about the BBBEE initiative and indicated a level of understanding of this policy, certain of their perceived understandings were misguided. The way in which the Act was intended to be implemented and was intended to benefit those who were previously disadvantaged had been misread by all parties. The way in which the government has rolled out its BBBEE initiative has not been effective. This needs to be addressed by both training and partnering with those SMMEs that can most effect change to implement the Act. This study only scratched the surface of the effects the BBBEE legislation will have on small to medium-sized businesses. It has highlighted the need for further research into both the trickle-down effect of this initiative and into the availability of skilled personnel to grow the economy in the way the BBBEE Act intended.