Focus on South Africa: operating responsibly in emerging markets
Tag: South Africa, South Africa Focus, emerging markets
Summary: The context for doing business responsibly in South Africa, one of the fastest-growing emerging economies in the world, has been largely shaped by the legacy of apartheid.
The context for doing business responsibly in South Africa, one of the fastest-growing emerging economies in the world, has been largely shaped by the legacy of apartheid.
Business is expected to contribute to the South African government's change agenda by supporting initiatives that promote diversity and address the lack of equality in the distribution of wealth between predominantly urban whites, the newly created black middle class and (especially) rural blacks.
This gap is a major source of tension and contributes to many of the challenges facing the country, due in part, to low levels of income-generating employment and wage inequality among those with employment, exacerbated by skill shortages.
Given the diversity of the population and the economic empowerment strategy in place, promoting and supporting diversity in the workforce is a fundamental issue that corporates seeking to operate responsibly need to turn their attention to.
Broad-Based Black Economic Empowerment (B-BBEE) was introduced by the South African government post-apartheid to promote the participation of black people in the South African economy. B-BBEE targets social and economic development of black people through seven key areas ranging from ownership to skills development to preferential procurement and socio-economic development.
Balancing legal requirements to reflect the demographics in an organisation with relevant education and work experience can be difficult.
Dealing with government intervention in procurement and sale of equity stakes to defined racial groups is challenging too for companies trying to maintain independence in their supply-chain processes.
Costs of complying, measuring and reporting on the B-BBEE scorecard also need to be considered, with supporting policies on non-discrimination and equal opportunities put in place. Although a criminal offence - "fronting" - whereby companies nominally promote or appoint black individuals into senior positions to achieve a better B-BBEE rating is not uncommon.
South Africa became quite an insular economy as a consequence of apartheid and one of the responses of the population was to start small businesses.
The working population is also close-knit and for the most part business people know each other. As a result, it is common for employees to run businesses on the side or to encounter family members in their business dealings.
In the public sector, employees may opportunistically set up companies in their own or in a family member's name in order to tender for contracts. It is essential to adopt and enforce robust policies and procedures to manage the conflicts of interest that inevitably result.
An issue any business operating in South Africa will face is the prevalence of HIV and Aids. In 2011, 44% of deaths in the country were Aids related, 5.38 million were living with HIV (10.6% of the total population) and just over 1.5 million adults were in need of antiretroviral therapy.
Given that a large proportion of sufferers are of working age, the duty of care for employees with HIV/Aids and their families is a material aspect of CR programmes.
Costs expected in managing an effective HIV/Aids response programme may include ensuring provision of antiretroviral treatment for employees, health and safety training, HIV counselling, testing and awareness-raising campaigns around safer sex practices. Companies may also be faced with the costs of employee absenteeism and the need to hire new workers owing to illness and mortality as a result of HIV/Aids.
The traditional African concept of Ubuntu is widely respected among South African people, particularly the black population.
Ubuntu is an ethic or humanist philosophy that emphasises people's allegiances and relations with each other.
Qualities associated with Ubuntu are mutual respect and support, interdependence, unity, collective work and responsibility. This, together with connotations for employees who raise concerns and apartheid era informants (in particular among Afrikaner and various black cultures), bear significant influence over employees' behaviour in the workplace.