Broad-based Economic Empowerment Programs

Broad-based economic empowerment programs basically consist of a strategy that seeks to employ and develop nationals with the view to replacing foreigners in the economy of country implementing the program . Historically, there has been a strong reliance on the use of expatriate employees to assist in the acceleration of development projects in developing countries . Often , rapid advancements that are made in the country in fields such as education, industrialization and other social development projects, is the catalyst to develop initiatives to accelerate the integration of local people into the economy . It is often necessary to implement these initiatives to reverse the historic reliance on foreigners to grow the economy.

When implementing a broad-based economic empowerment program one should realize that results will be gradual and at the same time, will need to be approached with the necessary foresight and urgency.

The basis of the introduction of a broad-based economic empowerment program is normally focused primarily on a job localization program. It is not realistic to assume that the introduction of a broad-based economic empowerment program is merely the generation of sufficient jobs for the new entrants into the job market. The basic principles underlying any broad-based economic empowerment program is the creation of a basis for the economic empowerment of the nationals of the country where it is implemented.

Fundamentals

A study of existing broad-based economic empowerment programs indicate that, as a general rule most of these programs consist of at least the following focus areas.

Ownership

Ownership and participation by locals in business can be divided into active and passive involvement as follows:

Active involvement:

Locally owned companies or joint ventures, which include management control by local citizens, are deemed to be an active involvement model.

Passive involvement:

Locally owned companies or joint ventures with no involvement in management by local citizens, are deemed to be a passive involvement model.

In this regard an employee shareholder scheme for local employees is often recommended as a grass roots starting point. One way of achieving this is to develop an employee share trust that hold the employee shares and then link the transfer of a certain number of shares from the trust to individual local employees based on the weighted performance rating every five years of actual service as part of the service award scheme.

Control

Control in this regard refers to the representation of locals at board level and in executive management positions.

In some countries this is not a problem however in cases where there is a lack of local representation specific targets should be set for defined positions with clear timelines to achieve the goals. In the absence of suitably qualified and experienced individuals companies should conduct comprehensive assessment center evaluations to identify individuals with appropriate potential and place these individuals on fast track programs. This is often necessary in industries that require a high level of technical expertise from senior executives.

Employment equity

In order to ensure that the correct level of localization is reflected in the employment of companies and its affiliates. These companies should publish the individual employment equity plans and achievements and subscribe to the following:

Establish targets for employment equity, particularly in the junior and senior management categories. Companies should define the plans for employment equity at all levels of management.

Companies should focus their overseas placement and/or training programs with JV partners on technical as well as management programs.

The identification of a talent pool with the correct potential should form the basis of a fast tracking program for locals. This fast tracking program should include high quality operational exposure.

The employment equity program should include plans for the inclusion of local women in the company. Companies should aspire to achieve a specific percent of women participation in the company within a specific timeframe.

Skills development

In most developing countries, the local labor market does not produce enough of the skills required by industry. Stakeholders should work together in addressing this skills gap in the following manner:

Through consultative arrangements they should interface with statutory bodies such as a government based human resource development trust or other similar body in the formulation of comprehensive skills development strategies that include a national skills audit.

By interfacing with identified education authorities and providing scholarships to promote industry specific educational advancement, especially in the fields of mathematics and science at the school level.

By undertaking to ensure the provision of scholarships that the number of registered students in the identified industries could rise to the desired levels.

Through cooperation agreement with technical vocational training institutes undertake to provide skills training opportunities to industry operators during their employment in order to improve their income earning capacity while being employed as entry level employees.

The Government of the country where the broad-based economic empowerment program is envisaged should undertake to ensure that it utilized its bi-lateral relations with countries known for its high level of skills and knowledge in the identified industries, secure training opportunities, as well as exchange opportunities with companies in these countries, for local employees.

Through the government based human resource development institutions and in collaboration with identified academic institutions, provide training courses for identified industry skills.

Industrial companies should undertake to:

Offer every employee the opportunity to become fully literate in English and numerate to a level where industry engineering problems can be sufficiently interpreted and understood.

Implement career paths to provide opportunities to their local employees to progress in their chosen careers and

Develop systems through which high potential local employees can be mentored as a means of capacity building.

Procurement

Procurement can be broken down into three levels, namely: capital goods; services; and consumables.

Industrial companies should undertake to give companies complying with government levels of broad-based economic empowerment a preferred supplier status where possible, in all three levels of procurement.

To this end industrial companies should:

Identify current levels of procurement from companies complying with government levels of broad-based economic empowerment.

Set specific targets to a progression of procurement from companies complying with government levels of broad-based economic empowerment over a specific time frame that will reflect the genuine value added by the providers complying with government levels of broad-based economic empowerment;

Encourage existing suppliers to form partnerships with companies, where no company complying with government levels of broad-based economic empowerment tenders to supply goods or services and

Help to develop procurement capacity by assisting companies not complying with government levels of broad-based economic empowerment to achieve these levels in defined time frames.

List of suppliers:

Industry should endeavor to produce a comprehensive list containing information on all suppliers complying with government levels of broad-based economic empowerment and publish this list as wide as possible to allow a large number of companies to make use of these companies as potential suppliers.

Enterprise Development

In most countries many small and medium sized industrial companies are unable to sustain business operations beyond their first year.

In order to attract and ensure that the small and medium sized industrial companies become sustainable existing companies in the industry has to play a leading roll.

In this regard large industrial companies should provider development initiatives, which include guiding, mentoring, coaching, tendering, tender advice and in some cases direct investment in small and medium sized industrial companies owned by locals.

Specific initiatives could include the technical skills transfer with emphasis on innovation and productivity, skills transfer in respect of management and operators, provision of administrative systems knowledge and skills, establishing of support in respect of cost control systems for industrial companies, proper skills transfer for industrial planning, and evaluation, procurement skills transfer as well as assistance in obtaining suitable financing and loans.

Corporate Social Investment

Large industrial companies have the opportunity to significantly increase the amount and effectiveness of corporate social investment as a part of their corporate social responsibility program.

The focus of the corporate social investment should be on investing in social infrastructure development in areas where new industrial companies and other industry related projects are taking place.

Utilizing construction methods and styles that can utilize the skill set of the locals where the construction is taking place, especially in respect of constructing social infrastructure.

Establish industry training centers for operators in remote areas where large industrial companies have established plants to train locals.

Develop and present community education and training programs to the community to alleviate potential unemployment, including practical skills and Adult Basic English education and training programs.

Support sector specific career guidance and mathematics and science initiatives in schools in order to promote industry specific engineering studies.

Conclusion

Best practice indicates that a scorecard that provides an objective and broad-based set of measurement indicators for purposes of measuring the economic empowerment of the target population group should be kept up to date.

A typical scorecard normally contains the following dimensions:

Elements:

The elements are the core components of the empowerment program. The interpretation of the elements as understood by the particular industrial company should be contained in the definition section.

Indicators:

An indicator is the specific area of measurement pertaining to an element of the empowerment program. Each indicator should be individually measured in the scorecard.

Weightings:

The weighting of individual indicators is the number on the scorecard that is used to indicate the relative importance of each of the elements contained in the scorecard. The individual weightings should add up to 100% to ensure the correct weighting for each individual element.

Targets:

The target is the quantifiable measurement of achieving the overall goals of the empowerment program.

Score:

The score is a reflection of the achievement of the industrial company in respect of reaching its broad-based economic empowerment program goals.

References

The following references were used during the compilation of this article.
Asia Foundation women's economic empowerment program
Indianapolis Urban League Economic Empowerment Program
Uganda Economic Empowerment Program
Zambia Development Agency economic-empowerment
South African Construction Sector Broad-Based Black Economic Empowerment Charter