As facts lose out to rhetoric in the debate over quotas in the private sector, New Delhi and India Inc should perhaps take a look at the example of South Africa. Emerging from apartheid just over a decade ago, the country has skillfully combined a system of incentives, fines and laws—rather than imposing quotas—to bring about affirmative action. And is now into the second leg of reforms to achieve “Black Economic Empowerment.” Legislative measures to dismantle the apartheid machinery began in 1994 with the African National Congress Government assuming office. The initial focus was on education with stress on strengthening basics like ensuring compulsory attendance and avoiding corporal punishment. Then came the Competition Act of 1998, which recognised the need to redress excessive concentration of ownership and control of economy in a few hands. An elaborate equity plan was also drawn up for the job sector the same year. The Employment Equity Act, with focus on ensuring diversity, applies to Government and private employers alike with more than 50 employees. However, defence and security services were kept out of its loop. Groups designated for protection include not just blacks, but women too. Interestingly, there was no quota. But the field was left open with a positive duty cast on the employer not to discriminate against any employee on grounds of “race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social origin, colour, sexual orientation, age disability, religion, HIV status, conscience, belief, political opinion, culture, language and birth.” The “Employment Equity Code of Good Practices” brought out under the Act called on employers to develop affirmative action measures so that “the corporate culture is transformed in a way that affirms diversity.” It obliged the employer to report back periodically to the Ministry and also review its actions. The suggested review goes much beyond concerns of race and seeks to overcome even subtle forms of discrimination and stereotyping like “pregnancy, family responsibility, exclusionary social practices, sexual harassment and religious or cultural beliefs and practices.” Contraventions fetch penalties starting at 5 lakh rand (Rs 37 lakh) for first-timers to 9 lakh rand (Rs 66 lakh) for four previous violations. In fact, the first prosecution under the Act was initiated in 2004 against two KwaZulu-Natal companies based in New Castle for failing to display the Employment Equity Law on their notice boards and not sending equity plans to the Government. The second leg of reforms to achieve “Black Economic Empowerment” (BEE) began in 2002 with the Government coming up with a “Strategy Document”. The document noted that “progress has been recorded in undoing the legacy of the past, however, the extent to which this economic success has been shared by all of our people is still inadequate for the requirements of a stable and prosperous society.” The strategy envisions a “scorecard” approach by which the Government would measure progress achieved by various enterprises in fulfilling BEE objectives. “Using the scorecard as a guide, government will rank and categorise enterprises for the purposes of preferential procurement, restructuring of state-owned enterprises, financing and other kinds of support.” Incentives for Black-owned firms • Small Medium Enterprise Development Programme: Black-majority firms assisted to a total of R100 million to develop infrastructure for projects related to manufacturing, high-value agriculture, agro-processing, aquaculture, agro-processing, biotechnology, tourism, information and communication technology investment. • Tax-free grant for two years based on costs. • Black Business Supplier Development Programme: An 80:20 sharing cash grant intensive scheme for firms that are majority black-owned and have a significant black representation in management.
