Black Economic Empowerment: How far have we come?

Broad-Based Black Economic Empowerment (B-BBEE) was a form of Economic Empowerment initiated by our government in response to criticism against Narrow Based Empowerment instituted in the country during 2003/2004. While Narrow Based Black Economic Empowerment led to the enrichment of a few black (Black African, Coloured or Indian) individuals, the target of Broad-Based Empowerment was to distribute wealth across as broad a spectrum of South Africa’s people as possible. In contrast, Narrow Based empowerment measured only equity ownership and management representation.

Critics argued that BEE’s aim was to attempt to create equality of the workforce of South Africa as a whole by enforcing the advantaging of the previously disadvantaged and disadvantaging the previously advantaged (White). This resulted in businesses having to consider the social background of any potential applicant instead of making decisions purely based on qualifications and experience. (News Daily, May 24, 2004). Nevertheless, the goal of the Act was enacted to promote the achievement of the constitutional right to equality.

Over time, there were still numerous allegations that black economic empowerment had been used to enrich a small, politically connected elite, while leaving the majority of poor black South Africans unaffected. These allegations of crony capitalism had arisen because many beneficiaries of BEE were close to the ruling party, the African National Congress. (Oavm.com)

However, one must confess that BEE has changed the landscape of South African business over the past 16 years, particularly when the Codes of Good Practice kicked in on February 9, 2007, which introduced a number of welcome compromises and concessions, particularly for smaller companies. These were generally well received.

Looking back, South Africa’s economic and political climate prior to this and during the initial years of democracy was characterised by inadequate investment, low level of economic growth, huge development backlogs, income inequalities, rising unemployment and poverty levels, poor black education levels to name a few. Once BEE was installed, there were a significant number of successful establishments, for example, the mining sector where BEE was successful in creating companies such as Shanduka, Wesizwe and ARM and in the agricultural sector, which led to the empowerment of wine farm workers, fruit farm workers and so forth. To date there has been around R200bn worth of BEE deals and an increased economic participation in the market by the blacks.

Still, one of the main concerns about B-BBEE has been the increased number of fronting by companies, including inept political appointments leading to low levels of productivity and competence. This sums up that our country’s biggest goal should be changing the mindset of the people (black and white), and that they should all be focussed on economic participation and productivity in order to create a competent workforce.

This model has been discussed, criticised, praised and discussed again and the recent introduction of the BEE Advisory Council as well as public criticism of the policy within the government and among business leaders has raised the question whether it should be accelerated, refined, reassessed or merely abandoned. (BBQonline.co.za).

Minister Davies stated during his recent budget vote, “Regarding economic empowerment more generally, the BEE Codes of Good Practice were promulgated 4 years ago and we are now in a better position to assess their impact. The Presidential Advisory Council has made several policy recommendations to allow for greater participation by black people in productive activities and to tackle what is now emerging as increasingly complex practices of fronting. To this end, the dti and the Presidential Advisory Council are focusing on reviewing the BEE Codes of good practice and possibly amending the B-BBEE Act. This could entail, amongst others, refinements to ensure greater policy coherence in the application of B-BBEE across government and to strengthen access to procurement opportunities through the now approved and aligned PPPFA regulations. We are also looking at ways to strengthen our efforts to combat the fraudulent practice of fronting.”

Mistakes are lessons of wisdom. The past cannot be changed but the future is yet in your power.
– Hugh White 1773

This article was used with permission from iquad verification services.