Briefs : Using BEE to eradicate poverty

Government's recently released black economic empowerment (BEE) strategy, aims to use "BEE as a powerful tool to broaden the country's economic base and accelerate growth, job creation and poverty eradication."

To achieve this will mean effort must be put into human resource development, employment equity, enterprise development. Whether the policy is successful, will be determined by whether:

the income levels of blacks increases and the income inequality between and within race groups has decreased an increasing proportion of the ownership and management of economic activities owned by collective enterprises has increased the numbers of blacks who have ownership and control of companies has increased, the number of new black enterprises, black-empowered enterprises has increased the number of black people in executive and senior management positions in enterprises has increased.

… Government will pass a law and regulations

Government will pass a law and regulations to guide businesses around the issue of BEE. The law will give government the power to issue guidelines and codes of good practice on BEE. Such BEE guidelines will be used when government:

grants a licence for a business for a regulated economic activity like gambling or mining grants a concession to a private enterprise to operate an asset or enterprise on behalf of the state sells an asset or a state-owned enterprise enters into a public-private partnership engages in any economic activity." Government will also encourage BEE by: transferring or selling an equity stake in a state-owned enterprise (SOE) to a black enterprise revising existing procurement guidelines so that there is more preference given to black-owned and black-empowered enterprises. expanding its supplier development programmes so that more black enterprises are created requiring all government departments that buy services, products to use the BEE codes of practice when deciding on which provider to procure from.

… balanced scorecard

Much is made in the document of the creation of the 'balanced scorecard'. This will "measure progress made in achieving BEE by enterprises". The scorecard will encourage companies to set targets for the:

black ownership and control of its enterprises and assets human resource development of black staff as well as progress on employment equity buying of goods and services from black-owned companies, investing in other black owned companies or involving itself in joint ventures and transfers of its skills to the empowerment company.

In some sectors, such as mining, these targets are already set. But in others, companies will be able to set out their targets themselves.

When government wants to buy goods and services from companies, or wants to enter into a public-private partnership, or wants to sell a stake in a SOE, it will use companies' scorecards to guide its decision on which company to use.

Some comments from critics:

Moss Ngoasheng, former economic adviser to President Thabo Mbeki and now an executive chairman of empowerment group, Safika, questions whether the BEE document is enough to reverse the massive racial and gender inequalities in income, skills and employment.

"If between 30 percent and 40 percent of our economically active persons are unemployed, job creation must surely be the most empowering thing we can ever do."

Businessman and younger brother to President Mbeki, Moeletsi Mbeki, regards black economic empowerment as "an invention of big white corporations which in the early 1990s, fearing that a future ANC government would be tempted to nationalise the economy, set out to solicit black economic participation."

"Everybody would like to be spoonfed, to get a free ride, people think that they should be given assets for free.

"If we want to build successful corporations, you have to take time, have to make savings and sacrifices, but if you are going to wake up and buy a Jaguar or a Mercedes, then you are not going to make a successful corporation.

"What we need are entrepeneurs, people who start new businesses, take risks and create new jobs. Under BEE, people take no risks. It encourages people to live off the fat of the land."


Numsa News