While the DA says that black economic empowerment (BEE) has failed to uplift the majority of black South Africans and is instead crippling economic growth, an independent economist said it remains essential for transformation, despite its flaws.
Professor Bonke Dumisa said: "The BBBEE (Broad-Based BEE) tries to broaden the investor base of black shareholders in order to make economic participation of Black South Africans more meaningful," he said.
"We still have less than 15% of the population running more than 70% of the South African economy, which is totally unacceptable."
"Dumisa acknowledged that while BEE has often benefited politically connected individuals, he warned against dismissing it entirely.
"Many potential investors who are insensitive to Black South African aspirations always cite BBBEE as a hindrance to economic growth," he said.
He was speaking after DA MP and Head of Policy Mat Cuthbert said BEE has enriched a politically connected elite while discouraging investment and job creation.
"Since the introduction of the Broad-Based Black Economic Empowerment (BBBEE) Act in 2003, growth has remained capped at approximately 1%. Our unemployment rate has soared from 27% to 31.9%," Cuthbert stated.
Cuthbert cited a recent World Bank report titled Driving Inclusive Growth in South Africa, which he said highlights how BEE policies and laws impede investment and economic growth.
He also took aim at government's plan to introduce a Transformation Fund aimed at mobilising R100 billion over five years.
Minister of Trade, Industry and Competition, Parks Tau published the Draft Transformation Fund concept document on Wednesday for a 30-day public commentary period.
Members of the public and interested parties can make inputs and comments on the Draft Concept until May 7.
In a statement, the minister said the aim of the fund is to aggregate especially Enterprise and Supplier Development (ESD) funds in support of transformation and the participation of and sustainability of black-owned enterprises in the economy.
“This provides an opportunity for the 7th Administration, working with the private sector to increase the effective economic participation of black-owned and managed enterprises, including small, medium and micro enterprises and co-operatives and enhance their access to financial and non-financial support in line with the requirement of the B-BBEE Act” says Tau.
It is expected that an amount of R100 billion will be aggregated over the term of the current administration through a joint effort by government in partnership with the private sector.
The objectives of the fund are as follows:
- Promote economic transformation in order to enable meaningful participation of black people in the economy.
- Improve access to funding for Black owned and controlled enterprises.
- Empower and support Black owned and controlled enterprises participation in value chains across key sectors of the economy.
- Mobilise financial resources from the private and public sector using B-BBEE legislation.
Tau said the requirements of the Fund are no additional requirements for entities over and above what currently exists in the B-BBEE policy. The B-BBEE policy through the Codes of Good Practice requires that entities must contribute through Enterprise and Supplier Development (ESD) in the 3% of Net Profit After Tax (NPAT), on development of black suppliers, black industrialists and SMMEs to broaden the industrial and services base of our country.
“Through the Transformation Fund, we maintain this principle of establishing partnership between established businesses and emerging businesses as well as diversification of suppliers within the value chains, as contained in the B-BBEE Codes. However, we would like to see a much more impact and spending on relevant ESD activities that must lead to growth and sustainability of black owned enterprises and SMMEs, by having a coordinated effort”, said Tau.
The concept document can be accessed on this link:
https://www.thedtic.gov.za/wp-content/uploads/Draft-Transformation-Fund-Concept-Document.pdf
Members of the public and interest parties can email their input to transformationfund@thedtic.gov.za