BEE opinion piece - Prof PDF Strydom

[duncan drennan]

A long opinion piece about BEE - in interesting read.

Some quotable moments,

As opposed to a growth oriented policy that is aimed at quality people, a flexible labour market coupled with pro-growth macroeconomic policies the South African government is fighting poverty primarily through redistribution. Reforming the labour market does not feature on the policy agenda while education and health care are showing little progress in delivering quality people. The redistribution policy of government is not successfully fighting poverty. Recent research at the University of Kwazulu Natal and the University of Stellenbosch confirm that poverty has widened over the past 10 years in South Africa. BEE should be assesed within this redistribution framework and it is remarkable that the main rhetoric of the old RDP features prominently in official BEE documents. That means there is more emphasis on redistribution than on progressively inspired growth policies coupled with meaningful reform of the labour market.

We conclude that BEE allocates a greater weight to the redistribution of existing enterprises as opposed to the development of new black-owned enterprises.

Small businesses could easily end up in a no mans land where existing rules do not apply to them but where they are discriminated against in terms of preferential procurement.

This last one being a big concern. There may be many business who are compliant in terms of the legislation (but are 100%) who do not get business as a result of their 100% non-blackness. Yes, legal action may be taken, but how does someone that small pay for litigation?

[Dave A]

I'm afraid that last point is definitely a concern that I identified during negotiations - but no obvious solution other than to try and reduce the impact.

Whilst it appears that exempt enterprises will be treated equally in terms of the QSE codes, there are defined bonus points in the big business codes that put an incentive on big business to procure and assist from exempt enterprises with a 50.1% (or higher) black ownership level - back to narrow BEE.

The incentive is fairly small, but given the challenges big business is going to face in getting a reasonable score, every point might become valuable.