BUSINESS NEWS
'Govt must seriously reconsider BEE'
Posted Thu, 13 Oct 2005
The time has come for government to seriously reconsider many aspects of black economic empowerment (BEE) policy, Democratic Alliance leader Tony Leon said on Wednesday.
"We must ask why South Africa should have to carry the ideological burden of our racial past into our economic future, when successful developing nations such as China and India are moving ahead precisely because they are leaving past mistakes behind and adopting new economic strategies."
Addressing the French, German and Italian South African Chambers
of Commerce and Industry in Cape Town, he said those who had to
bear the costs of BEE were not, as government sometimes claimed,
the white minority or even the business community.
Rather, the losers were the very people whom BEE policies were
intended to benefit — the black poor, working and unemployed, who
suffered directly the consequences of slower economic growth,
higher unemployment and deteriorating public services.
"That is why
South Africa needs urgent changes in our BEE
policies. We sit at a unique historical moment, where the business
community has been ready to make a sincere effort to help the poor,
and the poor have been willing to defer gratification for several
years.
"This is a window of opportunity that may not open again," he
said.
Serious current foreign direct investors in South Africa had
cited the onerous equity divesture requirements of BEE as a major
roadblock placed in the path of further investment in the country.
Given that Cabinet had appointed a task team to determine how
South Africa was to attain the six percent GDP annual growth
desired by government, it was devoutly to be hoped Cabinet would
take an objective and unsentimental look at how current BEE
policies, and practices, were dimming prospects for further foreign
direct investment (FDI) to fuel higher growth.
Leon proposed key ways to reform BEE policies, the first being
to simplify
BEE.
"BEE needs to be simple, easy to comply with and to understand.
All of the various charters, laws and codes need to be condensed
into one clear set of rules," he said.
Secondly, broad-based BEE should be the focus. Companies should
be encouraged to enact employee share ownership schemes rather than
to sell BEE stakes to a handful of investors.
BEE should be flexible. Firms that had complied with earlier BEE
requirements should be exempted from new ones.
If firms found it too difficult to meet specific BEE goals, they
should be allowed to "opt out" by paying a reasonable fee into a
ring-fenced fund that would in turn be used to provide bursaries to
black students.
Employment equity targets should be reasonable and reflect the
pool of available black talent, and ownership targets should allow
for the inclusion of indirect black ownership through pension
funds.
BEE should also be limited in time and scope. Preferential
procurement
should be severely restricted because it was so open to
corruption and abuse.
Lastly, economic growth should be made the top priority of BEE.
"Policies that aim to uplift the poor cannot succeed if they
drive away investors and slow economic growth.
"Greater emphasis should be paid to expanding employment and
improving education, for these are the only factors that guarantee
the success of black South Africans in the long run," Leon said.
Sapa
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