Black economic empowerment
Economic empowerment is an integral part of South Africa's transformation process, encouraging the redistribution of wealth and opportunities to previously disadvantaged communities and individuals, including blacks, women and people with disabilities.
The empowerment process has been identified as crucial to the future viability of the country's economy.
Black economic empowerment (BEE) companies have shown tremendous growth since 1994, when the first major black consortium listed on the Johannesburg Stock Exchange (JSE).
Increasingly, foreign and local companies are seeking BEE partners in order to establish working relationships or joint ventures, thereby securing state approval for government contracts. A BEE partner may add ten points onto any government contract.
Public-private partnerships are popular with the government, as are initiatives such as the Build-Operate-Transfer scheme, where projects are financed, built and operated by private enterprises
for a period of time before reverting to the government.
BEE companies are well represented in the financial services sector, the media, forestry and pulp and paper, oil and energy, beverages and fishing industries.
Defining BEE
The Broad-Based Black Economic Empowerment Act of 2003 defines "black people" as a generic term that includes "Africans, Coloureds and Indians". According to the Act, "broad-based black economic empowerment" – with an emphasis on "broad-based" - refers to the economic empowerment of all black people including women, workers, youth, people with disabilities and people living in rural areas.
To find out how empowerment businesses are categorized and how empowerment quotas affect government tendering processes click here.
Affirmative action
Affirmative action policies
have seen increasing numbers of senior black personnel, particularly in government parastatals. With the Employment Equity Act in effect since 2000, these policies have become standard for all larger companies.
According to Towards a Ten Year Review, a discussion document reviewing the impact of the government's policies since 1994, the proportion of black South Africans in top management grew from 12% to 13% between 2000 and 2001, while the number of senior managers grew from 15% to 16%. The proportion of skilled professionals and middle managers grew by only 0.2%.
These figures show that empowerment in the workplace is continuing, albeit very slowly.
Progress was also slow in extending black ownership, with black equity in public companies estimated at 9.4% in 2002 compared with 3.9% in 1997, from being virtually non-existent before 1994.
According to the review, the number of
previously disadvantaged individuals (PDIs) among the directors of South African public companies grew from 14 (1.2%) in 1992 to 438 (13%) in 2002. However, the proportion of PDI executive directors remains small.
According to Census 2001 - released in 2003 - the proportion of black managers, senior officials and legislators in South Africa has increased relative to their white counterparts, although the rate of change is still very slow - it rose from 42.5% in 1996 to 44.3% in 2001.
Black South Africans accounted for 61.4% of the country's professionals, associated professionals and technicians in 2001, up from 57.6% in 1996, the latest census figures show.
There is a relative scarcity of skilled black candidates in SA, and the resulting demand for qualified black managers and professionals has seen salary packages rising fast and very high job mobility.
The Skills Development Act
of 1998 aims to correct this problem by developing the skills of the South African workforce and improving the employment prospects of previously disadvantaged people.
Black Management Forum
The Black Management Forum believes in the development and empowerment of managerial leadership, primarily among black people, and essentially within corporations.
The Forum is concerned with ownership and the creation of managerial structures and processes which reflect the demographics of South African society.
The Forum has played an important role in creating economic opportunities for black people and women through its efforts in securing the Employment Equity Act and the establishment of the Black Economic Empowerment Commission.
BEE Commission
The Black Economic Empowerment Commission was established in 1998 and released a comprehensive report in
2000.
The commission's approach is based on the principle that a substantial increase in the level of black participation in South Africa's economy is fundamental to growth.
The organisation extends the definition of empowerment beyond transferral of ownership of companies, describing it as "an integrated and coherent socio-economic process ... which aims to redress past imbalances by transferring and conferring ownership, management, and control of SA's financial and economic resources to the majority of its citizens and ensure broader participation of black people in the economy in order to achieve sustainable development and prosperity".
The commission defines three categories of black empowerment: a "black" company is at least 50.1% owned and managed by black people; "black empowered" firms are at least 25.1% owned and managed by black people; and "black influenced" firms are 5%-25% black-owned and managed.
The commission's report reflected a pressing
need for a comprehensive BEE strategy, as several BEE initiatives since the 1990s have failed to translate into meaningful transfer of ownership in the country.
Despite the implementation of transformation policies and sound fiscal management, unemployment and poverty levels remain high in South Africa.
According to the commission, continuing racism across all sectors of society acts as a social impediment, distorting the functioning of markets and reinforcing the marginalisation of black South Africans.
The commission recommends that the following quotas, among others, be introduced to address these problems:
- 30% of productive land should be in black hands.
- Black equity participation in each sector of the economy should be increased to at least 25%.
- Black people should hold at least 25% of the shares of companies listed on the JSE.
- At least 40% of non-executive and executive directors of companies listed on the JSE should be
black.
- At least 50% of state-owned enterprises and government procurement should go to black companies.
- At least 30% of the private sector should comprise black-owned companies.
- At least 40% of senior and executive management in private sector companies (with more than 50 employees) should be black.
SouthAfrica.info reporter. Sources: South Africa Business Guidebook 2002-2003, Towards a Ten Year Review
| 
