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BEE is the right thing to do

Black economic empowerment (BEE) is part and parcel of SA`s economy, and embraced by those who have vision.
Read time 4min 40sec

Black economic empowerment (BEE) has been an issue of concern to every South African since 2001 when the BEE Commission submitted proposals for a National Integrated Black Economic Empowerment Strategy to President Thabo Mbeki.

It has resulted in a shifting business environment that has often left white males feeling persecuted and alienated. However, over time the value of what BEE has to offer the country has become increasingly obvious, and much like paying TV licences, complying with BEE regulations has become the "right thing to do".

The South African Department of Trade and Industries defines BEE as: "...an integrated and coherent socio-economic process that directly contributes to the economic transformation of SA and brings about significant increases in the number of black people that manage, own and control the country`s economy..."

Much like paying TV licences, complying with BEE regulations has become the "right thing to do".

Rob Abraham, MD, Bytes Document Solutions.

According to the guidelines set out by the BEE Commission, by 2011 the country must have achieved the transfer of 30% of its productive land to black people and collective organisations; black equity participation in each sector of the economy must have increased to at least 25%; black people or businesses should hold at least 25% of the shares of companies listed on the JSE, with at least 40% of non-executive and executive directors of these companies being black; and at least 50% of state-owned organisations and government procurement should go to black companies, of which 30% must be black-owned small and medium businesses.

Other targets include realising 30% black-owned private sector procurement; 40% black senior executive management environment in private sector companies with more than 50 employees; 40% of all professionals must be black; and at least 50% of borrowers on loan books with financial institutions must be black.

A mighty tall order for an economy once ruled by apartheid philosophies and practices, but with the South African spirit of diversity, not unachievable. In fact, a survey of 500 South African adults in metropolitan areas, conducted by Research Surveys at the end of October 2004, revealed that 70% of the respondents felt BEE had in fact enriched a select few. It found two-thirds felt that BEE was necessary in order to address the wrongs of the past; 65% believed that BEE has had a positive impact on the country and its economy; 48% felt that BEE was not stifling the country`s growth; and 48% believed that BEE was not creating an environment that fostered corruption.

Where the value lies

Although there are some negative effects of BEE practices, such as being on the wrong side of preferential treatment or retrenchments, especially for people of the lighter colour and male sex; and although BEE has made no inroads to improving the level of unemployment in the country, which is not its aim anyway; it is successfully evening out the business landscape and its value can be seen in what each measurement on the BEE scorecard aims to achieve.

BEE scorecards are being customised to best suit particular industries, and charters have already been signed in certain verticals. However, the basic elements of the BEE scorecard remain the same, and regardless of the industry, businesses have to address issues around ownership and control, management, employment equity, procurement, enterprise development and corporate social investment.

Ensuring a percentage of ownership and control is held by black people, and black women in particular, benefits not only those people who gain a shareholding in organisations, who achieve significantly advanced financial rewards and acquire invaluable corporate experience in the process, but it also benefits their families and communities. The industry also stands to benefit from the offering diversity brings to the party and the entrepreneurship that is given the opportunity to flourish under the wings of a stable, well-established company.

Ensuring that management demographics are evenly spread also brings the value of diversity to the company and the financial benefits to the manager and their families, while employment equity issues provide the same benefits at the shop-floor level.

Entrepreneurial spirit

Through preferential procurement, which carries a rather heavy weighting in the scorecard, black-owned businesses, especially small and medium ones, are given the opportunity to make themselves known, whereas previously they might have been overlooked. This is yet another boost for entrepreneurial spirit, something which this country has in abundance.

And finally, the requirement to invest a percentage of the company`s net profits into industry-specific initiatives or into health, education, poverty alleviation or community development concerns provides the country with much needed business involvement in areas with massive problems.

There are countless corporate social investment projects under way, some small, others significant. But the size of each project is unimportant. The impact of that project on the community and the country as a whole is where the value lies.

Black economic empowerment is part and parcel of SA`s economy, embraced by those who have vision, who understand and appreciate the value it has to offer South Africa and its people. Make it count; it IS the right thing to do.

* Rob Abraham is MD of Bytes Document Solutions.

Rob Abraham

MD of Bytes Document Solutions

Rob Abraham is MD of Bytes Document Solutions.

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