- Black Economic Empowerment
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Black Economic Empowerment (BEE) is a programme launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups (black Africans, Coloureds, Indians and some Chinese[1]--who are SA citizens) economic opportunities previously not available to them. It includes measures such as Employment Equity, skills development, ownership, management, socioeconomic development and preferential procurement.
Contents
Rationale
After the transition of Apartheid in 1994, it was decided by the government of the African National Congress that direct intervention in the distribution of assets and opportunities was needed to resolve the economic disparities created by Apartheid policies which had favoured white business owners. BEE intended to transform the economy to be representative of the demographics, specifically race demographics of the country. BEE was defined in the 2001 Commission Report as follows,
"It is an integrated and coherent socio-economic process. It is located within the context of the country's nation transformation programme, namely the RDP (Reconstruction and Development Programme). It is aimed at redressing the imbalances of the past by seeking to substantially and equitably transfer and confer ownership, management and control of South Africa's financial and economic resources to the majority of the citizens. It seeks to ensure broader and meaningful participation in the economy by black people to achieve sustainable development and prosperity."
— BEE Commission Report, pg. 2
Successful implementers of BEE also see it as a means to create economic growth in South Africa, and as vital to their corporate strategy.Legislation
On 9 February, 2007, the first BEE Codes of Good Practice was gazetted by the South-African Government. This newest release of the Codes is also known as Broad-Based Black Economic Empowerment or B-BBEE
This included the following Codes:
- Code 100 – Ownership
- Code 200 – Management & Control
- Code 300 – Employment Equity
- Code 400 – Skills Development
- Code 500 – Preferential Procurement
- Code 600 – Enterprise Development
- Code 700 – Socioeconomic development
- Codes 800 - 807 - Qualifying Small Enterprises
The following sector scorecards have also been gazetted (in terms of section 12):
Also gazetted were general guidelines and definitions, among which, the definition of the beneficiaries of BEE. The definition is the same as that of the Black Economic Empowerment Act of 2003 which states that "black people" is a generic term which means Africans, Coloureds and Indians and included provisions to ensure that they must have been South African citizens prior to 1994.[5] The fact that Chinese individuals (some of whom were classified as Coloureds under Apartheid, others as honorary white), who were also submitted to legal discrimination prior to 1990 (but exempt from the Group Areas Act as of 1984 when the Group Areas Amendment Act was promulgated), have been excluded as beneficiaries of black empowerment, has led to a renewed media debate regarding the definition of “black” in current legislation.[6] As of 2008, Chinese people have been reclassified as "black" after The Chinese Association of South Africa took the South African government to court and won.[7]
The BEE legislation is supported and functions in conjunction with various other forms of Legislation, including the Employment Equity Act, Skills Development Act, Preferential Procurement Framework and others.
The legislation was developed through numerous task teams and have taken more than 3 years to be gazetted since the first Act (December 2003) and the first Codes of Good Practice released in November 2005 which addressed Statement 100 and 200. Subsequent Codes were released in December 2006 addressing Codes 300 to 700. Based on public and stakeholder comments, the final codes were adjusted and gazetted.[8]
Scorecards
Enterprises may be rated based on various scorecards, however only the following have been gazetted as of February 2007:[9]
- Generic Broad Based Scorecard
- Generic Narrow Based Scorecard
- Qualifying Small Enterprises Narrow Based Scorecard
- Qualifying Small Enterprises Broad Based Scorecard
- Financial Sector Scorecard
- Construction Sector Scorecard
The last two - Financial Sector scorecard and Construction Sector scorecard have not been passed into law. They were gazetted under section 12 of the act, which is for comment only. They will need to be gazetted in terms of section 9 of the act to become an official sector code. Until that happens all enterprises falling in these two industries are required to use the codes of good practice in producing a scorecard.
Significant leniency for Small Enterprises has been built into the gazetted codes. Based on the Qualifying Small Enterprises Codes, all companies with a turnover under R5 million p.a. is completely exempt from BEE and automatically qualifies as a level 4 contributor or achieves 100% BEE Contribution Recognition.
The generic broad based scorecard. All seven pillars must be addressed totalling 100 points
Element Weighting Compliance Targets Ownership 20 points 25%+1 Management Control 10 points (40% to 50%) Employment Equity 15 points (43% to 80%) Skills Development 15 points 3% of payroll Preferential Procurement 20 points 70% Enterprise Development 15 points 3% (NPAT) Socio- Economic Development 5 points 1% (NPAT) Qualifying Small Enterprises (those with an annual turnover from R5 - 35 million) are rated on the following scorecard and may choose any four of the pillars to address, totalling 100 points
Element Weighting Compliance Targets Ownership 25 points 25%+1 Management 25 points 50.1% Employment Equity 25 points (40% to 70%) Skills Development 25 points 2% of payroll Preferential Procurement 25 points 50% Enterprise Development 25 points 2% (NPAT) Socio- Economic Development 25 points 1% (NPAT) Exemption
Small businesses, generally with a turnover of less than R5m, are considered to be Exempted Micro Enterprises and do not need to be measured against the BEE scorecards as stated above.
Criticism
Critics argue that BEE's aim was to attempt to create equality of the workforce of South Africa as a whole by enforcing the advantaging of the previously disadvantaged and the disadvantaging the previously advantaged. This results in businesses having to consider the social background of any potential applicant instead of making decisions purely based on qualifications and experience (News Daily, May 24, 2004).
Instead of using this type of policy, it has been suggested by critics[who?] that a policy of qualification equality should be used. This would allow businesses to focus on employing the person with the highest qualifications, the most experience and the best recommendations. To allow previously disadvantaged individuals to achieve these qualifications and experience, critics of BEE say that the government should place more emphasis on secondary and tertiary education, as well as subsidise companies wishing to employ entry level applicants.
In response to criticism, the South African Government launched Broad Based Black Economic Empowerment which is the current gazetted framework for addressing Black Empowerment beyond enriching a few.
BEE has also been criticized for creating a brain drain, where the qualified white expertise is leaving for areas where they would not be discriminated against. Inkatha Freedom Party leader Mangosuthu Buthelezi is a strong critic of BEE and supports this view. He has stated that "the government's reckless implementation of the affirmative action policy is forcing many white people to leave the country, creating a skills shortage crisis".[10] Archbishop Desmond Tutu has warned that South Africa is sitting on a "powder keg" because millions are living in "dehumanising poverty" stating that Black Economic Empowerment only serves an elite few.[11]
References
- ^ "Chinese are declared to be Black, so are Chinese are Fully Black?". BEE Partner, South Africa Economy Watch. http://beepartner.com/2008/06/30/chinese-are-declared-to-be-black-so-are-chinese-are-fully-black/. Retrieved 2008-06-30.
- ^ "Codes of Good Practice on Broad-Based Black Economic Empowerment - Financial Sector Charter" (PDF). Department of Trade and Industry. http://www.dti.gov.za/bee/beecharters/gazetteno610.pdf. Retrieved 2007-08-23.
- ^ "Codes of Good Practice on Broad-Based Black Economic Empowerment - Construction Sector Charter" (PDF). Department of Trade and Industry. http://www.dti.gov.za/bee/beecharters/gazetteno616.pdf. Retrieved 2007-08-23.
- ^ "Codes of Good Practice on Broad-Based Black Economic Empowerment - Tourism Sector Codes" (PDF). Department of Trade and Industry. http://www.thedti.gov.za/bee/beecharters/tourism.pdf.
- ^ "Codes of Good Practice on Broad-Based Black Economic Empowerment - Schedule 1, Interpretation and Definitions" (PDF). Department of Trade and Industry. http://www.dti.gov.za/bee/beecharters/schedule1.pdf. Retrieved 2007-08-23.[dead link]
- ^ Vuyo Jack (2007-04-29). "Chinese people fall in grey area of BEE scorecard". Business Report. Archived from the original on 2007-09-27. http://web.archive.org/web/20070927011730/http://www.busrep.co.za/index.php?fSectionId=553&fArticleId=3803052. Retrieved 2007-08-23.
- ^ "S Africa Chinese 'become black'". BBC News. 2008-06-18. http://news.bbc.co.uk/2/hi/7461099.stm. Retrieved 2011-06-27.
- ^ "The BEE Codes of Good Practice". Department of Trade and Industry. http://www.dti.gov.za/bee/beecodes.htm. Retrieved 2007-08-23.
- ^ "BB-BEE Codes of Good Practice" (PDF). Department of Trade and Industry. http://www.dti.gov.za/publications/BB-BEE%20Codes%20of%20Good%20Practice%20Booklet121206.pdf. Retrieved 2007-08-23.
- ^ "Buthelezi slams affirmative action". Mail & Guardian. 2007-02-01. http://www.mg.co.za/articlepage.aspx?area=/breaking_news/breaking_news__national/&articleid=297671. Retrieved 2007-08-23.
- ^ "Tutu warns of poverty 'powder keg'". BBC. 2004-11-23. http://news.bbc.co.uk/2/hi/africa/4035809.stm. Retrieved 2009-11-12.
External links
- Broad-Based Black Economic Empowerment Act, 2003
- [1] Department of Trade and Industry BEE Strategy
- SANAS South African National Accreditation System
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- South African law
- Affirmative action
- Discrimination by country
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