Bill to take BEE ‘beyond the boardroom’


21 June 2013

Black economic empowerment (BEE) is not only a political and social necessity in redressing the wrongs of South Africa’s past, but is also crucial to broadening economic participation and so contributing to economic growth, says Trade and Industry Minister Rob Davies.

Davies was briefing journalists in Cape Town on Thursday before the debate on the Broad-based Black Economic Empowerment (BEE) Amendment Bill in Parliament.

“As we bring people into the economy those people become consumers … but also they become involved as producers and contributors to the development of the wealth of the country.”

Davies said the growth in South Africa’s automotive sector, for instance, could be attributed to new entrants in the market.

He said the intention of the Bill was to ensure that black people became not merely owners of companies but also active participants in the company.

“They are the people that actually direct the way that the company operates. They are the people who when they sit in the boardroom, they sit in the proper boardroom and take the proper decisions about how the company operates, not just in the subordinate categories where PR and things like that are looked towards.”

He added that the aspirant small business owner had not benefited sufficiently from BEE, but that the new BEE codes of good practice, which are expected to be released in a few months’ time after last year being released for public comment, would boost support for small black-owned firms.

Answering a question on whether a time limit would be set on BEE, Davies said the country was nowhere near a point where a sunset clause could be set.

He pointed to a 2007 survey on BEE, conducted by the University of Pretoria, which had shown that most companies were only at the lowest level on the BEE scorecard – level 8.

The department has commissioned another university to conduct a follow-up BEE survey on the overall level of empowerment in South Africa.

The Bill, which amends the Broad-based BEE Empowerment Act of 2003, provides a clear statutory definition of “fronting”, and also provides for the setting up of a commission to address issues of fronting and levy penalties specified under the Bill.

The draft law also provides for a regulatory framework for BEE rating agencies, and gives all government departments and businesses one year to bring into line any other empowerment legislation they may be using with that of the Bill.

The mining charter, said Davies, is one of these tools that would need to be realigned with the BEE Bill.

The penalties under the Bill allow for those convicted of fronting to be levied with a fine or a prison sentence of no more than 10 years.

The department is also in the process of amending the BEE codes of good practice after last year putting them out to comment.

The amended codes provide for greater emphasis on the development of black suppliers. Davies said they would be released in another couple of months, hopefully at about the same time the Bill is signed into law by President Jacob Zuma.

Davies said much of the comments received were around the targets, time-frames and parameters, which the department was still in the process of engaging with.

Once the National Assembly has adopted the Bill, it will be referred to the National Council of Provinces for concurrence, before it can be signed into law by the President.