BEE harmful to all South Africans – Solidarity

2013-03-13 16:20

Black economic empowerment (BEE) is to the detriment of all South Africans, including blacks, trade union Solidarity has said.

It was for this reason recommending that the Broad-Based Black Economic Empowerment Amendment Bill of 2012 be withdrawn, it said in a statement.

The union made the proposal during a presentation to Parliament’s portfolio committee on trade and industry today.

Solidarity research institute senior economic researcher Piet le Roux said the bill’s purpose was to enable the government to enforce current BEE legislation more stringently.

“The amendment bill will result in all South Africans being disadvantaged, including those who are supposed to benefit from BEE.

“The bill will lead to even more resources being made available to relatively less competent entrepreneurs – black, coloured, Indian and white – those entrepreneurs who would not make the grade without government assistance.”

This meant fewer consumer goods would be available to all South Africans. The cost of the project would fall on ordinary consumers, who would have to pay more for basic goods.

Le Roux said it was important to remember it was not just “less competent” black entrepreneurs who benefit from artificial investment, but also whites.

“White entrepreneurs who would not have made it in the market, but who somehow managed to get a black, coloured or Indian BEE partner, are being kept in business at the expense of consumers,” he said.

Not all emerging entrepreneurs depended on government assistance, but BEE enabled weaker entrepreneurs to do business in an artificial and unsustainable way.

“Consumers in the market reveal the most effective entrepreneurs through their spending patterns. The most effective entrepreneurs are those who are able to offer consumers the greatest flow of goods and services in the cheapest way,” said Le Roux.

Investors took note of spending patterns and, based on these, allocated resources to entrepreneurs. BEE replaced this consumer-driven allocation with a politically-driven process.

When there was political interference, resources tended to flow to less effective entrepreneurs.

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