BEE, or BBEEE or BBBEEE or preferably black empowerment is a
concept intended to allow financial wealth to be redistributed amongst the
previously disadvantaged, thereby theoretically liberating them from financial
oppression.
The vehicle selected to achieve this objective was a points
system structured to allow ownership of companies to reflect black board or
management participation. Naturally companies and smaller enterprises did not
enjoy the concept of sharing, and many devised elaborate schemes to share but
not really to share.
You are on the board but no one cares and you are
completely replaceable like today. As a result it did not take long for
variations of the empowerment schema to be launched but with each launch new avoidance
techniques were developed to circumvent the new variation.
Of course not everyone failed at achieving benefit from
empowerment, in each version of BEE various intelligent black folk managed to
develop a methodology for implementing their will upon various companies and
assets. The problem though, is that BEE has completely missed the mark of
broadly (Broadbased) empowering the masses, this has, as we are well aware,
allowed much frustration to ferment.
In
addition to obvious frustration, we have seen the emergence of secondary
problems stemming from a frustrated mass, xenophobia, increased financial
crime, wage strikes and of course, politically, it allows opportunistic
politicians the space to prey upon weakness and inject far right/left/personal
agendas like nationalisation of the mines upon a hapless public.
WEALTH CREATION
When considering BEE and its objectives it’s important to
note that every politician calls it wealth creation. How on earth is it wealth
creation? If you take money from a person and give it to someone else what
wealth have you created? All you’ve done is made one party very upset and made
another party very happy and in this lies the problem with BEE. No extra wealth
is being created there is no extra cash in the economy, no extra jobs and more
importantly no improvement for anyone other than the recipient of wealth.
In itself, this is extremely dangerous because firstly you
are damaging a wealth creator and secondly you are enriching and individual who
may decide to redistribute it or as it currently turns out, pools it. Thus not
only are you empowering masses you are merely allowing a few smart business
people the opportunity to become filthy rich at the expense of previous wealth
creators.
THE CURE
The entire concept of BEE and all of its variants should be
completely scrapped, obviously not retrospectively but going forward. In its
place a new scheme called GEE(Grown Economic Empowerment) should be
established.
Grown Empowerment works like this:
1.
A company may only receive GEE points if it
invests directly into new businesses established by young entrepreneurs. There
is no maximum or minimum amount to the investment but the company needs to
invest without any equity return in any way whatsoever.
2.
In addition a company that trains young
entrepreneurs can get pre BEE points which don’t have any value until they
assist that entrepreneur with launching their own business. If after five years
the young entrepreneur is function well, with a good balance sheet and a
healthy amount of staff the revenue service will reduce the company tax level
of both the seeder company and the entrepreneur by 4%.
3.
A company may gain extra points and a tax
reduction by investing directly into education facilities, housing, health or
security. All of which need to be placed in an informal settlement or specific
locations in tribal homelands.
a.
All sectors (education, housing etc) need to
operated on a not for profit basis.
4.
Finally a company that invests into young
entrepreneurs in the agricultural sector may only do so in areas that currently
have no formal agriculture, in homelands or in areas thought to be unable to
sustain agriculture.
To ensure compliance, SARS will issue a 3% increase in taxes
for companies that do not have a GEE point after 4 years of implementation.
FINAL NOTES OF BEE
Chinese people (no offence) are not BEE. Just because we
want to do much business with china and Standard Bank wants to sell large
chunks of equity to china in no way makes them eligible for BEE. We need to
keep our own money and invest it back into OUR economy thank you.
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