I have stated quite vehemently on earlier posts that I’m strongly pro-BEE without clearly outlining why I have taken this stance (no it’s not just because I’m black). For this post though I’m going to put away my pro-BEE fighter costume and look at both the pros and cons to this piece of legislation in South Africa.
What is this BEE thing?
Black economic empowerment (BEE) is governed, by the Broad-Based Black Economic Empowerment Act of 200 the Act was entered into force in August 2008. The act puts pressure on businesses with annual turnover exceeding R35m to comply with the seven components or ‘elements’ of BEE. Firms with annual turnover between R5m and R35m are expected to comply with four out of the seven elements but may choose for themselves which these four should be and ignore the other three.
The Seven Elements of BEE
- Employment Equity
- Skills Development
- Preferential Procurement
- Enterprise Development
- Socio-Economic Development
- Management Control
BEE is voluntary however as no formal penalties apply for failure to meet the compliance targets laid out in the codes. Nonetheless, firms with poor BEE scores are unlikely to partake in government contracts and firms with low BEE scores will find it difficult to do business with other firms subsequently left out of procurement chains and battling to do business at all.
Critics of BEE
Moeletsi Mbeki, the brother of former president Thabo Mbeki, criticised BEE in his book, Architects of Poverty: Why African Capitalism Needs Changing, he wrote that BEE "strikes a fatal blow against black entrepreneurship by creating a small class of unproductive but wealthy black crony capitalists made up of ANC politicians". It thus robbed South Africa of the key to economic and industrial development: an entrepreneurial bourgeoisie. "These are the businessmen, industrialists, risk-takers and private investors who alone can create a developed, modern state."
Even ANC secretary general Gwede Mantashe, criticised BEE. He was quoted as saying "This thing of having a bottle of water that you can get for R7 procured by the government for R27 because you want to create a middle-class person who must have a business is not on … It must stop."
Generally the big issue with BEE has been the non-existent impact it has had on the very people it is trying to help. BEE has created an elite group of politically connected black South Africans and the majority of the disadvantage people of this country are unlikely to ever benefit from the policy.
Anthea Jeffery in a Mail and Guardian article titled ‘BEE is flawed and should be scrapped' argues that government should focus on identifying barriers to advancing the poor instead of focusing on BEE. ‘Instead of trying to "reform" BEE with a raft of further unrealistic requirements, the government should recognize that BEE is fatally flawed and cannot be made to work. Instead, the state should identify the real barriers to the advancement of the poor and start removing them. This means that the ruling ANC must now embrace the much harder tasks of: fixing education; freeing the labour market from excessive regulation; ending other damaging invention; building up international competitiveness; and making South Africa much more attractive to direct investors, both local and foreign. The government also needs to shift its "big idea". For 18 years, the ANC has emphasized redistribution instead of promoting economic growth. But dividing up the existing economic pie without expanding it will never be enough to meet the needs of a growing population.’
In addition there is also the argument that BEE is reserve racism as it discriminates against a certain group of the population unfairly.
Pro BEE sentiment
According to government, ‘South Africa's policy of black economic empowerment (BEE) is not simply a moral initiative to redress the wrongs of the past. It is a pragmatic growth strategy that aims to realize the country's full economic potential while helping to bring the black majority into the economic mainstream.’ Therefore it is necessary to address the systematic exclusion of Africans, Indians and coloured people from meaningful participation in the country's economy by the apartheid government.
Pierre de Vos a Constitutional law lecturer at the University of Cape Town Law Faculty stated something very similar saying ‘it will take many years to address the corrosive effects of 350 years of colonialism and Apartheid and to rectify the profoundly unfair and unequal racial distribution of resources, opportunities and privileges that persists in South Africa to this day. Constitutionally required redress measures (also sometimes wrongly called “affirmative action”) are therefore a pre-requisite for the achievement of the equality guaranteed by the Constitution – not an exception to the guarantee of equality. Constitutionally, the only question – as a recent Labour Court judgment about the use of regional demographics in employment equity plans demonstrated – is how these redress measures should be implemented.’ So according to him it is not a question of whether to BEE or not to BEE but rather a question of implementation of the legislation. He continues to say that the middle-class remains dominated by those who benefited from Apartheid (or continue to benefit from it as the children of Apartheid beneficiaries or the beneficiaries of whiteness). (Read full article here; http://www.dailymaverick.co.za/opinionista/2013-10-23-employment-equity-the-trick-is-in-how-its-implemented/#.UmughVNP1kh)
None of the above opinions are my own but rather a collection of opinions on both sides of the fence. There is certainly merit to the argument that the current legislation hasn’t worked but I find very little merit to the argument that the policy is somehow ‘reserve racism.’ In what way can one compare the hideous events of apartheid where thousands were killed to BEE is beyond me? There is also merit to the argument that there needs to be some way to bridge the racial divide between rich and poor. These inequalities can have a profound effect on our political stability. To BEE or not, well you make the decision.
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