BEE in SA failed to close the gap, says researcher Southall

THE policy of black economic empowerment (BEE) in South Africa, which became law in that country in 2003, has mainly benefited those who have strong ties to the ruling African National Congress (ANC) party, according to a South African political analyst.

Roger Southall, a researcher attached to the University of Witwatersrand, told delegates at the BEE symposium organised by the Bank of Namibia (BoN) on Thursday that this policy had hardly narrowed the gap between rich and poor. “There is a large body of evidence indicating that BEE in South Africa has worked overwhelmingly in favour of those with strong connections to the ruling party ANC and that large corporations have sought to strike up deals with individuals deemed to have influence with government,” Southall said.BEE is a policy to change the ownership of white-owned companies to include previously disadvantaged citizens and to have more black people at management level.South Africa intends to have the transformation of the economy through BEE largely concluded by 2014.One of the targets envisaged is to have 25 per cent black ownership of the Johannesburg Stock Exchange.Southall however pointed out that the South African government only completed Codes of Good Practice regarding BEE in December 2006, “nearly three years after Government started drafting them.”These codes exempted companies from BEE ownership requirements.Achieving company ownership of 25, 50 and more per cent by previously disadvantaged persons or such companies is regarded as BEE.A lesson Namibia could learn from the South African BEE policy would be that small companies with annual turnovers of R5 million or less do not have to comply with BEE requirements, Southall said.According to recent news reports, new companies being established in South Africa by foreign investors should also comply with BEE principles.This has not gone down well.An Italian investor recently won a case against the South African government exempting his company from BEE.In Namibia, procurement of goods and materials from local companies instead of importing them from South Africa is also regarded as BEE.Procurement from companies owned by previously disadvantaged Namibians to reduce imports from South Africa is already practised by NamPower and several mining companies in southern Namibia.These businesses have to register and are screened to determine whether they are able to fulfil the procurement requirements and standards.”There is a large body of evidence indicating that BEE in South Africa has worked overwhelmingly in favour of those with strong connections to the ruling party ANC and that large corporations have sought to strike up deals with individuals deemed to have influence with government,” Southall said.BEE is a policy to change the ownership of white-owned companies to include previously disadvantaged citizens and to have more black people at management level.South Africa intends to have the transformation of the economy through BEE largely concluded by 2014.One of the targets envisaged is to have 25 per cent black ownership of the Johannesburg Stock Exchange.Southall however pointed out that the South African government only completed Codes of Good Practice regarding BEE in December 2006, “nearly three years after Government started drafting them.”These codes exempted companies from BEE ownership requirements.Achieving company ownership of 25, 50 and more per cent by previously disadvantaged persons or such companies is regarded as BEE.A lesson Namibia could learn from the South African BEE policy would be that small companies with annual turnovers of R5 million or less do not have to comply with BEE requirements, Southall said.According to recent news reports, new companies being established in South Africa by foreign investors should also comply with BEE principles.This has not gone down well.An Italian investor recently won a case against the South African government exempting his company from BEE.In Namibia, procurement of goods and materials from local companies instead of importing them from South Africa is also regarded as BEE.Procurement from companies owned by previously disadvantaged Namibians to reduce imports from South Africa is already practised by NamPower and several mining companies in southern Namibia.These businesses have to register and are screened to determine whether they are able to fulfil the procurement requirements and standards.