Learning from SA BEE


By Mbatjiua Ngavirue WINDHOEK The aim of Black Economic Empowerment (BEE) is not to take wealth away from one person in order to enrich another, says leading South African expert Professor Kobus Laubscher. The real aim of BEE, he says, is to unlock the potential of businesses and the entrepreneurial spirit in people for the purpose of stimulating economic growth. “It is about growing the proverbial cake to divide an enlarged cake more equitably,” he explained. He was speaking at a seminar on Broad-based Black Economic Empowerment (BBBEE) organised by the Law Society of Namibia this week. Laubscher was born in Namibia but went on to a distinguished academic career at the University of the Free State where he served as Professor of Agricultural Economics. He now works as a strategic consultant on BEE in the agricultural sector (AgriBEE) and serves as a director of many companies, mainly involved in agriculture. He briefed members of the Law Society extensively about the legal framework around BEE in South Africa, dealing specifically with the situation since the Broad-based Black Economic Empowerment Act came into force in January 2004. South African BEE in its present form, he said, could largely be traced back to recommendations made by Cyril Ramaphosa’s Black Economic Empowerment Commission of 1998-2000. The new Act defines BEE as “promoting economic transformation in order to enable meaningful participation of black people in the economy”. It stipulates that empowerment means increased access to ownership of business, management control, opportunities and skills development. The term “black” is defined as either a black, coloured or Indian person who must all be treated equitably. Under the new law, white women no longer count as previously disadvantaged individuals (PDIs) as they used to. According to Laubscher, the new law has gone a long way towards eliminating flaws in the BEE system, especially in outlawing “fronting”. Fronting took place in several instances where, for example, the black tea lady at a company was made a director simply so that the company could win government tenders. The first 10 years of freedom in South Africa did not bring about much movement in the transformation of the South African economy, he noted. A few black individuals had benefited from BEE, but the wealth gap in the country was widening – which was not the intention of BEE. He stressed that BEE is not a one-off event but a continuous process, and the important thing for companies was to start the process. With the introduction of the BEE Act, the South African government had become very strict about BEE being broad-based. He gave the example of an actual case that occurred in South Africa where two companies were bidding for a tender to supply protective mine clothing. The first company was white-owned, but employed 200 black women to manufacture the protective clothing. Four black businessmen owned the company that won the tender but it imported all the protective clothing from China. “That is not Black Economic Empowerment,” Laubscher said. He explained that even though the South African Act is non-prescriptive, it is highly successful. It has become harder and harder for companies to do business without implementing BEE. To enforce BEE, government and parastatals insist on BEE as a criterion for doing business with companies. Laubscher explained the Code of Good Practice that acts as the implementation framework of the BBBEE Act. In terms of this code, companies are given a rating based on a number of criteria, including employment equity, skills development, preferential procurement, enterprise development and other aspects.