Business

BEE law has failed small enterprises, say black leaders

Chantelle Benjamin

There is an urgent need to review black economic empowerment, say business leaders.

Deputy President Kgalema Motlanthe  delivered the opening address at the 20 years of economic transformation summit. (Oupa Nkosi, M&G)

Black economic empowerment has failed to reach its objectives and needs to be reviewed urgently, according to black business leaders, business organisations and civil society.

Speaking at a one-day conference this week organised by the Mail & Guardian, at which 20 years of economic transformation was reviewed, National African Chamber of Commerce (Nafcoc) president Joe Hlongwane summed up the views of many of the speakers when he said: "Black economic empowerment [BEE] is not delivering. We need to fix it, or find something else."

Addressing Deputy President Kgalema Motlanthe, who delivered the opening address, Hlongwane said the major problem is that South Africa does not "concentrate on building companies from the bottom up; instead, we bought into existing big business. There is no focus, then, on building the BEE sector."

Legislation has done nothing to assist small business, as "big business just found ways to get around the system".

Motlanthe said in his address that BEE's original intention, which was to make ownership and senior management more equitable, "led to unintended consequences such as fronting, speculation and abuse of the tender system".

He said, however, new empowerment codes and greater monitoring of broad-based BEE compliance, as well as increased incentives for larger companies to support emerging and smaller enterprises and to include them in their supply chain, are being implemented.

Ministers inaccessible "until ­election time"
Hlongwane said that, in his ­experience, state agencies still work in silos, with one division not talking to another.

Furthermore, ministers remain inaccessible "until ­election time", making it hard for Nafcoc to address the specific ­problems of small enterprises.

"The sector, which is key to growth, needs a champion in the form of a minister assigned to oversee small, medium and macro enterprise development," he said.

Funding and training continue to be a large hurdle for small business.

The National Youth Development Agency's Siviwe Mkoka said there is no funding for small businesses that need up to a few thousand rand in start-up capital.

Former government communication spokesperson Jimmy Manyi, speaking on behalf of the Progressive Professionals Forum think-tank, said there is confusion within the government about the difference between ­entrepreneurship and self-employment.

"Let's not confuse someone who wants to open a spaza shop with an entrepreneur. A person who opens a spaza shop is looking at self-employment and maybe employing a few more people; an entrepreneur is something totally different."

Manyi said training is incorrectly targeted: "We are sitting with an innovation hub that is virtually a white elephant because the wrong people are being channelled there."

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