The South African government will not act irresponsibly or irrationally by giving taxpayers’ funds to previously disadvantaged individuals or companies that are ill-prepared or ill-equipped to meet the challenges ahead as part of the broader black economic empowerment (BEE) agenda, Finance Minister Trevor Manuel said on Monday.
Addressing delegates at the BEE Conference for the Western Cape, sponsored by the provincial government and financial services group Metropolitan, Manuel said the government was working to facilitate empowerment through, for example, its R70-billion procurement program, of which 20% (or R14-billion) is a built-in subsidy for preferential procurement for black-controlled businesses and entrepreneurs, as well as the Khula program that provides loan guarantees to those without the necessary collateral.
“We may want to speed up the process and quality of black economic empowerment, but we are not going to go awarding some individual in Mitchell’s
Plain a R2-billion contract to build jet fighters just because they have applied,” he observed.
“Financial services companies are intermediaries between savers and investors, and if the promise to pay collapses then the entire financial sector collapses. We can’t rewrite the rules of economics — if we destroy the financial services companies, we destroy investment capital.
“Clearly we have to try to distort the patterns that have shaped the market in South Africa,” Manuel continued.
“The Financial Services Charter (providing rules for black ownership and participation in the financial services industry) is about trying to put the market on an even keel. But we can’t just give funds away irresponsibly.”
Manuel suggested that a body or group be created with the responsibility of monitoring progress in both BEE and the creation of sustainable small, medium and micro enterprises (SMMEs). It would listen to those in need and measure their progress, while also acting as a forum for developing new structures or methods for facilitating participation by blacks in the economy.
“The government must be listening and responsive, directing opportunities,” he noted. “It must be able to understand what people are saying and respond appropriately, while guarding against unintended consequences.” – I-Net Bridge