Small entrepreneurs, not a handful of magnates, were benefiting most from black economic empowerment (BEE), the Department of Trade and Industry said on Wednesday.
More than 90% of the beneficiaries of cheap loans, incentives and contract opportunities were black, small, medium and micro enterprises, deputy director-general Lionel October said in Pretoria.
He told reporters the department was confident its incentives were resulting in broad-based BEE, rather than the enrichment of an elite.
The number of BEE companies in the country has grown from about two to more than 100 in the past 10 years. Almost 50% of companies in the construction industry were black enterprises.
”Empowerment has been much broader than it has been made out to be,” October said.
With South Africa being a market economy, it was inevitable that a few talented black business people would build large corporations. The department had no objection to this, he said.
But, it was not desirable to have a few conglomerates dominating the economy. Broad-based BEE, therefore, had to be expedited.
”We are watching the situation very carefully,” October said.
According to departmental chief director Iqbal Sharma, one needed to question the practice of historically white conglomerates choosing major black companies as their partners rather than smaller, upcoming ones.
”The decision of the large white conglomerates to continue to go after the same usual suspects, as it were, should be questioned — not the policy environment that has been created.”
October expressed optimism that a government target of achieving 25 to 30% BEE ownership in South African companies by 2014 was on track.
Empowerment charters for five economic sectors were due to be completed by year-end — information technology, transport, construction, agriculture, and wine. Charters for the oil, gas and mining sectors have already been concluded.
Charters for the bulk of South Africa’s economic sectors should be completed by the end of next year, October said.
Many sectors have started drawing up BEE charters autonomously, and the department would distribute guidelines shortly to ensure consistency with government aims.
October stressed that foreign multi-nationals operating in South Africa were not exempt from empowerment targets. But cases where global policy or the protection of intellectual property rights did not allow the taking on of a partner, could be accommodated.
The government has recently gone to trouble to rectify a misunderstanding that multi-nationals had to give away shares to BEE companies in order to do business in South Africa.
All BEE deals took place at market value, and if there was any discount, this seldom amounted to more than 10%, he said.
Regarding the status of state-owned enterprises and government entities in the empowerment arena, October said the view has always been that these could not be considered to be black companies. The government had no colour as it served all citizens.
A policy position on this matter would be finalised by a BEE advisory council expected to be set up shortly.
The department has nominated candidates for the 19-member council — due to be appointed by President Thabo Mbeki. It would be responsible for issuing and monitoring empowerment policies and guidelines. – Sapa