The government has tabled a special black economic empowerment (BEE) deal for foreign multinationals that exempts them from bringing in black shareholders.
The latest BEE codes of conduct, released recently, say that multi-nationals operating in South Africa can sidestep BEE ownership regulations if they can show that implementing black shareholding will cause substantial commercial harm.
Instead, multinational businesses operating in South Africa will be able to earn equity equivalents by participating in public programmes approved by the minister of trade and industry.
Acting chief director of BEE Polo Radebe was reluctant to give examples of these programmes, saying these would come from the sectoral charter councils. But he said they would have to broadly support economic goals such as that of halving unemployment by 2014.
Ownership counts for 20% of the BEE scorecard, with exercisable voting rights of black people set at 25% plus one vote over a 10-year period.
Radebe could not provide an estimate of the total value involved, but said it “was definitely a lot of money”.
The equity equivalent option does not apply to South African com-panies or multinationals that have their head offices in South Africa.
Radebe said the exception for foreign multinationals was in line with increasing foreign direct investment (FDI) in the country. By being flexible, the country would attract more FDI.
The latest Reserve Bank quarterly bulletin records the total value of FDI at the end of 2004, the latest available figure, at R355-billion.
Interested parties have been given three months to respond to the new draft codes of good practice for broad-based black economic empowerment.
A first set of codes was released for comment in November last year. Those released this week — covering preferential procurement, employment equity, skills development, enterprise development, corporate social responsibility and small enterprise — complete the set of codes intended to provide further clarity and guidance on the implementation of empowerment.
Other codes or statements released this week cover fronting, verification issues related to complex structures and state-owned and public entities.