/ 3 October 2013

Despite challenges, Davies views B-BBEE as a success

Trade and Industry Minister Rob Davies.
Trade and Industry Minister Rob Davies. (Gallo)

While broad-based black economic empowerment (B-BBEE) was initially not effective nationally, it has been a success, Trade and Industry Minister Rob Davies said on Thursday.

This was according to research done on B-BBEE, which aimed to empower black businesses and citizens who were previously disadvantaged due to apartheid.

The system had been in place in the country for the past 10 years.

"Achieving broad-based black empowerment was a political imperative … and a matter of equity," said Davies. "It has also been an economic imperative."

Davies was speaking at the New Age's business breakfast in Midrand.

Later on Thursday, a summit aimed at scrutinising the last decade of the system was scheduled to take place.

Davies said efforts were in place to improve the system and acknowledged that the plan still faced several problems, including verifying the BEE levels of companies and fronting.

Fronting referred to companies that fraudulently claimed to be black-owned, but were not.

Shortage of black industrialists
A commissioner would now be appointed to receive such complaints, and achieve solutions to these complaints or refer the matter to criminal courts.

Davies said they had also seen a shortage of black industrialists in the country.

The next step for development in B-BBEE would be grooming more black industrialists.

Sandile Zungu of the B-BBEE presidential advisory council, who was on the panel at the briefing, agreed that transformation was needed in the sector.

A lot of black people who wanted to go into industrial businesses had questions on how to access capital, said Zungu.

He suggested that more mentorship programmes be introduced.

Davies said amendments had been made to the codes of good practice and these were to be published in the Government Gazette next Friday.

Loopholes in the system
Among the changes set to be implemented, small businesses and enterprises would be exempt from paying thousands of rands to acquire B-BBEE verification certificates.

Previously small businesses paid around R30 000 to R40 000 to get their verification status, said Davies.

KIO Advisory Services analyst Duma Gqubule, who was also on the panel, said while they agreed that B-BBEE had been successful, it was disappointing that changes were only being made now.

"It has taken us too long to get to the phase where we are now," he said.

Gqubule said, as analysts, they recognised the loopholes in the system a while ago.

"From day one, a system to monitor B-BBEE should have been employed," he said.

Zandile Tshabalala, also of the presidential advisory council, said a serious effort was needed by black leaders to make even more progress.

"It requires bold leadership," she said on the debate, broadcast live on SABC2. – Sapa