Broad-Based Black Economic Empowerment (BBBEE, also known as BEE) is still a controversial subject in South Africa more than a decade after its official inclusion in the country’s legislative framework. There is a large amount of misunderstanding and resistance to BEE, as well as frequent accusations that the policy in its current form is ineffective, benefitting only a small part of society. There are even calls for BEE to be scrapped entirely. But BEE isn’t going anywhere; it’s here to stay – and here’s why.
BEE has been around in South Africa since at least 1993, at least informally, anyway. The first known empowerment deal was concluded during the run-up to our first democratic elections when Sanlam transferred a controlling stake in Metropolitan Life to a consortium of black business people. Then in 1994, Anglo American sold its shares in Johnic to the National Empowerment Consortium. These deals spurred a number of others, all with a narrow focus of the transferral of ownership and shareholding.
With the development of the Constitution and other laws enshrining equality, BEE policies were formulated to redress the injustices of the past. These were designed to be broad to ensure more equitable participation of black South Africans in all aspects of business and the economy. The BBBEE Act was promulgated in 2003, and then supplemented by Codes of Good Practice in 2007 – these Codes have since been revised.
BEE has changed substantially over the years, with a major shift happening in May 2015 when the seven categories of the BEE scorecard were condensed into five. Compliance has become somewhat more complex since then, particularly in the area of preferential procurement. The changes were made to increase transformation in, and support for, the area of black ownership and to strengthen the transformative socio-economic effects of BEE, especially in sectors that have been slow to change.
While BEE has gone through several phases already, and the policy will almost certainly undergo further revision (with, it is speculated, more emphasis being placed on the promotion of entrepreneurship), it will not be ending anytime soon. Government has confirmed that BEE will remain a key part of the National Development Plan going forward – and this is likely even if the ruling party changes.
There is still a great need for empowerment initiatives in South Africa – 22 years after the end of apartheid, the country remains divided and unequal in many ways. Director-General of the Department of Trade and Industry that BEE cannot have a sunset clause if it has not yet had a sunrise, emphasising that much-needed change is just beginning.
Love it or hate it, BEE is – and will continue to be – part of the business fabric of the country. Regardless of individual opinions, businesses of all shapes and sizes have both a moral and economic imperative to make efforts to comply. While this is voluntary, failure to do so means potentially missing out on tenders and preferential procurement deals, as well as standing out as a company that seems uninterested in moving South Africa forward.
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