Reading about the Broad-based Black Economic Empowerment (BEE) Act, which provides the legal framework for the government to achieve its broad-based BEE objectives; the codes of good practice issued in 2007, which provide practical guidelines for the implementation of such initiatives and the measurement of empowerment contributions in terms of the scorecard; and the Preferential Procurement Policy Framework Act of 2000, which guides the way such principles are integrated in government procurement decisions, reminds me of studying for my matric biology examination. It has a soporific affect.
Now there is a raging debate about the Broad-based BEE Act’s amendment legislation, which seeks to criminalise fronting and establish a commission that will have the power to investigate allegations of fronting and may delegate its duties and functions to the Special Investigating Unit or “any other person or organ of state”. (Perhaps committee chairmanship is a potential job for ousted Government Communication and Information System chief executive Jimmy Manyi.)
It also requires that public companies listed on the JSE provide the commission with “the report on their compliance with broad-based BEE and any other prescribed information”.
The codes of good practice will also be revised, according to Trade and Industry Minister Rob Davies. These are enormously complex to implement – and to comply with already. Perhaps we should be enthusiastic that the pillars are being reduced from seven to five, but one has to wonder whether this system is being properly implemented and what the compliance costs of the BEE legal minefield are to business.
Foreign companies are allowed to score “equity equivalents” if they cannot comply with the ownership and equity requirements – such as bringing a local BEE shareholder company on board. They can train workers instead, which is something that DA finance spokesman Tim Harris says, in the interests of simplicity, should be extended to local companies as well.
The problem is that the BEE industry has become a big business in itself. It has largely led to fronting – something which Davies is now fighting like a hound dog. It has led to a plethora of verification agencies, which provide thousands of people with jobs to go through the process of declaring the score of businesses in the BEE examination.
Then there are a whole host of agencies that charge lots of lolly to assist companies with how to be compliant.
Thankfully the codes of good practice on broad-based BEE have a shelf life until 2017, which is only another five years, but you can be sure that if the government is setting up a commission, then we are going to see the extension of this absurd system, which is simply bogging down business with endless red-tape.
Another major flaw of the BEE legal system is that it is based on race. It effectively excludes white males as apartheid laws excluded black, coloured, Indian and “other races” in the bad old days.
DA parliamentary leader Lindiwe Mazibuko and trade and industry spokesman Wilmot James recognise that race categorisation is “a blunt instrument”, but are prepared to live with it in the interests of overcoming past race-based economic discrimination practices. One does wonder why a less blunt tool – such as a measurement of socio-economic circumstance – cannot be used instead.
Many white males can tell a tale of not even getting job interviews because of their skin colour, which is absurd in a country desperately short of skills.