New rules for economic empowerment.

Anyone running a business in South Africa is aware of the legislation that is in place to redress the imbalances of our past. Being aware of a law and actually complying with it in a meaningful way are, however, two entirely different things.

This week the Minister of Trade and Industry, Rob Davies, released draft revised broad-based black economic empowerment (BBBEE) Codes. The new codes are intended to deal with the formalistic tick-box approach to BBBEE generally adopted by corporates in South Africa and to ultimately achieve real empowerment.

The amendments are also intended to help create and support productive black businesses.

The changes will affect businesses on both ends of the scale. Businesses with a turnover of less than R10m (double the previous amount) will be exempt from the codes.

For big businesses, passive black shareholding and ownership may no longer be enough. Companies that have neglected the black shareholding requirements, will be particularly adversely affected. For example, a large company that may have 7% black ownership, but is a level three contributor, will be automatically reduced to a level five contributor because it does not meet the 10% minimum black ownership target.

I find it encouraging to see a strong focus on actual transfer of ownership to previously disadvantaged individuals. It is also encouraging to see the increased support for small and micro-enterprises. This, I believe, is the area where the biggest job creation opportunities exist.

The draft Codes will be open for public comment for a period of 60 days

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2 thoughts on “New rules for economic empowerment.

  1. Agree – that is very encouraging. ‘Fronting’ is not going to get us where we need to be. One of the challenges in my mind is whether there is a risk to levels of investment in SA by large international corporates?

    • Yes Marion that is an interesting and real issue especially if one looks at the crowding out effect and the impact it has on the currency and balance of payment and flow of money.

      It is small business that will help employment grow and bring a change for the low and middle class.

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