BEE The Transformation Imperative

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(No Transcript)
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BEE The Transformation Imperative

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BEE Why is it necessary?

• Apartheid systematically and purposefully
  restricted the majority of South Africans from
  meaningful participation in the economy. The
  assets of millions of people were directly and
  indirectly destroyed and access to skills and to
  self-employment was racially restricted. The
  accumulation process under Apartheid confined the
  creation of wealth to a racial minority and
  imposed underdevelopment on majority black
  communities. The result is an economic structure
  that today, in essence, still excludes the vast
  majority of South Africans.

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BEE Who is Black?

• A generic term Indigenous Africans, Coloureds,
  Indians.
• Black Enterprise 50.1 owned by black
  persons/substantial control
• Black Empowered Enterprise 25.1 owned by black
  persons/control
• Black woman-owned enterprise 25.1
  representation black woman
• Community or broad based enterprise empowerment
  shareholder representing a broad base of members
  such as local community, black woman, people with
  disabilities, or youth groups, significantly
  comprising of black persons
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  Extract from Department of Trade and Industrys
  Strategy for BEE - April 2003

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BEE Survey - Key Points

• Policy objectives of BEE
• Key Principles of BEE
• Policy instruments to achieve BEE
• Financial support from government for BEE
• BEE Achievements and Lessons Learned
• Comparing our procurement policies with world
  standards
• Importance of Buy-in from Top Management

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Policy Objectives of BEE

• A substantial increase in the number of black
  people who have ownership and control of existing
  and new enterprises.
• A substantial increase in the number of black
  people who have ownership and control of existing
  and new enterprises in the priority sectors of
  the economy that government has identified in its
  microeconomic reform strategy.
• A significant increase in the number of new black
  enterprises, black empowered enterprises, and
  black-engendered enterprises.

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Policy Objectives of BEE

• A significant increase in number of black people
  in executive and senior management of
  enterprises.
• Accelerated and shared economic growth.
• Increased income levels of black persons and a
  reduction of income inequalities between race
  groups.
• An increasing proportion of the ownership and
  management of economic activities vested in
  community and broad-based enterprises (such as
  trade unions, employee trusts, and other
  collective enterprises) and co-operatives.

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Key Principles of BEE

• Black Economic Empowerment is broad-based
• Black Economic Empowerment is an inclusive
  process
• Black Economic Empowerment is associated with
  good governance
• Black Economic Empowerment is part of our growth
  strategy
• Wealth accumulation must come from both existing
  economic activity and new economic activity
• An effective and successful process of BEE and
  accelerated economic growth and mutually
  reinforcing objectives

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Policy Instruments to Achieve BEE

• Government use a number of policy instruments to
  achieve its objectives in respect of BEE.
  Government seek partnerships with the private
  sector to accelerate the BEE process.
• Legislation Broad Based BEE Billestablish
  framework
• Regulation Various regulatory means
• Balance Scorecardmeasure progress/basic
  framework
• 3 core elements (direct empowerment, HR
  development and employment equity, indirect
  empowerment preferential procurement and
  enterprise development

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Financial Support from Government

• R2.2 billion was allocated to fund BEE
  initiatives for 2002/03 financial year. (Ntsika,
  Khula, IDC, DBSA Land Bank)
• Isibaya Fund contributed R321 million, Umsombomvu
  Fund contributed R461 million and DBSA
  contributed R1.4 billion to the revenue of low
  income households 2000/2002
• Khulas contributions to empowerment and SMME s
  of R1.3bn
• 79 were to BEEs
• 56 to women-owned enterprises
• 71 to urban enterprises
• 29 to rural enterprises

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BEE Achievements

• The IDC has financed over 690 empowerment deals
  worth more than R6.6 billion.
• Increase in empowerment funding rose from three
  deals in 1990 to a peak of 191 deals in 2002,
  about 37 of the total number of approvals.
• Past 5 years to December 2002, increase in
  empowerment funding from 14 in 1998 (R56.4M) to
  39 (R1.2billion).
• Sectoral spread manufacturing, communications,
  mining, quarrying, retail and wholesale trade

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BEE Initiatives since 1994

• The Integrated Human Resources Develop Strategy
• Urban Renewal Programme
• Integrated Sustainable Rural Development
  Programme
• The Tourism Transformation Strategy
• The Strategic Sector Plan for Agriculture
• The National Small Business Development Promotion
  Programme

Department of Public Service Administration
Vol2. Ed03 2003
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BEE Achievements

• All BEE approvals during 1990-2002, 78 (R4.71bn)
  high impact sectors compared to 4 (R0.23bn)
  low.
• Central objective of RDP was to de-racialise
  business ownership and control completely,
  through focused policies of black economic
  empowerment
• The private sector embarked on several BEE
  initiatives in the 1990s. In 1993, Sanlam sold
  10 of its stake in Metropolitan Life to a
  black-owned consortium. This was followed by
  ABSA, Afrox-Health, Mvelepanda, MTN, African
  Rainbow Minerals, Harmony.

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Comparing our preferential procurement policies
with world-wide standards

• No study or research - preferential procurement
  policies
• SITA ITAC process similar to American DOD
  Procurement
• DPSA Preferential procurement is an effective
  instrument to promote BEE in our economy.
  Government is reviewing its preferential
  procurement policy in order to enhance its impact
  on BEE. In addition to increasing the levels of
  preference to black-owned and black-empowered
  enterprises, clear targets have been set. A final
  target will be set once research on existing
  levels of black procurement has been completed.

Department of Public Service Administration
Vol2. Ed03 2003
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Preferential Procurement by Government

• In support of increased procurement by
  black-owned firms, government will expand its
  supplier development programmes to ensure that
  more black enterprises are created and are able
  to meet the requirements of purchasers in the
  public sector.
• The enabling legislation on BEE will provide that
  all government departments, state-owned
  enterprises and public agencies must take into
  account any code of practice issues in terms of
  the legislation in determining and implementing
  their preferential procurement policy.

Department of Trade and Industry9 April 2003
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Black Economic Empowerment Task Team Announced

• The Minister _at_ DTI, Alec Erwin, announced the
  names of the BEE task team. Serve until Advisory
  Council on BEE appointed
• Finalize legislation and devise guidelines in the
  BEE strategy
• Liaise with various interested parties
• Cyril Ramaphosa, Saki Macozoma, Derek Cooper,
  Patrice Motsepe, Gloria Serobe, Danisa Baloyi,
  Buhle Mthetwa, Vuoy Jack, Ronnie Ntuli, Loyiso
  Mbabane, Imogen Mkhize, Alan Hirsch, Philisiwe
  Buthelezi and Lionel October

Department of Trade and Industry9 April 2003
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Summary

• Our country requires an economy that can meet
  the needs of all our economic citizens our
  people and their enterprise in a sustainable
  manner. This will only be possible if our economy
  builds on the full potential of all persons and
  communities across the length and breath of this
  country. Governments objective is to achieve
  this vision of an adaptive economy characterized
  by growth, employment and equity by 2014.

Department of Trade and Industry9 April 2003
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Thank You
Contact details 880-0101 telephone [phone]
facsimile info_at_i.co.za www.icoza.co.za