Trade and Industry minister Ebrahim Patel says that more needs to be done to promote black industrialists and small businesses in South Africa.
Presenting his departmental budget speech on Tuesday (18 May), Patel said that government will now look at reviewing and enforcing Black Economic Empowerment (BEE) regulations to improve outcomes.
“Though we have made progress with broad-based black economic empowerment, it is clear that we need to bring greater rigour and credibility to BEE statistics and practices and ensure that claims made by firms in their BEE reports are verified,” he said.
“This may require adjustments to the reporting requirements. I will appoint an expert panel to review the current BEE framework in order to address these legitimate public concerns.”
Patel added that a practice note under the Broad-Based Black Economic Empowerment Act would be gazetted shortly to provide guidance to regulators and clarity in the market on the treatment of broad-based empowerment vehicles.
This will ensure worker ownership schemes, community trusts and union investment vehicles are properly recognised for BEE-purpose, he said.
A report published by Sanlam last week found that black executives are still underrepresented in South Africa’s business landscape.
The report – which was based on study of B-BBEE scorecards of more than 3,100 companies – found that the Tourism sector is hitting 99.5% of its B-BBEE contribution targets. The Financial (97.1%), Construction (93.7%) and Integrated Transport (92.4%) sectors follow close behind with scores in the 90s.
Only five sectors are achieving Level 1 recognition: Tourism; Financial; Property; Marketing, Advertising & Communications; and Agriculture.
The ICT sector, with a Level 4 recognition, is one of the poorest performing sectors although it is exceeding Black Ownership targets.
Patel’s comments comes as South Africa pushes forward on the proposed Employment Equity Amendment Bill which promises a shake-up of the country’s employment equity laws.
The planned bill will allow Labour minister Thulas Nxesi to set numerical BEE targets for different business sectors. It will also introduce stricter rules around BEE inspections and enforcement, as well as further regulations around doing business with the state as a BEE company.
While the bill has been welcomed by some parts of the labour market, some businesses have warned that the bill could be detrimental to their operations.
Telkom’s Siyabonga Mahlangu highlighted the current tough economic climate and said it was difficult to make appointments that may be necessitated by the new numerical targets.
“The unilateral imposition of targets by the minister, which may not be practically implementable by electronic communications, operators and industry stakeholders, may have the unintended effect of threatening existing jobs in a difficult economic climate,” he said.
These concerns were echoed by AgriSA’s Christo van de Rheede, who acknowledged that there was a lack of transformation in the agricultural sector.
However, he said the power of the minister should be curbed and that there needed to be sector-based consultations.
“The imposition of one-size-fits-all approach for targets would unlikely achieve the results we all yearn for. The agricultural sector is faced with a skills gap, and this remains a challenge in filling critical posts in the sector,” he said.