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How many black South Africans benefit from BEE

How many black South Africans benefit from BEE

The current system of Black Economic Empowerment (BEE) only benefits a small elite, and will leave the majority of black South Africans out in the cold if an alternative is not found.

This is according to Dr Anthea Jeffery, Head of Policy Research at the Institute of Race Relations (IRR), who has called for an end to the ‘extortion’ of the BEE system.

Last week (20 July), Western Cape Premier Helen Zille spoke out against new Draft Preferential Procurement Regulations, which would see government pay a large premium on all procurement less than R10 million, in favour of BEE companies.

In a column on Politcsweb, Jeffery said that BEE benefits approximately 15% of the black population, with “a small group of beneficiaries having their way at the cost of the many”.

“BEE is a key reason why economic growth in South Africa lags so far behind other emerging countries.”

The remaining 85% have very little prospect of ever gaining BEE ownership deals, management posts, preferential tenders, or new small businesses to run, she said.

“Worse still, BEE does not simply bypass the 85% majority. Instead, it actively harms that 85% by reducing investment, growth, and jobs and making it very much harder for the poor to climb the economic ladder to success.”

The black African population is in the majority (44.23 million) and constitutes approximately 80% of the total South African population, according to StatsSA.

According to Jeffery, the indirect expropriation of existing firms through the 51% BEE deals – which is now increasingly required under empowerment rules – will ultimately do nothing to help unemployment, if no alternative is found.

EED: a BEE alternative

Dr Anthea Jeffery has proposed an alternative to BEE called “Economic Empowerment for the Disadvantaged or “EED”.

This program would:

  • Make rapid economic growth, rather than redistribution, the overriding policy priority.
  • Re-orient labour laws to help the jobless gain access to employment.
  • Increase community control over schools, and give parents state-funded education vouchers.
  • Give school leavers state-funded vouchers for university or technical education at institutions of their choice.
  • Sell off floundering state-owned enterprises to the private sector to help overcome the electricity crises.
  • Promote entrepreneurship via a venture capital fund with monies from both the state and the private sector.

“The immediate consequence of indirect expropriation under the rubric of BEE will be to deter direct investment, reduce our already meagre growth rate, and make it harder still for some 8.7 million unemployed South Africans (up from 3.7 million in 1994) to find jobs.” Jeffery said.

“The more this indirect expropriation is sanctioned and applauded, the more state powers of this kind will expand.”

“The real challenge is to open up real opportunities for all disadvantaged black South Africans. This cannot be done while BEE puts ever heavier leg irons on the economy.”

BEE: is it working?

BEE was launched in 2003, to redress the inequalities of Apartheid by giving certain previously disadvantaged groups of South African citizens economic privileges previously not available to them.

In October 2014, ANC deputy president Cyril Ramaphosa said that BEE benefits everyone and is necessary to build a prosperous, sustainable and equitable society.

However, data from research groups has shown that, while there has been an increase in wealthy black Africans since 2007 (113% increase to 4,900 individuals with a net worth over $1 million) – the black African population has shown the smallest growth in wealth out of all previously disadvantaged groups.

In March 2015, research found that black South Africans hold at least 23% of the Top 100 companies listed on the Johannesburg Stock Exchange as at the end of 2013.

The shares held by black investors include 10% held directly (largely through BEE schemes) and 13% through mandated investment – mostly through individuals contributing to pension funds, unit trusts and life policies.

An Intellidex study has shown that empowerment deals and schemes done by the JSE’s 100 largest companies have collectively generated R317-billion of value for beneficiaries – R108-billion of which has been generated by BEE deals, alone.

More on BEE

BEE deals drive over R319 billion in value

BEE benefits blacks the least

BEE rules are getting stricter

How many BEE millionaires are in South Africa

BEE benefits everyone: ANC

BusinessTech's Staff Writer is directly plugged into the South African Internet backbone, and spits out press releases and other news as they receive it. They are believed to be cl...
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  • CharlieTango

    No hope in hell of the ANC ever abolishing BEE – too many ANC ministers are making money out of it.

  • Shreez

    Thanks to BEE, you have instances where municipalities have taken tea ladies and cleaners and placed them into into positions like a Director General.
    Thanks ANC.

  • Cynic Scepticism

    Lol. Brand bootjie brand, sink bootjie sink. What a crock.

    • anonymauz

      Sowing seeds in the desert, then being astonished by dismal growth, if any.

      The ANC has a spoiled child’s mentality; irresponsible, immature, and incapable – but ready to tell everyone else what to do!

  • seafury

    MMM told you so sounds so tempting…

  • lehlo313

    It flows logically from the fact that Blacks are the overwhelming majority that if the economy grows, Blacks will benefit more and more. So, the best way will be to free the economy from Government interference, so that the entrepreneurs of the country can start growing the economy. The way things stand now, is that few entrepreneurs will start a new business, just to find that their workers are actually turned into bosses the moment they hire them.

    • anonymauz

      Or that the companies will be penalized because they are not 100% black-owned. By setting racial quotas for tax benefits / relief, the ANC is crippling open and equal entrepreneurship in a “supposedly Democratic” country.

      Everyone should be able to start a business, regardless of race – it will always benefit the economy because they still pay taxes.

      • Robert Dixon

        And this all from the ANC which condemned racism but in its hypocritical fashion does not rate this as racism!
        The simple fact is that Thomas Jefferson had it right when he said “That government is best which governs least”
        If the people vote for people who probably could not run a spaza shop and lie to parliament about who paid for the nkandla “upgrades” – was it really the zuma family? – and the ANC supports him then we get what we now have.

  • Chappies

    Wonder how many of the $ millionaires are goverment officials ?

  • Konstabel Koekemoer

    We need programmes that help the currently disadvantaged and not the historically disadvataged. Yes 85% of the currently disadvantaged are also historically disadvantaged but the big difference is that the 15% who have benefitted from BEE should be excluded as they don’t need or deserve any aritifical advantage. Keeping race as a criteria is totally corrput as it is being abused by the black elite to enrich themselves further at the expense of the poor.

  • Jacobus Pienaars

    You mean its like if Koos B was black?

  • NathanE

    If this article could just have substance of fact rather than skewed outcomes. When BEE was introduced, if advantaged businesses would eagerly engage in economic transformation then (for what it was purposed), instead of finding ways of seeing reversed racism – now 20 years later after managing delays very well, lets blame corruption. Don’t get me wrong, I’m sickened by corruption, but faced enough creative (experienced) ways of keeping me out of economic advancement. Yes, i got enough to say I’m ok – so I shouldn’t complain. But, my ambition was to go to the top and become a role model of hope for my future generations.

    Sadly the only way I could get there was ‘those deals’ but I walked away. It’s easy when you were never on the fighting side, to say don’t fight dirty (with BEE)…
    I’m not an activist and almost never voice my opinion, but my gosh come and talk to my black business network and experience the reality.


    • Helizna Kilian

      Nathan please start your own business with that strong network. Then you live what BEE should have been.

      • NathanE

        Thanks. Yes I’ve had my own business for more than 17 years and will always continue live true empowerment.

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