BEE benefiting only a few

Black Economic Empowerment (BEE) is becoming more narrow-based instead of becoming more broad-based, according to the Institute for Race Relations.

“Clearly a small group of beneficiaries are having their way at the cost of the many,” Dr. Anthea Jeffrey, head of policy research at the IRR told Talk 702 earlier this week amid new BEE proposals drafted by the National Treasury.

Under the new proposals, government tenders up to R10 million be evaluated only 50% on price, while the preferential weighting for BEE will also count 50%.

Carol Paton at Business Day noted this week that the government would pay a large premium on all procurement less than R10 million, under the new draft. The size of the premium will depend on how many points a company can score on the non-price factors to compensate for its higher price.

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Olga Meshoe, a director at Transcend Corporate Advisors told Talk 702 that the new proposals is a step in the right direction to stimulate the economy.

The pricing will increase, Meshoe admitted, however, she said that one need to appreciate that for those with good BEE score cards, it means that those company were looking out for other communities, up-skilling workers and contributing sustainably to the economy.

“Entities that are now going to be tendering, with a good scorecard, it can be said that they are contributing to the broader conversation of transformation,” the lead of the BEE strategy consulting firm said.

She said that even though the pricing might be an aspect that South Africans have to pay for in the short term, the fact that black business was given an opportunity is a positive.

She said that while white owned business may be looked at in a less light, there are ways that they can contribute positively to BEE, and be in the running for government tenders.

The IRR’s Jeffrey, said there is a group of BEE proponents, who have pushed for many years for the BEE rules to be tightened up in various ways.

That, she said, has happened with changes to the BEE genetic codes happening earlier this year.

“They did say that the 10% weighting on contracts above 1 million was far too little – they believe it needs to be above 50%,” Jeffrey said.

She pointed out that The Department of Trade and Industry (dti) announced in 2014 that it wanted to create 100 black industrialists in the next three years.

“BEE is becoming more narrow-based instead of becoming more broad-based…clearly a small group of beneficiaries are having their way at the cost of the many,” Jeffrey said.

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