The practice of fronting black economic empowerment (BEE) is unforgivable, President Jacob Zuma said on Thursday.<\/p>\n
Addressing the first national summit on broad-based black economic empowerment (BBBEE) in Midrand, Zuma said “fronting is unforgivable as it distorts our empowerment picture giving an impression of progress where there is none.<\/p>\n
“It is for this reason that we will work hard to prevent and eradicate this practice.”<\/p>\n
Zuma stressed the importance of BBBEE as an integral part of government’s economic policy and economic transformation.<\/p>\n
“It is part of a broader objective of promoting inclusive growth and economic development,” he said.<\/p>\n
“I would like to emphasise as well that economic transformation is not just about big business deals for few individuals in society.”<\/p>\n
BBBEE policy should consistently be implemented across all parts of the economy to ensure maximum impact on as many South Africans as possible.<\/p>\n
A lot of progress had been made since 1993 regarding economic transformation, he said.<\/p>\n
National per capita household income had increased by 40 percent from R27,500 to R38,500 in 2012.<\/p>\n
Disposable income had increased by 43 percent, and total employment by 3.5 million jobs since 1994.<\/p>\n
As a result of these developments the growth of the black middle class had been impressive, from 1.7 million people in 2004 to an estimated 4.2 million in 2012.<\/p>\n
However, while strides had been made, the levels of poverty, inequality, and unemployment were “unacceptable”.<\/p>\n
Annual African household income, at R60,613, was still far lower than white households at R365,164.<\/p>\n
“More importantly, we are yet to see the growth of black industrialists despite government’s aggressive focus on boosting the manufacturing sector,” Zuma said.<\/p>\n
Government would encourage the growth of more Small Medium and Micro Enterprises owned by black people, since “the backbone of any growing economy will depend on the SMMEs sector”.<\/p>\n
It would have a huge impact on job creation and skills development in the economy, Zuma said.<\/p>\n
Black economic empowerment, while important, should not be talked about all the time, otherwise there was a risk of becoming prisoners of the past.<\/p>\n
“We must come to a point where the mention of race [disappears].”<\/p>\n
Earlier, Trade and Industry Minister Rob Davies said that with 2013 marking a decade of BEE legislation, BEE was not only a political imperative but also “a matter of equity” and “economic imperative”.<\/p>\n
South Africa’s prospects of economic growth would be hobbled if the pool of participants remained small.<\/p>\n
“The imperative remains fundamental,” he said.<\/p>\n
Davies cited BBBEE fronting as a significant problem.<\/p>\n
“There was far too much passive shareholding deals,” the minister said.<\/p>\n
“There was significant fronting in this economy.”<\/p>\n
Fronting was essentially a form of fraud, with the small print of complex transactions often stopping empowerment taking place.<\/p>\n
To tackle this problem, a BBBEE commissioner would be established as part of amendments to BBBEE legislation.<\/p>\n
Other amendments would see BBBEE codes revised and the number of categories reduced from seven to five.<\/p>\n
Davies said a strong symbiotic relationship was required between big and small businesses.<\/p>\n
Skills development and ownership were also important, as was lightening the burden on small black-owned businesses.<\/p>\n
To this end, changes to the BBBEE Act would also see the removal of expensive verification processes, to be replaced by an affidavit aluding to a small company being black-owned.<\/p>\n
Vodacom accused of fraud in BEE deal<\/a><\/strong><\/p>\n Bosasa accused of BEE \u201cfronting\u201d: report<\/a><\/strong><\/p>\n