FREE DAILY EMAIL

Date : 02/09/2003
Source: Department of Trade and Industry
Title: Erwin: Broad-based Black Economic Empowerment Bill, NA


TRADE AND INDUSTRY MINISTER ALEC ERWIN'S SPEAKING NOTES ON THE BROAD-BASED BLACK ECONOMIC EMPOWERMENT BILL TO BE TABLED IN THE NATIONAL ASSEMBLY, 2 September 2003

Speaker and Colleagues
Heads of Cotii Institutions who will be central in implementing BEE
Members of the Task Team on BEE who have assisted so effectively

The tabling of this Bill in Parliament today is another important step in the economic revolution that the new democratic South Africa has been engaged in since 1994. Structural reform of an economy is not easy and takes time. The legacy of apartheid leaves us with particularly difficult challenges in the development of new enterprises and increasing the depth of participation by black persons in the economy. By restricting skill development; expropriating, land wealth and assets and by restricting business opportunities for the majority colonialism and apartheid laid barren the fields of wealth creation and opportunity for that majority.

Structurally such an economy could never prosper. To grow and develop our country requires an economy that can meet the needs of all our citizens - our people and their enterprises - 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 breadth of this country.

Starting with the RDP we have systematically addressed this legacy. However, it became evident that we had to more systematically address the participation of black people in the mainstream of economic activity and within the corporations and enterprises - including cooperative forms of enterprise - in the economy. This realization led to the formation of the Black Economic Empowerment Council and their path breaking Report. The Broad - Based Black Economic Empowerment Bill (BB BEE Bill) is the outcome of this process.

A policy approach for empowerment is complex and has to balance many economic processes and forces - not all of which make empowerment easy. After careful consideration the framework of the BEE policy was released by the dti, on behalf of government, on the 19th March 2003 and Parliament's Trade and Industry Portfolio Committee adopted the Broad-Based BEE Bill on August 20, 2003. After public hearings we have been able to make a number of important and constructive amendments.

The Bill is in essence enabling legislation that creates a framework for the development and implementation of black economic empowerment policy. It does this by the important mechanisms of the Advisory Council, a Strategy Document, Codes of Good Practice and the publication of Transformation Charters. This is an innovative response to what will be an important learning and developmental process that cannot be held within the tight confines of detailed legislation and regulation but where there is also a need for more certainty and clarity of purpose.

In the hearings there was a concern that the empowerment process must not have too narrow a base of beneficiaries. This is a concern that the government shares but we have to balance this against the fact that the Bill cannot embrace all the programmes and actions introduced by government to redress the iniquity historically imposed on the majority of our people. I believe that the amendments find this balance. The Bill has been amended to ensure that the law targets a broader spectrum of beneficiaries. The concept of empowerment is not one-dimensional and is a process that should result in both higher levels of black ownership as well as the reduction in income inequalities. It should result in effective black participation in the economy reflected in both a broadening of the entrepreneurial base and increased participation in managerial, professional and other skilled occupations.

The BEE process will therefore include elements of human resource development, employment equity, enterprise development, preferential procurement, as well as investment, ownership and control of enterprises and economic assets. I believe that the objectives of the Bill well define the ambit of endeavour of BEE and make it clear that the facilitation of economic possibilities in urban, rural and local communities are part of the concept of broad-based empowerment.

As indicated earlier, the Bill is innovative in that it essentially provides the enabling environment for the implementation of a strategy. The efficacy of the strategy lies in the ability of the government to use its own economic position to shape the behaviour of the private sector in a transparent and co-ordinated manner towards certain objectives. In doing this it works with the market and not against it but in doing so achieves objectives that the market would not achieve or achieve too slowly. There is now a realisation that we will not have growth and development if we cannot ensure that all our citizens are active and meaningful participants in the economy and have equal opportunity for such participation. This allows a common purpose around which the State intervenes in a developmental manner to ensure that the larger collective benefits of growth and development will be generated and shared by all.

This developmental and growth orientated approach is and must be fundamental to our understanding of the process and how we implement it. BEE is not an imposition but the opening of opportunities that the market itself would have inadequately realised. The new Act provides the instruments to implement, monitor and sensibly adjust by consultation as the process unfolds. These instruments are:

* The establishment of a Black Economic Empowerment Advisory Council as an advisory body to allow for stakeholder participation in the formulation, monitoring and implementation of BEE policy
* The ability of the Minister to issue codes of good practice on black economic empowerment that must also be taken into account by organs of state
* The ability of the Minister to issue guidelines for the development of transformation charters by different sectors of the economy. Such charters would need to include specific mechanisms to achieve BEE objectives in that sector in a comprehensive and appropriate manner, as well as provide measurement indicators and targets. The Bill also empowers the Minister to publish in the Gazette the transformation charter for a particular sector of the economy. This is the essence of the scorecard approach
* The publication of the Strategy Document provides a flexible but authoritative vehicle for articulating policy and guiding public and private sector participation in BEE.

Since the publishing of the Strategy Document in March we have already seen many developments, which confirm the wisdom of allowing for a stable but evolving approach. Different forms of ownership participation have emerged, as the scorecard approach unfolds so does the question arise, of how this works over time and we have had to address the varied corporate strategies of large multinationals through to small family owned enterprises - all have to be treated within the same framework but with flexibility that accords with their economic positions. We have a very diverse economy and a very sophisticated one at that. The need for the public sector to be more uniform in its approach has emerged strongly. In all this we have to continuously balance the need for certainty with that of being flexible in the face of commercial and financial good sense.

In the financing of BEE there have also been new approaches. As we indicated in the Strategy Document financing of BEE must also deal with some of the macro aspects of the capital market. This requires us to co-ordinate our efforts and ensure that we have the right products for the purpose. The IDC has done good work on this and new products will become available. In the dti we have had a fresh look at the NEF and it too will make certain new products available that complement those of the IDC and the private sector. I am pleased to announce that Sydney Maree has agreed to take up the acting CEO position to complete this process. We are therefore confident that we can manage a process that leverages in private sector financing in a manner that is sustainable and that promotes growth and stable capital markets.

I believe that within the private sector we now have a sense of common purpose that this is a common task that we must all embark upon for our common good. There has been a flood of approaches and initiatives that government has been asked to comment on. Multinational companies as a whole and often by their national origin have considered BEE and are making constructive and exciting inputs. The Oppenheimer Family has had the courage of their convictions and made concrete proposals in public to advance the process - the 'Brenthurst Initiative'. As one would expect and welcome in South Africa there have been intense debates on the politics and efficacy of government's approach.

I want to stress once again that what drives our policy is that equity and participation by all are the real drivers of growth and development. It is growth and development that are the final nail in the coffin of apartheid and the first in building a new and prosperous democracy. Hard work and goodwill are required to build a strong, non-racial, non-sexist, equitable and sustainable economy. There are no magic formulae or quick fixes only the determination and vision of our people.

I would like to express the gratitude of the government to the Black Economic Empowerment Council, Chaired by Cyril Ramaphosa, for their pioneering work and commitment to this worthy cause. Many have continued to work hard in the Task Team to which the dti and government owe so much. I would like to thank the Portfolio Committee under Dr Rob Davies who once again has done their work with professionalism and insight. I really don't know what the dti would have done without such a fine committee. Finally thanks from the Deputy Minister and myself to the team in the dti, led by Lionel October and Philisiwe Buthelezi for their tireless and intellectually thorough commitment to the purpose of this Bill.

We are adding another crucial dimension to the programmes of economic transformation and restructuring that will ensure our future. I commend this Bill to the House.

Published: 3 September 2003
Source: Department of Trade and Industry (http://www.dti.gov.za)

SPONSORED BY

Advanced