A presentation to the National Assembly on 19 MARCH 2003 by Trade and Industry Minister Alec Erwin, dealing with government's broad-based black economic empowerment strategy. The text reads as follows:

May I thank you for this opportunity to address this House. I think that it is appropriate that I inform the House of the progress made by the Government in setting out the policy on Black Economic Empowerment. Today Cabinet adopted the Broad-based Black Economic Empowerment Strategy, as announced by President Mbeki in his opening address in this House on Friday, 14 February 2003.

All comments made by Cabinet are now being incorporated into the final documentation and I will release this on Monday 24th March in Pretoria. The draft Bill will be finalised in the next Cabinet and will then follow the normal course of legislation.

However, let me make some points in anticipation of that more detailed announcement.

The essence of the new strategy can briefly be stated as follows. The strategy outlines government’s policy objectives as well as the policy instruments that government will consistently and predictably use. The policy instruments include:

(i) the formalisation of partnerships and ‘charters’ with the private sector, where this is appropriate;
(ii) the use of a ‘balanced scorecard’ approach to gauging success on the part of enterprises and sectors; and
(iii) an Act that allows for the formalisation of guidelines and codes and the establishment of an Advisory Council.

In addition new financial support measures are introduced and existing financial support is better aligned with the strategy.

In general there will now be considerable information available to all as to the policy intention and approach of the government. The essential elements of the strategy are discussed below.
Defining Broad-Based Black Economic Empowerment

The strategy proposes that BEE should be broad-based and inclusive and 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. This participation should be reflected in both a broadening of the entrepreneurial base and increased participation in managerial, professional and other skilled occupations.

Clear mechanisms are spelt out to ensure that BEE is broad-based and that local communities and employees benefit from the empowerment process.

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. These are factors that are embodied in and have been developed in the Mining Charter.

Black economic empowerment expands beyond political and social obligations. The creation of a more equitable economy is fundamental to the acceleration of South Africa’s economic growth. Empirical studies indicate that egalitarian societies tend to experience greater economic growth. The deracialisation of the economy is therefore essential for political and social stability and economic growth.
Charters and targets

The strategy has at its core the promotion of partnerships between the public and private sector. The partnerships would assist in the formulation of empowerment policies and programmes, as well as the development of workable empowerment financing and institutional arrangements. Sector- and enterprise-based charters are one of the forms that such partnerships could take. Such charters would need to include specific mechanisms to achieve BEE objectives in that sector or enterprise, in a comprehensive and appropriate manner, as well as provide measurement indicators and targets.

With regard to targets, it is proposed that these be set at the appropriate level to ensure accountability. Charters with relevant targets would be encouraged in sectors where Government issues licenses and where Government exercises strong regulatory control. In other sectors, especially the broader manufacturing and service sectors, Government should encourage companies to develop company or enterprise charters.

The Strategy is the culmination of a process that began in 2001. An interdepartmental task team, which was established in 2001 by the co-chairs Employment and Investment cluster co-ordinated input to assist in the development of a BEE Strategy.

It is also informed by the BEE Commission (BEECom) report on an “Integrated National BEE Strategy”, which was submitted to Government in April 2001. Presentations have been made to the Portfolio Committee on Trade and Industry. The BEE Strategy was discussed at Cabinet Makgotla’s in July 2002 and January 2003. Finally, the Strategy Document has been informed by discussions and written input from the following external stakeholders: the Black Business Council; the Black Business Working group; the Big Business Working Group and the Trade and Industry Chamber of the National Economic Development and Labour Council (NEDLAC). I would particularly like to thank business leaders for the well-considered and supportive comments that they have made to my Department as we finalised the documentation.

Between now and the passing of legislation and the formal setting up of the Advisory Council there is a chance to further refine the document and to promote this seminal strategy. I shall convene a task team to provide the kind of invaluable assistance many have provided over the last months.

Once again I thank you for this opportunity and I am sure we all look forward to the work this House will now have to do as we enter a new phase of South Africa’s successful and purposeful economic transformation.