Date: 11/03/2004
Source: Ministry of Trade and Industry
Title: L Hendricks: BEE symposium
KEYNOTE ADDRESS BY DEPUTY MINISTER OF TRADE AND INDUSTRY, LINDIWE HENDRICKS, AT THE BEE SYMPOSIUM, KWAZULU-NATAL, 11 March 2004
Programme Director
Mayor Mlaba
MEC Burrows
Chairperson of the Durban Investment Promotion Agency, Mr Don Mkhwanazi
Ladies and gentlemen
Congratulations to the KwaZulu-Natal Department of Economic Development and Tourism for organising this symposium and exhibition. It is important for all stakeholders to know their role in the implementation of the black economic empowerment (BEE) strategy and the impact of the legislation. It is necessary for all provinces to familiarise their business communities and stakeholders about BEE.
BEE is an area that is of critical importance for our country and for the future success of the South African economy. It is an imperative for us to implement BEE in South Africa, as it is necessary for us to transform our economy. BEE is not something that we have to apologise for as it makes economic sense to have black economic empowerment and grow the number of people who participate in our economy. It is therefore a subject that cannot be divorced from economic growth, job creation and greater equality in our country and should be embraced by all South African's. It is also an area that is closely linked to small business development and entrepreneurship in South Africa.
Over the past ten years we have seen an increase in BEE taking place in South Africa, however, there is a perception that this empowerment has only been enriching a few individuals through ownership stakes. While I do not believe that this is true, it is certainly the large BEE deals that take prominence and receive the most media attention. What is clear to us in government is that whether it is perception or reality that BEE is only about ownership stakes in large companies, this situation must change. The promulgation of the Broad Based BEE Bill and the implementation of the terms of this piece of legislation will go a long way to ensure that in South Africa there is greater participation in black economic empowerment.
While the details of the BEE Act will be unpacked during the course of this conference, I would briefly like to cover the main aspects of this Act. In short, the Act formally expands the approach to BEE so that it is broader and encompasses the areas of ownership, management, human resource development, procurement, women empowerment and where applicable, beneficiation. The Act uses a scorecard approach so that targets can be set and can then be measured in each of these areas. Certain sectors and industries will be required to comply with the terms of the Act by developing sector charters, whereas other sectors will voluntarily develop their own sector charters. These charters are important because they outline the issues for effective transformation of the sector, how BEE will be implemented and the targets for transformation.
This approach is proving to be effective as we are already seeing sector charters in the financial service sector, the mining sector, the oil and energy sector and the information and communication technology sector. Other sectors such as wine and sugar, the auto industry, and the construction sector, have made substantial progress in the negotiation of their sector charters. Certain sectors that are directly affected by this legislation have not even started drafting their charter - they will soon find out that we are serious about BEE.
In the implementation of these sector charters there will be opportunities for black owned businesses across the board. This will take place because of the procurement aspect of the sector charters, which will see greater opportunities being created for black small and medium enterprises to become suppliers in these sectors.
There is clearly only a certain number of people who will benefit from the ownership aspects of black economic empowerment, yet when we take into consideration the procurement, human resource development, management and beneficiation aspects of BEE then the scope for BEE in South Africa becomes very broad.
Furthermore, BEE should not only be seen in the context of transforming existing sectors rather it should be seen as the empowerment of black people through the creation of new enterprises in new and existing sectors. Therefore BEE is not only about the legislation that was signed by the President earlier this year, rather it is about the whole approach to how the government is managing the economy and creating an enabling environment for businesses, especially black businesses, in South Africa. If you look at policies and laws passed since 1994 you will see that economic empowerment did not start last year when the BEE strategy was unveiled.
The government's approach to the creation of an enabling environment for business has seen amongst other things, priority given to macro-economic stability, low inflation rates, low interest rates, a reduction in regulations to start a new business, an improved tax environment for small businesses, a number of incentives offered by government departments such as the dti to businesses, and many support programmes to assist with the development of small businesses. The impact of these measures has seen our economy growing by on average 2.8% per year since 1994; over 100 000 new companies being registered per year, which is more businesses registering than ever before; and South Africa receiving international accolades for the ease of doing business in our country.
Another intervention by the government, which is well suited to BEE, is targeting the establishment and growth of new industries. For example, there are increasing opportunities being created in the call centre industry, in the biotechnology industry, as well as in the aeronautics industry. These nascent industries were very small industries in South Africa a few years ago yet today they are high growth areas that are attracting large amounts of new investment.
By targeting new industries as well as ensuring that there is a positive and stable environment for business; the government is creating the environment where black businesses can flourish and new industries where black businesspeople can establish a name for themselves. In addition the government has created specific support programmes for black enterprises such as the National Empowerment Fund (NEF).
The NEF was established for the express purpose of addressing the lack of finance for black economic empowerment and is correcting a market failure of insufficient private capital being made available to BEE firms and ventures. It is targeted at black people taking ownership stakes in unlisted companies and state owned enterprises that are being privatised as well as providing finance to new business ventures that will create jobs and promote women's empowerment. The products that the NEF offers take the form of venture capital and private equity.
The assumption and one of the underlying premises behind our policies is that more black people will start new businesses to take advantage of the opportunities that are being created in our economy, as just taking ownership in existing enterprises and occupying management positions in existing companies are insufficient means to achieve successful BEE and are not broad based.
Programme director, ladies and gentlemen, BEE should be seen as an agreement or contract between Government, the private sector and black entrepreneurs that will lead to effective transformation of our economy. The negotiation of this BEE contract has been extensive; it was not something that someone did one day at their computer, nor was it given to a firm of consultants to draft; BEE is far to important for that and the agreements that were reached on how to implement BEE in South Africa have taken years of negotiation by the parties themselves.
Like any contract, in order for it to be effective, there needs to be clear understanding from all parties involved in what the contract entails and how the contract will be executed. I have already outlined a large portion of the delivery expected by the government under this contract; and through the BEE Bill and the sector charters, it is clear what the role of the private sector is in the contract. I would now like to turn my attention to the role of the third party to this contract and that is black entrepreneurs.
The role of black entrepreneurs, for me, is quite clear and that is to take advantage of the many opportunities that are being created in South Africa. By taking advantage of these opportunities, starting new enterprises and creating new wealth, black entrepreneurs will not only become empowered but will also contribute to the growth of our economy, greater equality in our society and the creation of new jobs.
The BEE opportunities that I refer to here are not about black people acting as fronts for white firms. The guidelines and codes of good practice that are being prepared by the Minister of Trade and Industry will deal with this problem of fronting. BEE is also not about gatekeepers who exclude others from participating in BEE deals. Gate keeping will defeat the broad based requirements of BEE and will therefore not be accepted.
Rather BEE is about those companies that have already been empowered finding ways and means to plough back and support up-and-coming black businesses through procurement, venture capital, offering guarantees and mentorship.
Finally, BEE is about addressing the two economies that co-exist in our country so that over time the people in the second economy are brought into the first economy and our society becomes more equal.
To conclude, as we celebrate the first decade of freedom let us ensure that the next decade will bring about economic freedom for the masses of black people.
Issued by: Ministry of Trade and Industry
11 March 2004
Source: Ministry of Trade and Industry
Title: L Hendricks: BEE symposium
KEYNOTE ADDRESS BY DEPUTY MINISTER OF TRADE AND INDUSTRY, LINDIWE HENDRICKS, AT THE BEE SYMPOSIUM, KWAZULU-NATAL, 11 March 2004
Programme Director
Mayor Mlaba
MEC Burrows
Chairperson of the Durban Investment Promotion Agency, Mr Don Mkhwanazi
Ladies and gentlemen
Congratulations to the KwaZulu-Natal Department of Economic Development and Tourism for organising this symposium and exhibition. It is important for all stakeholders to know their role in the implementation of the black economic empowerment (BEE) strategy and the impact of the legislation. It is necessary for all provinces to familiarise their business communities and stakeholders about BEE.
BEE is an area that is of critical importance for our country and for the future success of the South African economy. It is an imperative for us to implement BEE in South Africa, as it is necessary for us to transform our economy. BEE is not something that we have to apologise for as it makes economic sense to have black economic empowerment and grow the number of people who participate in our economy. It is therefore a subject that cannot be divorced from economic growth, job creation and greater equality in our country and should be embraced by all South African's. It is also an area that is closely linked to small business development and entrepreneurship in South Africa.
Over the past ten years we have seen an increase in BEE taking place in South Africa, however, there is a perception that this empowerment has only been enriching a few individuals through ownership stakes. While I do not believe that this is true, it is certainly the large BEE deals that take prominence and receive the most media attention. What is clear to us in government is that whether it is perception or reality that BEE is only about ownership stakes in large companies, this situation must change. The promulgation of the Broad Based BEE Bill and the implementation of the terms of this piece of legislation will go a long way to ensure that in South Africa there is greater participation in black economic empowerment.
While the details of the BEE Act will be unpacked during the course of this conference, I would briefly like to cover the main aspects of this Act. In short, the Act formally expands the approach to BEE so that it is broader and encompasses the areas of ownership, management, human resource development, procurement, women empowerment and where applicable, beneficiation. The Act uses a scorecard approach so that targets can be set and can then be measured in each of these areas. Certain sectors and industries will be required to comply with the terms of the Act by developing sector charters, whereas other sectors will voluntarily develop their own sector charters. These charters are important because they outline the issues for effective transformation of the sector, how BEE will be implemented and the targets for transformation.
This approach is proving to be effective as we are already seeing sector charters in the financial service sector, the mining sector, the oil and energy sector and the information and communication technology sector. Other sectors such as wine and sugar, the auto industry, and the construction sector, have made substantial progress in the negotiation of their sector charters. Certain sectors that are directly affected by this legislation have not even started drafting their charter - they will soon find out that we are serious about BEE.
In the implementation of these sector charters there will be opportunities for black owned businesses across the board. This will take place because of the procurement aspect of the sector charters, which will see greater opportunities being created for black small and medium enterprises to become suppliers in these sectors.
There is clearly only a certain number of people who will benefit from the ownership aspects of black economic empowerment, yet when we take into consideration the procurement, human resource development, management and beneficiation aspects of BEE then the scope for BEE in South Africa becomes very broad.
Furthermore, BEE should not only be seen in the context of transforming existing sectors rather it should be seen as the empowerment of black people through the creation of new enterprises in new and existing sectors. Therefore BEE is not only about the legislation that was signed by the President earlier this year, rather it is about the whole approach to how the government is managing the economy and creating an enabling environment for businesses, especially black businesses, in South Africa. If you look at policies and laws passed since 1994 you will see that economic empowerment did not start last year when the BEE strategy was unveiled.
The government's approach to the creation of an enabling environment for business has seen amongst other things, priority given to macro-economic stability, low inflation rates, low interest rates, a reduction in regulations to start a new business, an improved tax environment for small businesses, a number of incentives offered by government departments such as the dti to businesses, and many support programmes to assist with the development of small businesses. The impact of these measures has seen our economy growing by on average 2.8% per year since 1994; over 100 000 new companies being registered per year, which is more businesses registering than ever before; and South Africa receiving international accolades for the ease of doing business in our country.
Another intervention by the government, which is well suited to BEE, is targeting the establishment and growth of new industries. For example, there are increasing opportunities being created in the call centre industry, in the biotechnology industry, as well as in the aeronautics industry. These nascent industries were very small industries in South Africa a few years ago yet today they are high growth areas that are attracting large amounts of new investment.
By targeting new industries as well as ensuring that there is a positive and stable environment for business; the government is creating the environment where black businesses can flourish and new industries where black businesspeople can establish a name for themselves. In addition the government has created specific support programmes for black enterprises such as the National Empowerment Fund (NEF).
The NEF was established for the express purpose of addressing the lack of finance for black economic empowerment and is correcting a market failure of insufficient private capital being made available to BEE firms and ventures. It is targeted at black people taking ownership stakes in unlisted companies and state owned enterprises that are being privatised as well as providing finance to new business ventures that will create jobs and promote women's empowerment. The products that the NEF offers take the form of venture capital and private equity.
The assumption and one of the underlying premises behind our policies is that more black people will start new businesses to take advantage of the opportunities that are being created in our economy, as just taking ownership in existing enterprises and occupying management positions in existing companies are insufficient means to achieve successful BEE and are not broad based.
Programme director, ladies and gentlemen, BEE should be seen as an agreement or contract between Government, the private sector and black entrepreneurs that will lead to effective transformation of our economy. The negotiation of this BEE contract has been extensive; it was not something that someone did one day at their computer, nor was it given to a firm of consultants to draft; BEE is far to important for that and the agreements that were reached on how to implement BEE in South Africa have taken years of negotiation by the parties themselves.
Like any contract, in order for it to be effective, there needs to be clear understanding from all parties involved in what the contract entails and how the contract will be executed. I have already outlined a large portion of the delivery expected by the government under this contract; and through the BEE Bill and the sector charters, it is clear what the role of the private sector is in the contract. I would now like to turn my attention to the role of the third party to this contract and that is black entrepreneurs.
The role of black entrepreneurs, for me, is quite clear and that is to take advantage of the many opportunities that are being created in South Africa. By taking advantage of these opportunities, starting new enterprises and creating new wealth, black entrepreneurs will not only become empowered but will also contribute to the growth of our economy, greater equality in our society and the creation of new jobs.
The BEE opportunities that I refer to here are not about black people acting as fronts for white firms. The guidelines and codes of good practice that are being prepared by the Minister of Trade and Industry will deal with this problem of fronting. BEE is also not about gatekeepers who exclude others from participating in BEE deals. Gate keeping will defeat the broad based requirements of BEE and will therefore not be accepted.
Rather BEE is about those companies that have already been empowered finding ways and means to plough back and support up-and-coming black businesses through procurement, venture capital, offering guarantees and mentorship.
Finally, BEE is about addressing the two economies that co-exist in our country so that over time the people in the second economy are brought into the first economy and our society becomes more equal.
To conclude, as we celebrate the first decade of freedom let us ensure that the next decade will bring about economic freedom for the masses of black people.
Issued by: Ministry of Trade and Industry
11 March 2004
Advertisement
EMAIL THIS ARTICLE SAVE THIS ARTICLE FEEDBACK
To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
