Date: 18/08/2004
Source: Ministry of Minerals and Energy
Title: L Xingwana: Afrikaanse Handelsinstituut Board of Trustees
ADRESS BY THE DEPUTY MINISTER OF MINERALS AND ENERGY, LULU XINGWANA, TO THE AFRIKAANSE HANDELSINSTITUUT BOARD OF TRUSTEES, Hyde Park, Johannesburg, 18 August 2004.
Master of Ceremonies
Chairperson of the AHI Board of Trustees,
Dr Franklin Sonn,
Distinguished guests,
Ladies and gentlemen.
It is indeed my pleasure and honour to be standing here today, to address you on the implementation of Black Economic Empowerment.
Perhaps it would be more appropriate for me to start by taking you back to the reason behind this transformation imperative called BEE. It is crucial to understand the magnitude of what took place in our past in order to understand why we need to act together as a nation to bring about an economic transformation in the interest of all.
Apartheid systematically and purposefully restricted the majority of South Africans from meaningful participation in the economy. The accumulation process under this "monster" confined the creation of wealth to a racial minority and imposed underdevelopment on black communities. The result is an economic structure that today, in essence still excludes the majority of South Africans.
The South African constitution emphasises the need to effect redress in the interest of equity, and that is what the Broad Based Black Economic Empowerment Policy and Strategy are set out to do. Vast racial and gender inequalities in the distribution and access to wealth, income, skills and employment persists. As a consequence, our economy continues to perform below its full potential, since such societies entrenched by gender inequality or racially and/or ethnically defined wealth disparities are not likely to be socially and politically stable.
Systematic disempowerment not only resulted in a landless black majority with restricted access to skills development, but also deliberately prohibited black people from generating self-employment and entrepreneurship. Blacks were deprived of valuable business opportunities in the following ways:
* The majority were confined to homelands, which lacked a dynamic business infrastructure and environment
* Racially segregated areas enforced through the Group Areas Act not only uprooted millions from their places of residence but also let to large capital losses and virtually destroyed the fabric of small enterprises
* The curtailment of property ownership rights of blacks made it impossible for them to acquire assets that could serve as collateral for loan financing.
As if these were not enough, a job reservation policy was reinforced by a vastly inferior education system for black learners and this had devastating effect on technical and science skills. Only a minority of blacks could gain access to higher education. I remember vividly that in order for a black person to study engineering, permission had to be obtained from the Minister. Now, I am sure that you all know the odds of the poor applicant being granted that permission, suffice to say that due to inadequacies in the teaching of mathematics and sciences in black schools, he wouldn't even make the grade. I am specifically referring to the black person as a he, because the female species had it even more difficult. Not only did the apartheid regime make it difficult for us, we also had to face the wrath of society and family, "a woman's place is in the kitchen, so the saying goes. The scenario I have just painted was also to blame for the displacement of these poorly equipped black people when the South African economy adjusted in the 1990's to re-enter the global market. So, the struggle continued.
Enough said about this said history of black people in this county, I would like to move on to the present, and what government sees as the future of this country in as far as including the historically disadvantaged individuals in the economic mainstream is concerned.
Government defines BEE as an integrated coherent socio-economic process that directly contributes to the economic transformation of South Africa, and brings about significant increases in the numbers of black people that manage, own and control the countries economy, as well as significant decreases in income inequalities.
The policy objectives of BEE are as follows:
* A substantial increase in the number of black people who have ownership and control of existing and new enterprises. That is the reason why we see different charters outlining percentages for the different enterprises
* These sectors include agriculture and agro processing, mining, minerals and metals beneficiation, clothing and textiles, automobiles, information and communication technology sector, etc
* A significant increase in the number of new black enterprises, black-empowered enterprises and black-engendered enterprises (It is women's month, and I am a woman so I dare not forget that BEE initiatives need to be engendered)
* A significant increase in a number of blacks in executive and senior management of these enterprises
* An increasing proportion of the ownership and management of economic activities vested in community and broad based enterprises (such as employee trusts, community trusts, trade unions, etc) and co-operatives.
The BEE strategy is underpinned by the following key principles:
It has to be broad based. This is the only way that the de-racialisation of the South African economy can be accelerated. The strategy does not support nor promote the enriching a few 'BEE gentlemen' going by the term 'oligarchs'. BEE is an inclusive process, meaning all sectors operational and thriving in South Africa should and must, participate in the process.
* It must be associated with, and ensure the highest standards of governance and most importantly, it is part of South Africa's growth strategy. This strategy thus emphasises that BEE is not merely redistribution of existing wealth.
* Policy instruments to achieve BEE
After passing of a Broad-Based Black Empowerment Bill to establish an enabling framework for the promotion of BEE in South Africa, government will now utilise various regulatory means to achieve its objectives on BEE. The scorecard was introduced to measure three core elements of BEE, which are: direct empowerment through ownership of businesses and assets, human resource development and preferential procurement.
The restructuring of state-owned enterprises is another way for government to ensure the transfer or sale of an equity stake in a state-owned enterprise. Preferential procurement is another way in which government will enhance the impact of BEE. Government will ensure that its supplier development programmes are expanded to ensure more black enterprises are created and are able to meet the requirements of purchases in the public sector.
An important instrument is institutional support, an instrument I think your organisation can feature in, to assist black business especially SMME. Through your different structures, you can take them by the hand and help them prosper.
Your organisation can also spread the word about what South Africa's capabilities are. You can assist in building a positive image for South Africa, to give the competitive edge necessary to attract foreign direct investment and retaining existing investors. As a young democracy, South Africa needs your support to build it into a thriving economy. Your involvement at this stage will decide the kind of future the country will have.
You could also ensure that new entrepreneurs gain the skills and expertise they need to make their business thrive. Access to finance is also an area you could assist them in. As your objectives state, you could enable your members to utilise business opportunities in this changing environment and promote the economic interest of members and broad business community. Through your specialised committees, you should identify what it is you can do to advance BEE.
We all know how the Afrikaners managed to get into the economic mainstream, institutions like this one played a huge role in that, and we will be looking up to you to do the same this time.
I thank you
Issued by: Ministry of Minerals and Energy
18 August 2004
Source: Department of Minerals and Energy (http://www.dme.gov.za)
Source: Ministry of Minerals and Energy
Title: L Xingwana: Afrikaanse Handelsinstituut Board of Trustees
ADRESS BY THE DEPUTY MINISTER OF MINERALS AND ENERGY, LULU XINGWANA, TO THE AFRIKAANSE HANDELSINSTITUUT BOARD OF TRUSTEES, Hyde Park, Johannesburg, 18 August 2004.
Master of Ceremonies
Chairperson of the AHI Board of Trustees,
Dr Franklin Sonn,
Distinguished guests,
Ladies and gentlemen.
It is indeed my pleasure and honour to be standing here today, to address you on the implementation of Black Economic Empowerment.
Perhaps it would be more appropriate for me to start by taking you back to the reason behind this transformation imperative called BEE. It is crucial to understand the magnitude of what took place in our past in order to understand why we need to act together as a nation to bring about an economic transformation in the interest of all.
Apartheid systematically and purposefully restricted the majority of South Africans from meaningful participation in the economy. The accumulation process under this "monster" confined the creation of wealth to a racial minority and imposed underdevelopment on black communities. The result is an economic structure that today, in essence still excludes the majority of South Africans.
The South African constitution emphasises the need to effect redress in the interest of equity, and that is what the Broad Based Black Economic Empowerment Policy and Strategy are set out to do. Vast racial and gender inequalities in the distribution and access to wealth, income, skills and employment persists. As a consequence, our economy continues to perform below its full potential, since such societies entrenched by gender inequality or racially and/or ethnically defined wealth disparities are not likely to be socially and politically stable.
Systematic disempowerment not only resulted in a landless black majority with restricted access to skills development, but also deliberately prohibited black people from generating self-employment and entrepreneurship. Blacks were deprived of valuable business opportunities in the following ways:
* The majority were confined to homelands, which lacked a dynamic business infrastructure and environment
* Racially segregated areas enforced through the Group Areas Act not only uprooted millions from their places of residence but also let to large capital losses and virtually destroyed the fabric of small enterprises
* The curtailment of property ownership rights of blacks made it impossible for them to acquire assets that could serve as collateral for loan financing.
As if these were not enough, a job reservation policy was reinforced by a vastly inferior education system for black learners and this had devastating effect on technical and science skills. Only a minority of blacks could gain access to higher education. I remember vividly that in order for a black person to study engineering, permission had to be obtained from the Minister. Now, I am sure that you all know the odds of the poor applicant being granted that permission, suffice to say that due to inadequacies in the teaching of mathematics and sciences in black schools, he wouldn't even make the grade. I am specifically referring to the black person as a he, because the female species had it even more difficult. Not only did the apartheid regime make it difficult for us, we also had to face the wrath of society and family, "a woman's place is in the kitchen, so the saying goes. The scenario I have just painted was also to blame for the displacement of these poorly equipped black people when the South African economy adjusted in the 1990's to re-enter the global market. So, the struggle continued.
Enough said about this said history of black people in this county, I would like to move on to the present, and what government sees as the future of this country in as far as including the historically disadvantaged individuals in the economic mainstream is concerned.
Government defines BEE as an integrated coherent socio-economic process that directly contributes to the economic transformation of South Africa, and brings about significant increases in the numbers of black people that manage, own and control the countries economy, as well as significant decreases in income inequalities.
The policy objectives of BEE are as follows:
* A substantial increase in the number of black people who have ownership and control of existing and new enterprises. That is the reason why we see different charters outlining percentages for the different enterprises
* These sectors include agriculture and agro processing, mining, minerals and metals beneficiation, clothing and textiles, automobiles, information and communication technology sector, etc
* A significant increase in the number of new black enterprises, black-empowered enterprises and black-engendered enterprises (It is women's month, and I am a woman so I dare not forget that BEE initiatives need to be engendered)
* A significant increase in a number of blacks in executive and senior management of these enterprises
* An increasing proportion of the ownership and management of economic activities vested in community and broad based enterprises (such as employee trusts, community trusts, trade unions, etc) and co-operatives.
The BEE strategy is underpinned by the following key principles:
It has to be broad based. This is the only way that the de-racialisation of the South African economy can be accelerated. The strategy does not support nor promote the enriching a few 'BEE gentlemen' going by the term 'oligarchs'. BEE is an inclusive process, meaning all sectors operational and thriving in South Africa should and must, participate in the process.
* It must be associated with, and ensure the highest standards of governance and most importantly, it is part of South Africa's growth strategy. This strategy thus emphasises that BEE is not merely redistribution of existing wealth.
* Policy instruments to achieve BEE
After passing of a Broad-Based Black Empowerment Bill to establish an enabling framework for the promotion of BEE in South Africa, government will now utilise various regulatory means to achieve its objectives on BEE. The scorecard was introduced to measure three core elements of BEE, which are: direct empowerment through ownership of businesses and assets, human resource development and preferential procurement.
The restructuring of state-owned enterprises is another way for government to ensure the transfer or sale of an equity stake in a state-owned enterprise. Preferential procurement is another way in which government will enhance the impact of BEE. Government will ensure that its supplier development programmes are expanded to ensure more black enterprises are created and are able to meet the requirements of purchases in the public sector.
An important instrument is institutional support, an instrument I think your organisation can feature in, to assist black business especially SMME. Through your different structures, you can take them by the hand and help them prosper.
Your organisation can also spread the word about what South Africa's capabilities are. You can assist in building a positive image for South Africa, to give the competitive edge necessary to attract foreign direct investment and retaining existing investors. As a young democracy, South Africa needs your support to build it into a thriving economy. Your involvement at this stage will decide the kind of future the country will have.
You could also ensure that new entrepreneurs gain the skills and expertise they need to make their business thrive. Access to finance is also an area you could assist them in. As your objectives state, you could enable your members to utilise business opportunities in this changing environment and promote the economic interest of members and broad business community. Through your specialised committees, you should identify what it is you can do to advance BEE.
We all know how the Afrikaners managed to get into the economic mainstream, institutions like this one played a huge role in that, and we will be looking up to you to do the same this time.
I thank you
Issued by: Ministry of Minerals and Energy
18 August 2004
Source: Department of Minerals and Energy (http://www.dme.gov.za)
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