Positive discrimination
October 4, 2013
Speaking at a two day Broad-based Economic Empowerment (BEE) summit in Johannesburg, President Jacob Zuma said his country is ready to further boost its economy, this time by opening the doors to more black industrialists. Zuma said his government is planning to provide mentorship programs and financial assistance to previously disadvantaged black businesses.
Addressing delegates at the BEE, President Zuma also said the current BEE Act has been amended to ensure that black businesses have the same opportunities as their white counterparts.
The Act, which dates back to 2003, aims to redress the inequalities of apartheid by giving disadvantaged groups, including blacks, Indians and coloreds, economic privileges previously not available to them.
"It is important therefore, to underline that Broad-based Economic Empowerment is an integral part of our economic policies and economic transformation. It is part of a broader objective of promoting inclusive growth and economic development." Zuma said.
Zuma told the summit that since South Africa achieved its independence in 1994, BEE transactions worth $60 billion (44 billion euros) have been made. He added that in the past financial year, the National Empowerment Fund assisted black businesses to the tune of $500 million and created hundreds of jobs in the process.
Bureaucracy and corruption as hurdles
The BEE national summit aims to evaluate progress made and chart the way forward for the next phase. However, BEE delegates said bureaucracy is among a number of challenges facing the black empowerment program. It is still very difficult for them to access financial assistance from the government.
They also pointed out that the $4,000 required for small businesses to be granted BEE status was a huge setback.
Speaking to DW, Sandile Zungu, a member of the Black Business Council in South Africa, said the biggest of all challenges is that of un-deserving companies using unfair means to get BEE privileges.
"There is what is called simplistic fronting, where you take a gardener and make him a director of a company, and then say this company of yours is black owned, but the gardener will never see the dividends. In actual fact you get him fired before he gets anything, that's crude fronting," Zungu explained.
Corruption is also a big problem, said Jordan Hill, shadow minister of trade and industry from the Democratic Alliance, the official opposition party in South Africa.
"We have seen examples of deals in the past where one well-connected leader will make tens of millions of Rands and the other shareholders, the so called black broad-based elements will make a few hundred Rands out of the deal, to re-empower a few extremely wealthy individuals who are well connected," said Hill.
In response to these criticisms, the government in turn announced plans for swift measures to deal with the challenges facing the black empowerment program.
It revealed that the amendment of the BEE Act would include clauses that will criminalize fronting and allow for a commission to be set up that will monitor and safeguard the objectives of the program.