The debate on whether BEE is a practical way of redressing inequalities perpetuated by the legacy of apartheid continues to rage on in different forums, and apparently there is no consensus.
While the people while their time debating and the gap between the rich and poor continues yawning, Dr. Anthea Jeffery, Head of Policy and Research at IRR, offers practical solutions to addressing the worsening lot of the Previously Disadvantaged Individuals (PDI). She suggests that BEE should be completely scrapped for Economic Empowerment of the Disadvantaged (EED), which she believes will actually be a feasible alternative.
Under these revised codes, Jeffery sees qualifying small enterprises (QSEs) – now redefined as firms with annual turnover of between R10m and R50m – regardless of the owners’ race – feeling the impact of the cost of compliance on the balance sheet.
The author of the first comprehensive book on empowerment policies, entitled BEE: Helping or Hurting? says: “Instead, BEE codes for QSEs – and larger enterprises too – need to be scrapped in their entirety and replaced by a non-racial system of ‘economic empowerment for the disadvantaged’ or ‘EED’.”
South Africans of all races agree that there is a need to expand opportunities for the truly disadvantaged, Jeffery notes.
“BEE was supposed to do this, but it has not succeeded. Like other affirmative action measures all around the world, it helps the top 15% and bypasses the remaining 85%. Worse still, it harms that 85% by promoting crony capitalism and helping to choke off investment, growth, and jobs.
“BEE has been tried; and BEE has failed. It is time to replace with it EED – and a rising tide of rapid economic growth that will far more swiftly lift all boats,” she says.
In the EDD voluntary new system, Jeffery suggests, points will be available to firms in the following circumstances, for example:
- Rapid economic growth, rather than redistribution, will be the overriding policy priority. To help promote growth, firms will earn EED points for all direct investments made and corporate taxes paid;
- Labour laws will be re-oriented to help the jobless gain access to employment. Firms will earn EED points for every job they sustain or generate from year to year;
- Schools will come under community control and parents will be given state-funded education vouchers so they can send their children to the schools of their choice. Firms will earn EED points for ‘topping up’ these education vouchers or donating directly to schools;
- School leavers will be given state-funded vouchers for university or technical education. Firms will earn EED points for topping up these vouchers or donating to the relevant institutions;
- State-owned enterprises will be sold off to the private sector to help overcome the electricity crisis, expand essential infrastructure, promote competition, and bring down costs. Firms will earn EED points for infrastructure successfully and timeously brought on-stream;
- Entrepreneurship will be promoted via a venture capital fund with monies from both the State and the private sector. Aspirant entrepreneurs will be given state-funded vouchers for training in financial management and other essential skills. Firms will earn EED points for contributing to venture capital funds or topping up these training vouchers.
