B-BBEE codes: stronger focus on new entrants needed
The Department of Trade and Industry (DTI) is not considering changes to the definition of "new entrants" or any major changes to the ownership element of the Broad-Based Black Economic Empowerment (B-BBEE) scorecard that would serve to make B-BBEE a more effective instrument to broaden participation in the economy.
This was revealed in a presentation to the national B-BBEE Summit yesterday by DTI's Chief Director of the B-BBEE unit, Ms Nomonde Mesatywa, where she provided details of the Codes of Good Practice to be published for implementation on 11 October.
In her presentation Ms Mesatywa confirmed that DTI has not changed its mind on its decision to increase the threshold of the value of equity previously held to qualify as a "new entrant" from R20 million to R50 million.
The DA believes that steps must be taken to ensure that B-BBEE does not become a tool for elite enrichment - we therefore argued for lowering the threshold in the definition of "new entrants" to R10 million and increasing the points that can be earned by involving new entrants and workers in empowerment transactions.
This would prevent the B-BBEE codes from incentivising the enrichment of the already empowered.
President Jacob Zuma yesterday claimed that "economic transformation is not just about big business deals for a few individuals in society". Despite this, the details given on the revisions to the Codes indicate that DTI has not taken serious steps to address one of the key points of criticism against the black economic empowerment process to date - the narrow enrichment of the politically connected.
We live in a society where 41% of the population lives below the poverty line and where 12 million people do not have access to adequate nutrition.
Surely you are not a "new entrant" to the economy when you hold R50 million worth of shares.
When the new version of the Codes is officially published, we will study them in detail. However, all indications are that the recognition for ownership transactions involving new entrants, employee share ownership schemes and designated groups (including unemployed persons) will still only make up 5 out of the 25 points allocated to ownership in the B-BBEE scorecard.
If government was serious about establishing an inclusive economy, it would have made bolder changes to the B-BBEE Codes.
Instead, it is missing a vital opportunity to make a real commitment to making empowerment truly broad-based.
Statement issued by Dr Wilmot James MP, DA Shadow Minister of Trade and Industry, October 4 2013
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