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OPINION: Here’s more evidence why BEE will never work – IRR

Biz News / OCTOBER 18, 2017 / Dr Anthea Jeffery

JOHANNESBURG — There have been concerns in South Africa for years now that BEE in its current form is simply not working and merely creating a new, crony elite. The likes of Gupta-linked Trillian (which was incidentally set up and created by several white CAs and traders) has also shone the spotlight on how ‘BEE’ firms are created to merely act as fronts and skim millions of rands from state coffers while doing very little work for it. In this article then, Dr Anthea Jeffery looks at the pitfalls of BEE and she proposes a new form of empowerment that is more broad-based. – Gareth van Zyl

Dr. Anthea Jeffery is Head of Policy Research at the IRR.

A recent research report compiled by independent analysts for the National Treasury shows that foreigners own 38% of the JSE’s market capitalisation, while institutional investors (often in the form of retirement funds) own 48%. Between them, foreigners and South African institutions own 86% of JSE-listed South African companies.

Only 14% of JSE-listed shares are directly owned by individuals, trusts, or firms and are thus (notionally) available for BEE ownership deals. This casts doubt on the practicality of the 25% BEE ownership target in the generic codes, let alone the 30% required by the 2017 mining charter and the 51% demanded by Eskom of its coal suppliers.

As Treasury’s report points out, the retirement funds, long-term insurance firms, and other investment management companies which own 48% of listed shares are also ‘the main vehicles through which millions of ordinary South Africans save for retirement and manage risks to the well-being of the household’.

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LINK - https://www.biznews.com/wealth-building/2017/10/18/evidence-bee-will-never-work/

Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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