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B-BBEE, the cause of anxiety for EU business in South Africa


Lost in the Covid-19 information minefield was a recent report by the EU - South Africa (EU-SA) Partners for Growth project which warns that the Broad-based Black Economic Empowerment (B-BBEE) codes are not realising South Africa's position as a sustainable and conscious stakeholder in the global economy.

The report titled "Key changes in Broad-Based Black Economic Empowerment (B-BBEE) legislation since 2015 which impact EU businesses in South Africa", said for many companies in South Africa, both local and foreign-owned, responding to the constantly evolving B-BBEE landscape is like “treading water while trying to keep head-above-water”.

Edwin Naidu. Picture:Twitter

Instead, they propose workshops that will hopefully result in fresh empowerment ideas which:

* Recognise and encourage contributions that businesses, especially foreign-owned businesses, can make in terms of skills enhancement to the South African workforce and entrepreneurs.

* Affects a more actionable influence on the successful implementation of the YES initiative.

* Enables legislators to appreciate and draw on the entrepreneurial and technical skills and insights which family-owned businesses are able to share with industry without compromising their ownership, and ultimately contributes to building an investment-conducive climate in South Africa, particularly for SMEs.

B-BBEE is a particular bugbear for the EU business in South Africa, especially smaller family-owned operations for whom giving up ownership in their companies could threaten their survival.

This challenge was raised in a previous review of the investment climate in South Africa by the European Chamber of Commerce and Industry of Southern Africa.

The EU is a major player in the country, boasting 2000 companies with 300000 employees, representing more than 75% of South Africa's total foreign direct investment inward flow of an estimated $1.325 billion (R24.122 billion).

But the rationale for this paper came via an EU Dialogue Facility, which revealed that the 2013 amendments to the B-BBEE codes resulted in downgraded ratings for many companies, including EU companies.

The study said the ownership aspect of the codes remain a challenge for non-listed small EU companies, especially those in family ownership and that while the Equity Equivalent Programmes (EEP’s) are viewed as possible measures by which to respond to the ownership criteria of the codes, these programmes may not be economically viable for many companies, especially new investors and SME’s.

The Broad-Based Black Economic Empowerment Amendment Act became effective in 2014, intending to advance economic transformation and enhance the participation of black South Africans in the economy.

But it is crucial for these policies to strike a balance between attracting foreign investments and achieving a true transformation economy.

The EU-SA Partners for Growth initiative is but one example of a great vehicle with enduring potential to drive transformation but only if it stops being a talk-shop promoting the interests of European businesses.

Vendors involved in the EU-SA project must reflect diversity. That would be a fresh start in a post-Covid-19 world that may bring opportunities.

Naidu is a communication professional and journalist.



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

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