Paul Janisch

BEE coming to an end? Not likely

There have been a few articles in the business and other press suggesting that BEE is going to be put on hold or perhaps its lifespan will be shortened.  Typical headlines  - "BEE may lose out on 2010 contracts." (Sunday Times, Business Times 30 July, 2006); "No more special treatment for local companies tendering for government work - Growth before BEE, says Erwin", (Business Day, 15 July, 2006); "Is it the beginning of the end of BEE?" (Engineering News, 21 July, 2006).

These three articles refer to the development of infrastructure that South Africa requires within the next few years.  This urgency is made more pressing with the upcoming FIFA World Cup and South Africa's promises and guarantees to FIFA.  The work has to be completed quickly and in the most cost effective way with the highest possible levels of quality.  And if local contractors are unable to deliver then Erwin has suggested that he will outsource the work to overseas contractors.  Government's first prize would be to use black-owned contractors, but if there aren't enough then they must look elsewhere.

This does not mean that government is going to cut back on its broad-based BEE programme.  They can't afford to.  The object of BEE is to narrow the gap between the first and second economies, if the programme is discontinued South Africa will be in bigger trouble than Zimbabwe.

Don't put your BEE process on hold because of this, you will still need to demonstrate your BBBEE status.

Sunday Times "Grape Vine"

Marcia Klein wrote a paragraph on so called Broad-based BEE deals called "Broad-based my foot", in today's Sunday Times (30 July, 2006 - page 24 of the Business Times).  She suggests the time has come to take a cynical approach to these BEE deals that extend ownership to a larger section of the population in the name of "broad-based BEE".  The reality is that it's still the same old same olds who are really benefiting.  This doesn't come as a surprise at all, these same olds have cash and clout and are very attractive to business owners concluding the deals.   

It is sometimes interesting to figure out exactly what these broad-based beneficiaries stand to get out of the deal.  A recent deal revealed that in ten years time each of the smaller beneficiaries would get out something like R3000.  This really is a joke and the sooner companies doing deals realise this the better. 

Surely the money spent on the deals (sometimes in the billions) would be better used under enterprise development and corporate social investment.