I have been threatening for a while to write something on BEE deals. Here goes.
I don't like BEE deals.
I don't like BEE deals that are done because they are BEE deals. I like deals that are done because there is a real business need and conducted in such a way that all parties involved in the deal participate in the same way that any other merger and acquisition would operate. I don't care who the participants in the deal are.
I can see the benefit for larger corporates doing deals especially listed companies (they've been doing similar types of things for years through share options). SMEs however should steer clear of any deal especially if the business owner does not want to sell anything. A BEE investor/partner who contributes nothing to the deal also doesn't make the experience any better.
Another problem with deals is the fact that it makes it really easy to front. It is the easiest thing in the world to put a black person on the shareholder's certificate and pretend that they are in fact shareholders.
BUT (the best is always left for last). BEE deals have a tendency to hinder capitalist activity. Many BEE deals are dependent on the black investor remaining a shareholder. Mzi Khumalo has shown that he is happy to benefit from these deals but when the time is right he is out of there. And if a deal is constructed in such a way that the new shareholder is not tied into the deal through debt or some other mechanism, then that shareholder must be allowed to alienate these shares whenever they want. Hence the term "doing an Mzi".
Another version of an Mzi was in last week's Business Times. Speculation mounts as to whether some of the beneficiaries in the Elephant Consortium (who did the Telkom deal) have cashed in their shares. Smuts Ngonyama (he who claims he did "not struggle to remain poor") was quoted as saying that the deal was not an empowerment deal, even though Telkom claimed it was.
Robin Woolley summed this who deal thing up by posing the question "How can you expect a capitalist to behave in an anti-capitalist fashion?"
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