There are a number of black commentators who are not in favour of bolshie bob's new amendments. I spoke about Andile Khumalo's article in the Sunday Times a few months ago. We now have an opinion in one of oddball's publications written by Karabo Mashugane. I don't read surve's newspapers or online publication at all. However I have a rather old Google Words search for BEE and this article came up. Mashugane comes from a small business perspective, his concern is that the promotion of large businesses to higher BEE levels because of their black ownership will have an impact on smaller business. He laments both the instant promotion and the fact that the new proposed amendments allow for all significantly black owned businesses to become enterprise and supplier development beneficiaries irrespective of size. He very correctly observes that
Enhanced recognition has been roundly criticised for sending empowerment back to pre-2007, when BEE consisted of issuing shares to the politically connected and not much more. The amendment gives the impression that black people, no matter how successful, carry no responsibility for empowering their less fortunate countrymen and contributing to job creation and economic growth. Black ownership, even if only on paper, now carries a very high prize and offers a hassle-free existence for all corporates. It frees them from having to bother with employment equity, skills development, preferential procurement, SME development and socio-economic development.
He writes persuasively and has most certainly considered his position. He posits
All these changes taken together appear to signal a renewed focus on ownership of companies, almost to the exclusion of all other elements. A lot of us are wondering if the dti is suffering from battle fatigue and giving up on the broad-based part of black economic empowerment. There is another perspective, though. Perhaps the dti decided to retract enhanced recognition because of the backlash it received. Maybe the second additional changes are being offered as an alternative solution. Allowing corporates to multiply their procurement spend with black-owned businesses by “a factor of 2” on their scorecards gives the black-owned businesses a competitive edge, which makes it unnecessary to exempt them from compliance with B-BBEE.
Mashugane seems to be of the opinion that the immediate promotion for certain levels of black ownership,irrespective of turnover, is not going to fly. I get the impression that this was another poorly thought out amendment that was hastily drafted. I think that his opinion should be read - it makes a strong case for the development of smaller black businesses. He concludes with this paragraph
Black ownership alone should not be enough to get preferential market access. They should be required to meet a B-BBEE compliance threshold, say level 4, to qualify for the “factor of 2” clause. Policymakers must discourage a culture of free rides or unearned entitlements, especially for beneficiaries of B-BBEE.
And then most pertinently
All things considered, I feel compelled to venture one more wish: that the dti will explain to South Africans exactly what they are thinking and doing as they engage with the public on the Gazettes.
Exactly - we'd all love to know. At the moment there is not enough of an economy to support the most basic of elements.
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