Then, of course, there is Black Economic Empowerment. Transnet, the report points out, has “identified the role of middlemen in procurement as a problem. The middlemen increase the cost by taking a margin but adding no value”. The reason Transnet uses middlemen is “usually to comply with BBBEE requirements”, the report finds. We are all deeply shocked by this discovery.
Could it be that Tim Cohen read my post from yesterday?
The logic of this is beyond absurd. If you have an exclusive right to import or sell a foreign product or service that gives you a competitive edge over everyone, why would you then want to hand that right to someone else, or have that edge diminished because you have given over the right to manufacture to someone locally in the name of BEE. This is not how business works. You get an edge and you work on it and build the business.
I didn't think that you could use ED or SD to create middlemen, but it's very possible, specifically if you plan to supply SOEs. I suspect that de Ruyter might not be open to this anymore. The whole of the Zondo commission is about middlemen -think Ferrari (and Bentley) sodi, was about the corruption that arose as a result of BEE compliance and middlemen. Even if you don't supply SOEs you can still create them and it will open up SOE markets. The PPPFA allows for a 20% increase in price for contracts less than R50m and about 11% for larger contracts.
And you wonder why the country is poor and SARS are behaving like microlenders.
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