The upcoming intensification of the Broad-Based Black Economic Empowerment Act and the accompanying BEE codes will be harmful to South Africans in general.

This is according to trade union Solidarity in view of the BBBEE summit taking place in Midrand. It would not only be existing business owners and genuine entrepreneurs who would be affected, but especially South African consumers as well. Solidarity deplores the continued politically-led allocation of capital rather than a consumer-led allocation in the South African economy, which the union warned against in parliament earlier this year.

According to Piet le Roux, senior economic researcher at the Solidarity Research Institute (SRI), this law would have ironic consequences. “The irony is that the apparent intention of the intensified Act recently approved by parliament is to benefit blacks economically, but it will be harmful to all South Africans, including many of those who are supposed to benefit from BEE. This will result in even more resources being allocated to entrepreneurs who are relatively ineffective – black, coloured, Indian and white; entrepreneurs who would not cope without government assistance. That would mean less consumer goods being made ​​available to all South Africans. Therefore, the cost of this project will ultimately be borne by ordinary consumers who would have to pay more for food.”

Le Roux said that in addition to what could be considered as good intentions with this Act, Trade and Industry Minister Rob Davies unfortunately also has his own agenda with this Act. “Black economic empowerment is not just a social and political imperative. We need to make sure that in the country’s economy, control, ownership and leadership are reflective of the demographics of the society in the same way the political space does,” Davies said in October last year.

According to Le Roux, this approach would lead to the principle of private ownership being subjected to the extent that it promotes political control and that would be in line with Minister Davies’ senior role in the South African Communist Party. “The only real benefit of BEE would go to the black elite and those white people with the right connections. This would be at the expense of the vast majority of consumers in South Africa which includes black, coloured and Indian people.”

Additional Reading?

Request Free Copy