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Growth plan too vague on BEE: experts

Johannesburg - The government’s New Growth Path (NGP) is unlikely to change the route that black economic empowerment has taken, analysts said this week.

"The document rehashes media soundbites without addressing substantial issues," said Duma Gqubule, a director at advisory firm Kio.

"The success of BEE hinges on access to cheaper capital. The NGP does not clearly address interest rates, growth and employment.

"BEE can’t succeed in an environment where real interest rates are high, the economy is not growing and is losing jobs. Anything else is tinkering at the edges,"  he said.

Gqubule said the document was too vague because it did not provide details on how it got to the assumptions it made.

He cited an example of where the document said BEE imposed significant cost on the economy without quantifying that cost.

“In six months, nobody will be talking about this policy document,” he said.

Reg Rumney, head of the Centre for Economics Journalism in Africa at Rhodes University, agreed with Gqubule about the vagueness and contradictory nature of the document but welcomed the debate that it had generated.

“It is a great starting point to discuss innovative approaches to policy but I would like to see more detail about how the proposals would work,” he said.

“Reviewing BEE would be a challenge and would be disruptive to the economy, particularly the verification industry.”

He said the fronting and narrowness of empowerment justified the need to relook at how empowerment was being implemented.

Gavin Levenstein, chief operating officer of advisory firm EconoBEE, said some of the failures of BEE to have a bigger effect was due to government’s own treatment of the policy.

“The Preferential Procurement Policy Framework Act is outdated. If you want to win a government tender, for example, you need to be 50% black-owned. This figure is just illustrative and does not truly reflect the quality of empowerment within a company,” said Levenstein.

He said that as a result, companies often interpreted being BEE compliant as only having black partners as owners and managers. The document called for a rethink of BEE.

Levenstein said tweaking legislation and enforcing implementation might unleash BEE’s true potential.

“BEE can’t be about white business just selling to black people. It must be about creating an environment where black people can start their companies and build them to be big. That will create jobs,” said Levenstein.

He said this environment could be partly created if established firms focused more on enterprise development.
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