FNB report questions BEE focus

Johannesburg - The government should switch its attention from black empowerment to lifting its investment efforts in enterprise development, according to a report prepared by First National Bank (FNB) and Endeavour, an entrepreneur support initiative.

"One suggestion is that government should put less emphasis on the 'ownership' and 'employment' sections of BBBEE [broad-based black economic empowerment] and place higher allocations of points to ED [enterprise endeavour]," said the report which was published on Friday.

"This will make the desire to invest in ED more financially attractive to corporates," the report added.

ED is a relatively new concept in South Africa. It asks South Africa's corporate class to commit a portion of its profit to support smaller businesses.

The thinking is that stimulating smaller firms will expand the number of economically active consumers and businesses participating in the economy.

Commenting on the report, FNB Commercial Banking CEO Iris Dempsey said: "Lack of respect and recognition for the contribution entrepreneurial activity makes towards the country's gross domestic product, and for the initiatives that encourage entrepreneurial activity, were highlighted as stumbling blocks."

ED is also likely to become big business in South Africa, with the report suggesting that petrochemicals giant Sasol was likely to spend more than R1bn on ED projects by the year 2015.

However, this means that the industry needs to be properly managed and promoted and investments considered with care, the report said.

"ED programmes which do not gear up to select the right enterprises to support and structure the relationship for success and support the enterprises over time will simply squander valuable resources," the report said.

- Fin24.com