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Why we must keep the "Broad Based" in "Broad Based Black Economic Empowerment"

13 May 2015 8:27 PM

Government announced changes that could narrow the reach of empowerment programs to a few black industrialists only.

Broad Based Black Economic Empowerment (BBBEE) came into being as a result of criticism levelled against empowerment programs instituted during 2003/2004. These programs enriched a few black industrialists, but failed to distribute wealth across a wide spectrum of previously disadvantaged South Africans.

DTI shocks SA Inc. with BEE “clarification notice”

The Department of Trade and Industry has issued an unexpected "clarification notice" that has the business sector up in arms.

Broad-based empowerment and employee ownership schemes will from now on count less than individual share ownership.

These changes could mean empowerment programs meant to benefit many end up going to a few black industrialists.

The provision only affects BBBEE deals struck on or after 1 May 2015.

Why BBBEE should stay broad based

We interviewed Intellidex MD and Analyst Stuart Theobald who argues that (BBBEE) should stay broad based.

Scroll down to listen to the audio.

Our research shows that broad-based schemes have created at least R50 billion in value that are now in the hands of many thousands of people.

Stuart Theobald, Intellidex MD and Analyst

It’s a fact of mature capitalism around the world that staff members must be empowered to have a say in the companies they work for. I can only see reasons to encourage broad based empowerment.

Stuart Theobald, Intellidex MD and Analyst

If your stated policy is to fix inequality then I don’t understand this announcement. We certainly need black industrialists, but the way we tweak BEE deals must reduce inequality at the same time. Dealing with inequality should be our main objective.

Stuart Theobald, Intellidex MD and Analyst

13 May 2015 8:27 PM