Companies not complying with BEE

Tuesday, April 6, 2010

Pretoria - A staggering 75 percent of South African companies in the private sector do not comply with the Broad Based Black Economic Empowerment (BBBEE) Act, almost six years after the Act was passed.

Trade and Industry Minister Rob Davis revealed this on Tuesday following a meeting of the BEE Advisory Council

"The reality is that while a sizable proportion of some transactions have some element of employment, the impact is very slow," Davis said.

He said the non-compliant findings were based on research conducted by a private consultancy firm in 2008. It also found that most companies were not adhering to the BEE Code of Good Practice as stipulated by legislation.

Government set up the council to ensure that the full transformation of the business sector was in line with the country's economic growth, while the Code will ensure a uniform approach is applied when the empowerment strategy is implemented.

But Davis said there was still a high level of fronting and that attempts to broaden BEE to benefit more people were failing.

"What the council has also discussed is a possibility of using the codes to ensure that companies are encouraged to earn points through enterprise developments and skills training."

The council will also look at the possibility of partnering with companies to encourage and help them comply with the code and other BEE legislation. There will also be emphasis on the implementation of article 10 of the code which deals with state companies' responsibility towards the BEE code of practice.

The council, which had its second meeting since being inaugurated earlier this year, will advise President Jacob Zuma on the implementation of the BEE strategy to ensure it is broad-based and in accordance with the economic growth targets of the country.

Meanwhile, the recent economic recession witnessed globally has dealt BEE players a major blow with the value of shares owned by those empowered reaching an all time low.

Davis said those who had invested money borrowed to purchase the shares were unable to get any returns as the recession set in.