Picture: ISTOCK
Picture: ISTOCK

The Broad Based Black Economic Empowerment (B-BBEE) advisory council has called for improved government and private sector funding for empowerment deals in line with the requirements of the Financial Services Charter.

Empowerment is a major campaign issue ahead of the national  elections. SA’s main opposition party, the DA, has rejected BEE in its current form, saying it is being used by the ruling ANC to enrich only a few politically connected elite at the cost of job creation.

The DA said in its manifesto that its approach would see the B-BBEE scorecard being “vastly simplified” with the inclusion of time frames for initiatives to help the business sector to plan.

It also says its approach will set requirements, as part of the scorecard, to ensure that the beneficiaries of genuine B-BBEE are not just a politically connected elite.

The signatories of the charter, including banks, have committed to promote the establishment of “an equitable society” by providing accessible financial services to black people and by directing investment into targeted sectors of the economy.

The advisory council was set up to offer recommendations to the president on B-BBEE and transformation of the economy.

According to the preliminary report by the B-BBEE Commission looking into the financing of major B-BBEE deals, most deals are vendor financed, with government funding being the lowest.  The commission is tasked with monitoring progress and compliance in terms of the empowerment Act.  

Its recent report on the national status and trends on B-BBEE for the 2017 calendar year shows a decline in black ownership of 5.75 percentage points. Black ownership stood at 27% in 2017, compared with 32.75% in 2016. Black female ownership declined 1.96%.

Following a meeting last week to discuss broader transformation issues, the advisory council said the role of development finance institutions should be complemented by the broader financial sector to intensify funding for B-BBEE [deals] according to the Financial Services Charter.

“The preliminary report of the B-BBEE Commission showed that vendor financing is higher, followed by funding by financial institutions in respect of major B-BBEE deals already registered, with government funding being the lowest. Focus should be on financing SMMEs and black industrialists, especially those in the productive sectors,” the advisory council said.

Notwithstanding the funding challenges, the council said there has been some progress over the past five years in transforming the economy. This includes implementation of the black industrialist programme, which has supported 138 beneficiaries.

According to the department of trade and industry, the programme aims to unlock the potential of black industrialist companies in key sectors of the economy through targeted and well-defined financial and nonfinancial interventions.​

phakathib@businesslive.co.za