New BEE plans smack of Zim-style indigenisation

If you want to do business
with government bodies, you’ll
soon have to hand over control
of your business to a black
economic empowerment (BEE)
entity before you can achieve
that aim.
That’s if the latest BEE plans
that the department of trade
and industry (dti) is currently
mulling over come to fruition.
According to John Kane-
Berman, a policy fellow at
the SA Institute of Race
Relations (SAIRR), a thinktank
promoting political and
economic freedom, the dti is
putting the finishing touches to
these new regulations.
One aim of these, he added,
was to empower organs of state
to push up black ownership
requirements from 25% to
51% (a controlling interest) for
companies doing business with,
or needing licences from them.
And the freight and
transport industry would
be heavily involved in such a
situation. Most of the freight
companies – in all sectors
of the industry – deal with
Transnet and its subsidiaries,
or are licensed by customs or
other government or provincial
bodies. And, Kane-Berman told
FTW, parastatals like Transnet
were “organs of the state”.
“That description,” he said,
“is very broadly defined, and,
(from a previous legal finding)
is any institution that acts with
a licence from or is empowered
by any statute – and therefore
includes state-owned entities
and provincial authorities.
“In fact, we counted up to
1 000 such institutions.”
And Kane-Berman was
anything but surprised about
these regulations being
considered. “I don’t think the
ANC has made any secret
of the fact it wants black
control of SA business,” he
said. “This set of regulations
is just another instrument to
implement that policy.”
They would also not need
to face any opposition before
being put into place, he added.
“Regulations are drawn by
the minister under enabling
law. And they don’t need to
go through parliament before
being implemented.”
Nor, indeed, does the
minister need to consult any
company likely to be affected by
his decision.
FTW business contacts
were furious about the scheme,
but none wanted to be named
because of its brittle political
nature.
A shipping industry
spokesman said that this
would meet with the same
objections from the industry
that arose when SA’s ‘cabotage”
scheme was being considered.
“How many of the foreignowned
lines would be willing
to allow any sort of demand
for a compulsory local black
share ownership, never mind
a controlling shareholding?
Ridiculous,” he said.
A sentiment shared by
executives in other freight
industry sectors who agreed
with FTW’s suggestion
that this was identical to
Zimbabwe’s latest stance on its
indigenisation policy.
In this, from April 1, “It’s
either you comply or you
close shop.”
And, if SA continues to
follow this path, that “shutting
shop” comment may be very
appropriate.
Our executive contacts
were adamant that foreign
businesses were very likely to
restrict their local investments,
and some even opt to establish
business elsewhere, and pull
out of SA completely.
Said one: “I can’t see the
likes of the big international
car manufacturers willingly
handing over 51% control of
their local businesses to comply
with these regulations. They’d
probably prefer to shut up shop
and move to another country.”
According to Joan
Warburton-McBride, CEO of
the Johannesburg Chamber
of Commerce and Industry
(JCCI), that’s somewhat similar
to the feedback they’ve been
getting from members – but
without the withdrawal factor.
“All that we find is that
people back off from doing
business with government,
and get more involved in
doing business in other parts
of Africa, for example.”
The SA Chamber of
Commerce and Industry
(Sacci) is also examining the
issue at our request. “But,”
said CEO, Alan Mukoki,
“we are still in consultation
with our members, and
we will probably be able to
articulate our standpoint
next week.”