BEE codes to lure foreign investment
15 December 2006

The standards, entitled Codes of Good Practice for Broad-based Black Economic Empowerment (BBEE), outline what companies need to do to fulfil government's BEE policy requirements.

They were released by Trade and Industry Minister Mandisi Mpahlwa in Johannesburg.

"The focus of the codes is to ensure that BEE is well understood by business as well as all South Africans."

Effective in 12 months

They would ensure that empowerment was broadened to include a broader section of the population, he said

The codes, that outline what companies need to do in order to achieve BEE status in terms of, among other things, ownership, employment equity and management control, will become effective in 12 months.

The absence of an official document explaining clearly what the companies' obligations were in terms of BEE had been cited as one of the reasons contributing to the dearth of foreign investment in the country.

Trade and Industry Director General Tshediso Matona hailed the launch of the codes as a qualitative leap towards higher economic growth.

Seven elements

According to the codes, companies' BEE compliance will be rated on seven core elements: ownership, management control, employment equity, skills development, preferential procurement, enterprise development and socio-economic development.

To score the highest points a company has to demonstrate how its policies empower among others, women, rural people, the disabled and black people in general.

"The codes lay conditions for a sustained and inclusive economic growth," said Mpahlwa.

Approved by cabinet earlier this month, the codes are silent on the wide-spread problem of fronting that defeats the objectives of the policy.

"This is not an easy area — how do you catch those guilty of fronting and if you finally do, what action do you take against them?" said Mpahlwa.

However, Mpahlwa said the issue could be covered in future legislation.

Sapa, businessiafrica.com