The new empowerment codes will take effect early next year; but what will they mean for SA firms, and multinational operations? The dti's deputy director general details the score cards.

Bruce Whitfield:
I see cabinet today approving the codes for broad based black economic empowerment; it is the second phase of the BEE program. We sent Steven Grootes from the Eyewitness News team off to collar the Department of Trade and Industry deputy director general Lionel October earlier today. Steven asked him what the changes are and what’s in store for black economic empowerment.

Lionel October:
Up until now government has been giving preferences and licences to black business but they were only measured on the basis of ownership which as you know it is a narrow way to view ownership. What the codes introduce is a generic score card which means companies will now be measured not only on ownership but will be measured on skills development, on employment equity, on procurement and so on.

So it is a generic score card which will now become the basis for measuring companies. Also government has now set up clear targets for black economic empowerment so for example in the area of ownership it sets a 25 percent target, for managerial positions it sets targets and so on. Also what we have finalised is small businesses and how they will participate in black economic empowerment.

Steven Grootes:
In other words you are making the big companies who can afford to, they need to carry a little bit more of the can, and the young guys who are starting, the smaller companies, you're giving them a bit more freedom.

Lionel October:
Exactly, especially for start-up enterprises in the first year of operations we won't be burdening those companies but after their first year of operation they can participate but as you say with very small companies there will be much more flexibility.

Steven Grootes:
What about foreign companies? You know the big companies they come over here, they wholly own their subsidiaries, they own them in all other countries of the world. What is going to happen there?

Lionel October:
For multinationals, which globally have 100 percent owned subsidiaries and that's part of their charter or global practice, those particular companies like your DaimlerChrysler's, like your Microsoft's, in those instances we will allow them to come up with alternative ways of promoting black economic empowerment in the area of ownership.

Steven Grootes:
Looking into your crystal ball five years from now, how do you think these measures will affect the economy?

Lionel October:
I think definitely it will really be part of boosting growth. As we can see up until now how the black middle class, the increase in the black middle class, has fuelled a higher growth rate of five percent and as we move to a higher growth rate of six percent I think the black economic empowerment is going to strengthen because you are going to bring more black entrepreneurs into the economy, you are going to raise the incomes of the black middle class, so in that sense black economic empowerment assists and will enhance growth.

Bruce Whitfield:
Lionel October, the deputy director-general at the Department of Trade and Industry talking about the new codes for broad-based black economic empowerment.

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