The idea of a strategy for broad based economic empowerment was initially put forward by the Black Economic Empowerment Commission (BEE Com). The Commission was established to address the problem of non-participation of the majority of South Africans in the economy. The idea of the Commission arose out of a resolution taken at the BMF national conference in November 1997. The Commission was subsequently established in 1998 under the auspices of the Black Business Council (BBC). The BEE Com had the mandate of redefining the concept of empowerment, investigate the state of empowerment, identify the hurdles to empowerment and recommend a policy to the government. The Commission presented its final report to government in June 2001.

The Bee Com report had the following key recommendations:

• Setting of empowerment targets;
• Legislative interventions by the government; and
• The establishment of a BEE Commission within the Office of the State President.

After much debate, the government empowerment strategy document was made final at this year’s January Cabinet Lekgotla and announced by the Minister of Trade and Industry in March 2003. The final document has departed from recommendations made by the BEE Commission, where government favours self-regulation and sector specific targets. Government’s approach has been to situate black economic empowerment within the context of a broader national empowerment strategy that focused on historically disadvantaged people, and particularly black people, women, youth, the disabled and rural communities.

The government BEE strategy has three main components namely:

• Direct empowerment through ownership and control of enterprises and assets;
• Human resources development and employment equity; and
• Indirect empowerment through preferential procurement and enterprise development.

Government is of the view that in order to achieve BEE objectives the country needs a consistent approach, appropriately flexible to respond to different economic and enterprise conditions and the ability to measure progress. Government will use a scorecard to measure progress by enterprises and where sector specific are developed, the terms set out in those charters will apply.

The scorecard will measure three core elements of BEE, namely:

• Direct empowerment through ownership and control of enterprise and assets
• Human resource development and employment equity
• Indirect empowerment through preferential procurement and enterprise development.

Another instrument that government is planning to employ in trying to ensure that empowerment objectives are met is the use of sector specific and enterprise tailored charters. The charters are meant to be collaborative efforts between stakeholders from government, the private sector and labour. Charters are aimed at building some level of understanding, agreement on program interventions and support for implementation. These charters will also have targets that each sector or enterprise has agreed upon.

The BEE Council as stipulated in the Strategy will be established in terms of the broad base BEE Bill. The constitution of the Council will be determined by the Minister of Trade and Industry and will not be incorporated in the Act. The Council will comprise 19 members appointed by the State President and drawn from business, government, civil society and other stakeholders

The Council will advise the State President on BEE and will carry out the following functions:

• Review progress in achieving BEE,
• Providing advice on the implementation of the BEE Act and Governments BEE Strategy,
• Promote partnerships to enhance the implementations of BEE,
• Advice on sector and enterprise charters,
• Executing any other function as requested by the President from time to time

• Promote economic transformation in order to enable meaningful participation of black people in the economy

• Achieve a substantial change in the racial composition of ownership and management structures of existing and new enterprises
• Increase the extent to which communities, workers, collective enterprises and cooperatives own and manage existing and new enterprises
• Promote investment programmes that lead to broader and more meaningful participation in the economy by black people in order to achieve sustainable development and general prosperity
• Develop rural and local communities by enabling access to economic activities, land, infrastructure, ownership and skills

• Empower the Minister to issue codes of good practice on BEE; and
• Establish an Advisory Council to advise the State President on BEE.

The Minister (of Trade and Industry) will have the power to issue codes of practice on BEE that may include the following:

• The interpretation and definition of BEE;
• Qualification criteria for preferential purposes for procurement and other economic activities;
• Indicators to measure BEE;
• The weighting to be attached to BEE indicators;
• Guidelines for stakeholders in sectors of the economy to draw up transformation charters for their sectors;
• A system for reporting on the implementation of black economic empowerment by organs of state, employers and other enterprises;
• Any other matter necessary to achieve the purpose of this Act.

The Minister has the power to promote and publish transformation charters, which have been developed and agreed by major stakeholders in that sector, including organised business, organised labour and relevant government departments.

• The draft Bill stipulates the role of the advisory Council is to advise the President on BEE;
• The Council will consist of the State President and other members, which will be determined by the Council’s constitution; and
• The Minister has been mandated with the establishment of the Council’s constitution and may amend the constitution and rules after consulting with the Council.

1. Powers of the Minister – Too much power has been granted to the Minister, ranging from issuing codes of practice to publishing transformation charters. The issuing of the codes of good practice should be vested with the advisory Council rather than the Minister.
2. Equity and Skills Development – The advancement of equity and linking it to skills development should be made an explicit code of good practice in underscoring the importance of creating equal opportunities for all. Skills development was also prioritised in the agreement of the Growth and Development Summit.
3. Scorecard and Targets – The BMF supports the notion of sector or enterprise specific charters that would be voluntarily established. However, the targets that sectors or enterprises set for themselves should be linked to the scorecard and be included in the proposed codes of practice. This would make the scorecard a meaningful measurement tool in gauging commitment to BEE.
4. Advisory Council – Its functions should be more than ‘review’ and ‘advice’. The Council should have the mandate of monitoring the implementation and compliance with BEE across enterprises and industries.
5. Reporting System – The Bill should incorporate an independently established reporting system to gauge commitment to BEE. As it stands, the Bill proposes a code of practice for reporting by organs of state and employers. This should not be left to the discretion of these entities.
6. Penalties - The draft Bill does not state what will happen in the event that an enterprise chooses not to comply with the strategy or fails to attain targets set in the charter. This is a conspicuous omission, which needs to be addressed. It should be noted that for the public sector, government has said it will apply commercial penalties for non-compliance, eg losing or be refused a contract.