The Cape Town Regional Chamber of Commerce and Industry with over 4400 member firms, employs some 280 000 employees in Cape Town and the Western Cape. The Chamber is the oldest chamber of commerce in South Africa having been founded in 1804. The Chamber's membership, 80% of which comprise SMME's makes it one of the largest independent business organisations in South Africa which largely focuses on the needs of small business.
The Chamber is supportive of the principles outlined in the Broad-Based Black Economic Empowerment Bill. It has commenced a strategic objective to become a catalyst in the development of BEE through awareness campaigns, education, networking and facilitatory programmes. The Chamber will also guide its membership to embrace the spirit of the pending BEE legislation. In doing so, the Chamber recognises and endorses that BEE is a process and has developed a BEE Forum of members to take the process forward.
In endorsing the preamble to the Bill, the Chamber accepts that to have a large percentage of the South African population excluded from the economy is not sustainable.
It makes economic sense to broaden the economic base as set out in the objectives of the Bill which serve to give effect to the Constitution. From a business perspective, broadening the economic base will have a multiplier effect in strengthening the market and allow South Africa to achieve a higher growth rate than has been seen over the past few years. The Chamber has consistently held the view that it is only through high and sustainable economic growth that the means will be founded to enhance and develop the broad mass of our population who are Black. It can in effect be stated that the principles of BEE will be difficult to achieve unless sustained economic growth can be maintained.
Having outlined the above, we would like to make the following observations and comments:-
1. Establishment of Black Economic Empowerment Advisory Council The Chamber has an interest in how the BEE Advisory Council will be constructed. While obviously it will contain the major black business organisations and probably big business, as the Big Business Working Group has been consulted. In our view, a major gap exists between black business organisations and big business, which runs the risk of overlooking organised business as represented by the chamber movement in South Africa. This is because neither black business nor big business represents the few million established SMME businesses (mostly white) who primarily are represented through the chamber movement. We would strongly urge that this group be represented on the BEE Advisory Council as for BEE to be successful it requires an active partnership between black and white business. The true engine room for BEE, we believe will be the dynamic partnerships which will emerge in the small and medium sized business sectors. As a consequence the BEE Council should contain a majority of representatives drawn from the private sector. The Chamber would also suggest that the BEE Advisory Council be made a "public entity" and be subject to the due diligence and accountability of a statutory body.
2. Regulations The Chamber understands that the legislation will be given substance through the Regulations to be developed by the Minister. It is understood that indications to measure black economic empowerment and a "BEE score card" is to be developed. The development of codes of practice should not be solely in the hands of the Minister but should incorporate recommendations of the BEE Advisory Council.
While being supportive of this approach, as measurement is a key tool in effective management, the Chamber would suggest that a pragmatic approach to setting quotas without taking into account the realities of the different sectors of the economy could be dangerous. Further, the South African business landscape is complex and regulations should not be uniform in nature so as to apply to both large and small business. The definition which is contained in the Small Business Act should be used as the basis to distinguish between levels of compliance to regulations and codes of practice.
We would also suggest that regulations should be enabling with the focus being on encouragement and reward and light on being punitive.
3. Application The Chamber is of the opinion that effective BEE is a complex process that goes far beyond empowerment through "ownership".
Entrepreneurship is the forerunner to empowerment and the education system needs to be adapted to include the subject of entrepreneurship and business studies at a school level. This was verified in the recent report on global competitiveness by the Monitor Group which gave South Africa as a developing country a low score on entrepreneurship. A culture of enterprise needs to be developed as opposed to a culture of entitlement where the focus must be to generate new businesses. The BEE initiative also needs to be portrayed in a positive light as it has been reported to the Chamber that false perceptions do exist abroad that the application of BEE could be counter productive to economic growth. South Africa would be ill advised to dismiss this caution as it has to ensure that on all fronts it makes itself attractive to both local and foreign investment because as we stated at the outset, the ability to increase and sustain the countries economic growth rate lies at the heart of success in BEE.
Success in business, be it black or white is dependent on education, training, ability and experience. Time is required to acquire all four. This helps to partly explain the large number of white senior managers in business, the vast majority of whom have been developed and promoted internally within their companies. These managers must be co-opted into the BEE process and be persuaded that by imparting their skills to black managers they further empower themselves.
The Chamber would like to once again pledge its support for the Bill and would in particular like to be given an opportunity to comment on the Regulations which the Minister intends to develop.
The Chamber is also prepared to appear before the Parliamentary committee to make an oral presentation, if so called upon.