Report of the Portfolio Committee on Trade and Industry, dated 20 August 2003:
The Portfolio Committee on Trade and Industry reports as follows:

"Parliamentary Public Hearings on Draft Strategy Document, "South Africa’s Economic Transformation: A Strategy for Broad-Based Black Economic Empowerment" and
Broad Based Black Economic Empowerment Bill [B27-2003]
Hosted by the Trade & Industry Portfolio Committee
24 – 26 June 2003

Introduction
The Trade and Industry Portfolio Committee agreed with the Department during its initial presentation on the Strategy Document that comments received during public hearings on the Broad–based Black Economic Empowerment Bill (B27-2003) would inevitably touch on the Strategy Document, to which the Bill seeks to give effect. These comments would therefore need to be taken into account in preparing a revised version of the strategy document.

The included comments and proposals from organisations and individuals who made submissions to the Parliamentary public hearings in June 2003 is intended to assist and guide the Department in preparing a revised version of the Strategy Document. What follows is a summary of some of the key points, which the Committee has synthesized from the individual presentations and discussions.

Presentations
The following presentations were made at the Hearings:

Eskom
The Eskom submission spoke to the policy instruments to achieve BEE and the definition of "black empowering enterprises". The policy instruments of the strategy, including the balanced scorecard, complement Eskom’s initiatives. The presentation cautioned against manipulation and non-compliance with sectoral charters. Where charters do not exist the responsible state entities should set the equity and empowerment targets for that sector. Eskom acknowledged that it does not work within the preferential procurement framework of government. The company does have a black empowerment strategy that includes "price matching", i.e. black suppliers, are allowed to match the lower tendered price. In addition Eskom specifies the percentage of contract value that must be sub-contracted to black suppliers. This has facilitated black ownership, control and skills enhancement in the sector. It was reported that government, and the Department of Public Enterprises, requires Eskom to work within the preferential procurement framework. The government ’s preferential procurement framework does have fiscal implications for the state enterprise.

Eskom proposes that a common set of definitions be included in the act so as to avoid ambiguity and strengthen common purpose. The definition of BEE contained in the strategy addresses ownership and management control to some extent. According to Eskom many other factors are excluded from the definition. The definition should also take into account the various types of enterprises, i.e. micro, small and medium. The presentation concluded by highlighting the definitions used by Eskom of black, women owned, small and medium enterprises and black empowering enterprise. The subsequent questions and discussions centred on the details of Eskom’s BEE strategy.

Black Management Forum (BMF)
The BMF presentation addressed the origins of the BEE strategy, the Black Economic Empowerment Commission (BEE Com) and the contribution of the BMF. The BMF cautioned against the departure by government from the BEE Com recommendations. According to the BMF government’s approach has been to locate BEE within the broader national empowerment strategy. The BMF presentation discussed the scorecard and charter approach proposed by government. In addition, the composition and functions of the Advisory Council was outlined. The objectives and purpose of the Bill was discussed. It was reported that the Minister of Trade and Industry will have the power to issue codes of practice relating to the interpretation and definition of BEE, criteria for procurement, indicators to measure performance, weighting, guidelines for transformation charters and a system of reporting.

The BMF suggested that too much power has been vested with the Minister, including the issuing of codes of good practice, which should be the responsibility of the Advisory Council. The presentation stressed the linkage between equity and skills development, which should be made an explicit code of good practice. Voluntary sector or enterprise charters should be measured against the scorecard in gauging progress. The BMF proposed that the Advisory Council should monitor the implementation and compliance of BEE rather than reviewing and advising. With regard to a reporting system it was proposed that an independent reporting mechanism be established to gauge progress and challenges. The presenter proposed that equity and empowerment targets should also relate to state enterprises. The BMF supported the inclusion of detailed penalties in the Bill. The questions and discussions centred around the practical implications of giving the Advisory Council more powers as recommended by the BMF.

Cape Regional Chamber (CRC)
The CRC provided an overview of the history, structure and constituency of the organisation. The overwhelming majority of members include micro, small and medium enterprises. The CRC reported that it supports the central thrusts of the empowerment process and will establish a forum to take the process forward. The presenter outlined that economic growth is a necessary feature of economic empowerment, and an inclusive approach will broaden the base of the economy and contribute to positive multiplier effects.

With regard to the composition of the BEE Advisory Council the CRC proposed the participation of white SMME’s through the representative chambers. The Chamber proposed the active partnership between black and white businesses, with the private sector being effectively represented on the Advisory Council. It was proposed that the Council should be made a public entity and be subject to the accountability of a statutory body.

The formulation of codes of practice should be vested with the Advisory Council and not with the Minister. The presentation highlighted that the South African economy is complex and diverse in structure. According to the CRC any BEE approach should be flexible and take into account the nuances of different sectors. It was suggested that the regulations should focus on encouragement and rewards rather than being punitive in approach. The Chamber stressed the importance of the promotion of entrepreneurship, education and training as the impetus for the implementation of the BEE strategy. The questions and discussions focused on the appropriate instruments needed to redress the imbalances of the past.

Harmony Gold Mining
Harmony proposed that members of the Advisory Council be drawn from the various industry sectors so as to ensure that the Council is made up of persons with specific industry experience or knowledge.

COSATU
The union federation questioned the lack of a complete policy process and the absence of a White Paper. It was proposed that legislation should only be processed once the relevant policy had been presented to the various role players. With regard to the definition of BEE, the federation cautioned against narrow definitions of BEE that exclude broader considerations. Cosatu supports the definition of BEE as adopted at the Growth and Development Summit. This definition includes the following elements:

Ensure the broadest ownership of productive assets and resources
Increase levels of employment in the formal economy
Increase household incomes
Expand literacy and skills development
Extend basic services to those who do not currently have them

The presentation cautioned that a targeted sector approach to BEE requires the active participation of the state. If the state does not participate actively the strategy runs the risk of inconsistently benefiting the established formal, urban and male owned businesses as opposed to the targeted lower income poor, especially the rural poor. The concern of the presentation was that state resources should not be limited to benefiting individuals but should have a broader positive impact.

The federation cautioned that the BEE strategy does not strengthen the empowerment of ordinary people as contained in the RDP. Similarly it was stated that the "sale of state assets" weakens the ability of the state to deliver basic services and hence achieve the broad objectives of BEE. According to Cosatu the strategy ignores the need to strengthen social capital and it therefore proposed the broadening of ownership of public assets so as to improve access to services. In addition Cosatu proposed that the weighting of the scorecard should recognise a broader approach that rewards employment creation and community development. Cosatu cautioned that the criteria contained in the scorecard are not outlined in the Bill, and the Advisory Council should contain community representation. The presenter suggested that the drafting of charters must specify the stakeholders involved and must include input from business, labour and civil society. Cosatu proposed that the trade-offs between broad based and narrow black empowerment must be clearly outlined with the objective of finding a balanced and broader approach to empowerment. The questions and discussions focused on the nature of broad based economic empowerment.

The Banking Council
The Banking Council endorsed the strengthening of skills development for previously disadvantaged people as a measure of ensuring meaningful participation in the mainstream of the South African economy. Improved black participation and increased income generation, according to the Banking Council, are crucial elements that contribute to economic growth. It was reported that broader participation should be on a sustainable basis linked to the gradual elimination of "special measures" for black empowerment over the longer term. The inclusion of the term permanent resident to the definition of black people, according to the Council, is relevant and welcomed by the financial sector. The Banking Council welcomes the broad based approach of empowerment and encourages individual ownership and the inclusion of previously disadvantaged people into the economy.

The presenter proposed that government, through the charters, should not prescribe a format to the various sectors but should rather provide guidelines. In addition the Banking Council welcomes a simple system of reporting as proposed in the strategy document, and recommended that the period for stakeholder comment on the Codes of Practice should be extended to 60 days. In a supplementary submission to the Portfolio Committee the Banking Council recommended that the Minister should give legal status to a charter if it is a product of consensus in an industry and contains a scorecard to measure performance. It was recommended that the gazetting of a charter linked to a scorecard should be recognised by all levels of government, especially when considering tenders.

It was proposed that government institutions adopt the preferential procurement framework based on the rankings of the scorecard. It was reported that the financial sector has progressed in the drafting of a transformation charter. It was stated that economic transformation should be contextualised within government’s macro-economic strategy and a strategic approach to globalisation. The Banking Council noted that existing government macro economic policy and legislation provides a helpful foundation on which to build BEE. The Council welcomed existing strategies of government to promote black economic empowerment. The Banking Council recognises the broad definition of empowerment that includes human resource development, employment equity, enterprise development, preferential procurement, investment and ownership transfer.

The Banking Council cautioned against the use of punitive measure to promote BEE. It was reported that supportive and enabling legislation will create policy certainty and encourage private sector participation. The balanced scorecard will give businesses the flexibility to implement transformation programmes relevant to the specificities of the individual sectors. It was stressed that the scorecard should be the final measure of performance. It was recommended that a voice for black business would play a leading role in driving the process. The Banking Council welcomed the Advisory Council. In concluding the Council acknowledged that the financial sector has a role to play in the financing of the transformation process. However, the presentation cautioned that non-commercial risk should not be the sole responsibility of the financial sector but should be shared with government. The questions and discussions focused on the financing of BEE, government financial support and the role of the financial sector.

South African Chamber of Business (SACOB)
The Chamber’s introductory comments centred on the profile of the organisation representing some 35 000 businesses, both big and small. SACOB reported that it was not consulted but noted that four organisations including the Black Business Council, the Black Business Working Group and NEDLAC was consulted. The Chamber reiterated its support for broad based black economic empowerment. While recognising the necessity to include previously marginalised groups into the formal economy, SACOB cautioned against the possible negative impact of the legislation on small business, cost of compliance and the impact of the legislation on business unity. SACOB cautioned that BEE is an ongoing process and may not yield substantial results in the short term. Investment in education over the long run will enhance the effect of an empowerment strategy. The presenter echoed support for the agreements reached at the Growth and Development Summit on economic growth and development.

SACOB noted that empowerment and employment is more likely achieved through higher economic growth. Similarly SACOB noted the importance of organised business unity, and that it has been involved in various initiatives to reach consensus. The presentation proposed that consensus is more likely achieved through incentives and rewards as opposed to punitive measures. SACOB noted the similarities between the South African BEE strategy of 2003 and the Malaysian transformation experience of the 1970s. The Chamber cautioned that Malaysia experienced a high rate of growth that facilitated a more equitable distribution. The South African empowerment model is being implemented with a low growth rate and could have negative and unintended consequences.

It was reported that government has introduced a range of measures to support small and medium enterprises. The presenter questioned the success of the various initiatives and outlined the dangers of excessive regulation, which increase the compliance costs of operating a small enterprise. The termination of contracts for non-BEE compliance, according to SACOB, can have unintended negative consequences for small businesses. According to SACOB the BEE ownership and management transformation targets proposed by DTI will "pose hazardous options for small businesses". The presenter outlined the various challenges in promoting cooperation between white and black small businesses. Similar to ownership challenges SACOB outlined the various control and management challenges that are linked to the lack of skilled black managers. SACOB cautioned that ownership and management transformation are long-term strategies.

The presentation cautioned against the politicisation of business and within this context questioned the composition, role and mandate of the Advisory Council. While recognising that past imbalance should be corrected SACOB cautioned against distortionary measures and proposed a time frame to correct racial imbalances. SACOB recommended that government intervention should be flexible and not threaten existing enterprises. SACOB envisaged that BEE should be beneficial to the previously disadvantaged and not harm existing businesses. The Committee questioned SACOB’s vision of transformation and empowerment.

Black Business Council (BBC)
It was reported that the Black Business Council (BBC) is an instrument that seeks to contribute to the transformation of the economy. The BBC intends to be actively involved in the implementation of the BEE strategy and will continue to provide a voice for black business and professionals. The BBC welcomed the BEE strategy and stressed the inclusion of black people in the mainstream of the economy as a crucial factor in promoting economic growth. Some of the concerns outlined by the BBC include increased clarity on the drivers of industry charters, use of scorecards, government guidance on national targets, a strengthened Advisory Council, mandatory reporting requirements and the role of the National Empowerment Fund.

While welcoming the establishment of the Advisory Council the BBC supports it’s strengthening so as to make it more effective. The BBC proposed the appointment of an executive director for the Council and envisaged the following functions: monitor progress in the various sectors, reward good performance and make recommendations to the relevant authorities of any infringements, monitor government departments and recommend necessary interventions. The BBC supported the inclusion of trade union and community representation on the Advisory Council. The presenter recommended that the legislation should require all government entities, state owned enterprises, listed companies and companies of a certain size to report on BEE performance and be bound by the transformation charters.

With regard to the scorecard and charters the BBC proposed the following: greater clarity is required on the consultative processes within sectors, defined drivers of the process, charters to contain clearly stated government expectations, targets and how government plans to utilise the scorecards. The BBC proposed that government procurement is a key tool in strengthening BEE and suggested an equity target of 40% within 5 years and 60% within 10 years. In addition the procurement contract period should be extended from one year to three years for government tenders. The BBC welcomed government initiatives to support black business organisations. While supporting the broad based approach of the strategy the BBC questioned the following elements, namely ownership trends, access to land and human resource development. The BBC concluded by emphasising that all stakeholders have a role to play in ensuring the success of the BEE strategy. The questions and the discussions focused on the practical implementation of the transformation charters and scorecards.

KZN BEE Alliance
The Alliance questioned the precise definition of BEE and suggested that a common definition be included in the Bill. Taking account of disparities (including provincial differences) the presentation called for the inclusion of a "priority population group". The Alliance recommended that the inclusion of details on programmes could strengthen the Bill. With regard to the consultation process the Alliance recommended that greater consultation should have taken place with the various provinces. It was proposed that the charters should have legal recognition and should be enforceable. While recognising the specificities of various sectors the Alliance proposed that generic targets of ownership, control, financing and training could be determined through an overarching charter. Charters, according to the Alliance, should be aligned to the various provincial development strategies. Incentives for successful implementation should be introduced and timeframes legislated.

According to the Alliance details of BEE financing should be outlined in the BEE bill and in the legislation of state finance institutions. The financing of BEE initiatives should be more creative and sensitive to the conditions of the target audience. The Alliance called for the decentralisation of state financial institutions so as to improve access to finance and avoid overly bureaucratic processes. In addition the Alliance recommended that the IDC broadens its support across the various industries and sectors and supports the creation of more venture capital funds to finance BEE transactions. The presenter proposed that successful black entrepreneurs should in turn support BEE initiatives. It was suggested that greater clarity be given on government’s proposed ten billion rand contribution to BEE.

The Alliance made the following recommendations on the Advisory Council: nominations should be regionally based and representation should be provincially weighted, and organised business bodies should make nominations. The Alliance proposed the following functions for a statutory Advisory Council: monitor compliance and impact, ensure compliance through incentives and punitive measures, publish sector compliance reports, encourage public participation, monitor procurement and partnerships, and coordinate government’s contribution to the promotion of BEE. The discussions focused on the definitions of BEE, target population and the functions of the Advisory Council.

South African Communist Party (SACP)
The SACP identified poverty, inequality and the creation of sustainable livelihoods as a central challenge in addressing the legacy of apartheid and colonialism in South Africa. The South African society is characterised by a dual nature where in the formal economy race, gender and class inequalities still prevail. The other, informal economy is characterised by the marginalisation and the exclusion of the majority of black South Africans. The SACP further stated that global inequality and the integration of our economy into the global markets is deepening the levels of inequality. While the SACP sees the importance of changing the ownership and control structures of the economy, this should be a consequence of transforming the dual nature of the economy through a broad based strategy that benefits the working class and the poor.

The SACP cautioned that economic development and transformation should not be reduced to BEE and endorses the priorities outlined by the Growth and Development Summit (GDS), namely the reduction of unemployment, poverty and inequality. The Party questioned the assumption contained in the BEE strategy document that sees a causal relationship between increasing the racial representivity of ownership and control and decreasing income inequality. It therefore recommended the inclusion of asset and skills inequality. In addition, the SACP recognised the importance of community and cooperative organisations as detailed in the GDS.

Broad based economic empowerment will challenge the concentration of ownership and control in South Africa and give the majority of poor and marginalised a chance at participating in the formal economy on more humane terms. The balanced scorecard allows for the assessment of black participation in the economy. The SACP stated that while recognising that the balanced scorecard should apply to private enterprises so as to promote transformation, government structures should not be excluded from the transformationary goals of the scorecard. It was proposed that the strategy should also measure the performance of state enterprises. The SACP cautioned against the narrow focus of the strategy with regard to state enterprises and called on government to weigh the impact of privatisation on the ability of enterprises to deliver on developmental mandates. According to the SACP the scorecard should give greater weighting to initiatives that benefit the largest number of poor peoples and marginalised communities as opposed to individuals.

In conclusion the SACP supported the Bill, but cautioned against the legal status of the Strategy Document in relation to the Bill. In addition, the SACP recommended that guidelines be included in the Bill so as to provide a framework for the relevant minister. It was also proposed that Nedlac constituencies should be included on the Advisory Council. The questions centred on the boundaries of a broad strategy and the implications of a broader approach as opposed to a narrower plan.

Competition Commission
The Competition Commission commented on the main features of the new policy in relation to previous attempts. The Competition Commission noted legislation (Competition, Preferential Procurement and Employment Equity Act) enacted so as to realise the objectives of BEE. It was reported that the previous definition of BEE focused on equity ownership, company management and control to the exclusion of other strategies, namely human resource training, rural infrastructure and preferential procurement. Companies who created "fronts" so as to meet the targets abused the narrow definition. The new definition takes a much broader view. The Commission noted that the new policy is flexible by not setting targets and deadlines and the definition of BEE gives an equal weighting to ownership and other broader initiatives. According to the Commission the objective of the new policy is not simply to create a few empowered black entrepreneurs but to benefit the maximum number of previously disadvantaged people.

The presentation addressed the various instruments needed to realise the objectives of BEE. These include legislation, regulation, restructuring of state owned assets, preferential procurement, institutional support and sustainable access to land. With regard to the restructuring of state owned enterprises the presenter discussed the importance of promoting competition in facilitating wider ownership, redistributing wealth, strengthening SMME’s and promoting affirmative action. The Commission noted that the correct market structure is crucial for the entry of new companies. In industries where government is still dominant entry by new firms is restricted, hence the call by the Commission for the restructuring of state owned enterprises.

The Commission also noted the importance of procurement in promoting BEE and highlighted the substantial BEE procurement budgets of Transnet, Eskom and Denel. The presenter highlighted the importance of transparent and competitive tendering processes so as to recognise merit and avoid pseudo empowerment. The Commission was generally in support of the flexible approach to the scorecard and charter process that are responsive to particular circumstances, while at the same time introducing a measure of standardisation to a particular industry. The presenter noted the positive investment implications of a voluntary system. The presentation measured the strengths and weaknesses of the Advisory Council and cautioned against ascribing an overly regulatory character to the Council. The Commission recommended that the President should not be the chairperson of the Council, but the President should rather appoint an eminent person to chair the Council. The Commission remarked that a dialogue on land reform and ownership should be further discussed in the new strategy document.
Similarly the presenter noted the importance of improving access to finance for effective BEE. While the Strategy Document discusses the role of various financial institutions it does not discuss the role of commercial banks. A more holistic discussion on financial institutions, including the role of commercial banks in promoting BEE, was required. It was noted that large sections of the South African population are excluded from the formal banking system.

The Commission stated that while government has an important enabling role the onus to strengthen BEE should lie with individual industries and firms. The Commission concluded that the strategy document "provides a business friendly framework within which to achieve BEE." The Committee discussed the legal status of the strategy document, measures to ensure correct market structure and the role of the Competition Commission.

African Council of Hawkers and Informal Businesses (ACHIB)
The African Council of Hawkers and Informal Businesses (ACHIB) supported the broad based nature of black economic empowerment but cautioned against recent actions by large businesses using "fronts" that do not promote real empowerment. The presenter cautioned that representatives of black businesses must speak for the interest of black people and not promote self-enrichment. While supporting the Bill

ACHIB cautions that the Advisory Council should be sectorally based so as to give a voice to the smaller enterprises. It was proposed that the Advisory Council should also represent the interest of poor rural communities. ACHIB recommended that the Bill should outline incentives but also corrective measures so as to ensure compliance with the charters. It was noted that the drafting of the charters should include the relevant stakeholders in each sector. It was stated that the consultation in the drafting of the Bill was limited and did not include a broader audience. ACHIB proposed that government should be a driving force in the funding of BEE and should not be reliant on the private sector. The Committee discussed the question of consultation and representivity. The role of ACHIB in the empowerment of members was also discussed.

National African Federated Chamber of Commerce and Industry (NAFCOC)
The NAFCOC proposed that the most effective way of achieving BEE was through higher rates of economic growth. The presentation looked at various methods of correcting historical imbalances but cautioned against unintended consequences. NAFCOC cautioned that a narrow definition of BEE suffers from the danger of only benefiting a minority of the population and proposed that a broad based approach can only be achieved within a context of high economic growth. The presenter stated that economic growth is directly linked to the "maintenance of a business friendly market economy with reduced levels of economic regulation and taxation". The presenter called for a Regulatory Impact Assessment (RIA’s) and the removal of regulatory impediments contained in the strategy. In addition, the presentation endorsed the simplification and the easing of the tax burden for SMMEs particularly black enterprises. It was suggested that discretionary executive decision should be guided by transparent policy. NAFCOC supported the targeting mechanisms of the new strategy that could benefit the organisation’s constituency.

The following recommendations where made with regard to government procurement, outsourcing and privatisation: inclusion of SMMEs through smaller transactions, reduced administrative bureaucracy, shorter timeframes for payments and improved financial access for SMMEs. It was suggested that BEE should be sensitive to the experiences of smaller more vulnerable business enterprises and the privatisation of state enterprises could assist in the empowerment of small black enterprises. The transfer of government land was identified as a key strategy for the empowerment of black people. NAFCOC cautioned against old laws that continue to hamper broad based empowerment.

Industrial Development Corporation (IDC)
The Industrial Development Corporation (IDC) noted its support for the strategy within the context of concentration in the economy and the marginalisation of the broad majority from the mainstream of the economy. According to the IDC the Bill serves to include the majority of South Africans into the economy and strengthen an entrepreneurial spirit.

Similar to other submissions the IDC echoed its support for the broad based nature of the strategy. Rural development, promotion of investment incentives and meaningful participation forms part of the broad-based strategy. The IDC noted that codes of practice serve as indicators to measure BEE performance, attach weighting to BEE indicators and provide guidelines for the drafting of charters. The presenter highlighted that the current challenge centres on achieving the targets, monitoring and evaluating performance and the co-ordination of various role players. It was stated that the definition of a black person should be more clearly defined so as to avoid ambiguity. Similarly gender and equity objectives of the bill need further elaboration with the participation of black women in the economy as a stated objective.

It was reported that the codes of practice provide an opportunity for government to address challenges of fronting, procurement and ownership structures by nurturing a common vision in the promotion of BEE. The codes of practise should also be relevant for state enterprises. The IDC noted with approval the introduction of transformation charters in various industries that involve restructuring, inclusion of black role players, skill development, access to finance and SMME development. It was recommended that government should encourage industrial sectors to develop transformation charters.

While the presenter noted the recognition ascribed to the Advisory Council, further information was sought on implementation considerations, independence, role of various ministers, powers and functions, finances and stakeholder participation. Further questions of clarity included the relationship between the BEE and Competition legislation and the long-term objectives of the bill. In conclusion the IDC welcomed government’s contribution and guidance on the promotion of BEE. The Committee discussed questions of definition (black people) and the importance of transformation charters linked to growth sectors.

National Cooperative Association of South Africa (NCASA)
The NCASA highlighted recent progress of the cooperative movement in South Africa. The various types of cooperatives was discussed namely worker, financial, consumer and social cooperatives. The social and economic relevance of the various cooperative types was highlighted. It was stated that within the South African context of poverty and inequality a cooperative model of enterprise would facilitate greater black economic empowerment as compared to other forms of private enterprise.

The presenter stated that the cooperative movement could play an active role in the achievement of BEE objectives. An example provided was the complementary role of cooperatives and state owned enterprises in the provision of certain services, e.g. electricity and telecommunications. It was recommended that the restructuring of state owned enterprises (SOEs) should consider the role of cooperatives in the management and provision of services. The presenter promoted the idea of cooperative financial instruments as ensuring the sustainability of the cooperative movement. The following instruments where mooted: savings, credit, banking and insurance instruments. NCASA also recommended that the cooperative movement should be afforded special recognition with regard to government procurement.

It was proposed that the scorecard should also provide appropriate weighting to the promotion and development of cooperatives. Cooperative representation on the Advisory Council was also proposed. The Committee discussed in further detail the practical contribution of cooperatives to broad based BEE.

CONCLUDING COMMENTS
The following key points, identified by the Committee, emerged from the presentations and discussions.

There was general support for a balanced broad based approach to BEE as contained in the strategy document. A number of submissions suggested amendments to the definition proposed in paragraph 3.2.2 and some called for consistency between the definition contained in various official documents. The Committee considered favourable the proposal that the strategy adopts the definition agreed to by the constituencies at the Growth and Development Summit and included in paragraph 4.1.3 of the Agreement document of June 7.

A number of submissions recommended a framework to guide and encourage SOEs to promote BEE. Restructuring of SOEs, implying sale of shares, was seen by a number of those making submissions as only one – relatively minor – way in which SOEs could contribute to BEE. Moreover, as the Report of the BEE Commission indicated this would, on the basis of a broad definition, have to be weighed against the impact on service delivery to black communities, employment of black people, and procurement from black firms. Several submissions saw a need for SOEs to be given a clear and consistent mandate to promote BEE, especially through procurement and the delivery of services. The Committee noted variation in approach of different SOEs on procurement, with one SOE even indicating that, in practice, it was ignoring the provisions of the Preferential Procurement Act. Whatever the reasons for this, it seemed to the Committee that a clear and consistent approach by SOEs to promoting BEE is fundamental to government’s efforts in this regard. In addition, the reference in paragraph 3.5.4 to "worker and community ownership and management of SOEs" as an option available to government to pursue BEE is too cryptic and needs elaboration.

There was a feeling by some that cooperatives, community and collective enterprises, though mentioned, had not received the degree of emphasis and priority merited. This contrasted with the emphasis afforded in the Growth and Development Summit.

The section on "Finance for BEE" (paragraph 3.6) and particularly the section on "Financing Mechanisms" (section 3.6.5), refers largely to the role of governmental agencies in providing funding to support BEE, but does not address the role of private financial institutions in promoting BEE. Some indication of government’s approach in this regard needs to be included, referring inter alia to the 2002 Nedlac Financial Sector Summit and the current process of developing a Financial Sector Charter.
NAFCOC proposed that the strategy should also entail a regulatory review aimed at identifying regulations that hampered BEE as well as mechanisms that could be used to promote it.

The concept of a "balanced scorecard" was generally supported, but a number of submissions made specific proposals for some amendment to the focus and distribution of weighting. There was also a fair degree of support for the proposal that an amended version of Appendix A be included as a Schedule to the Bill.

There were a number of proposals on the composition of the BEE Advisory Council (Appendix C). There is clearly a strong feeling that the Council must be representative of the range of stakeholders that will have an interest in broad based BEE. While there may not be a need for much reformulation of paragraph 3.3 (ii) in the Strategy Document, consideration could be given to indicating that Council members will be appointed through a process of appropriate consultation. ".

Report to be considered.