Mathews Phosa slates South Africa's BEE policy

Fin24 Correspondent

Johannesburg - Businessman and former ANC treasurer general Mathews Phosa has expressed misgivings about the ability of the current black economic empowerment policy to lead to real broad-based black economic empowerment (BBBEE).

Speaking at a conference on black economic empowerment on Thursday, Phosa did not hold back on his criticism of black economic empowerment.

"The present black economic empowerment policy... is with respect, not a cure-all to real broad-based black economic empowerment. Millions of black people feel left out and are very sceptical since they cannot enter the formal economy. They only see a few that largely benefited from tenderpreneurship and not from hard work," Phosa said.

He said empowerment should be broad and based on education and skills. “Rearranging” ownership through legislated processes and codes, as is the current practice, brings no benefits as sustainable jobs are often lost to accommodate a new “empowerment” partner through paying for the costs associated with the moves, he said.

"I wonder if those with empowerment shares in struggling commodities feel empowered today, or do they feel overwhelmingly indebted? It is our duty to focus our efforts on removing all the real barriers to growth and job creation, Phosa said.

Phosa's comments come amid general apprehension among companies and businesses about the effect of the recently updated codes of good practice. There are fears that companies will lose BEE ratings under the new codes, which now put increased emphasis on supplier, enterprise and skills development.

The amended BBBEE Act has reduced the number of compliance categories from seven to five. Employment equity and management control have merged, while preferential procurement and enterprise development are now one category.

Ryland Fisher, associate publisher and editor at Topco Media, said businesses are worried about the new codes as these affect them at several tiers. Fisher said there is a general sentiment that sectors which do little business with government are slow to transform.