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BEE Critical For Economic Recovery After Covid-19 Pandemic: Ramaphosa

BEE Critical For Economic Recovery After Covid-19 Pandemic: Ramaphosa…  President Cyril Ramaphosa says black economic empowerment (BEE) is an integral part of SA’s economic reconstruction and recovery in the wake of the Covid-19 pandemic.

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BEE Critical For Economic Recovery After Covid-19 Pandemic: Ramaphosa

 

He made the remarks in his Monday weekly newsletter when he revealed he would announce the appointment of the new Broad-Based Black Economic Empowerment Advisory Council this week.

Next year it will be two decades since the Broad-Based Black Economic Empowerment (BBBEE) Act, which established the council, was passed.

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Among other functions, the act was established to grow black entrepreneurship, ensure greater black management and ownership of businesses, and bring black women into the mainstream of the economy.

We have gone backwards when it comes to increasing black management control, upscaling skills development, entrenching enterprise development and broadening procurement to give opportunities to black women and the youth
President Cyril Ramaphosa

 

Nearly two decades later, Ramaphosa said the country had much work to do on the empowerment front.

“While there has been significant progress over the past two decades, there are some areas where there has been regression. We have gone backwards when it comes to increasing black management control, upscaling skills development, entrenching enterprise development and broadening procurement to give opportunities to black women and the youth,” he said.

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While the apartheid government deliberately built a distorted economy designed to benefit white people and exclude black people from the mainstream economy, Ramaphosa said at the end of apartheid, black ownership of JSE-listed companies was less than 1%.

“This figure has not improved much in the past 28 years,” he said.

Despite the lack of progress, the president said there have been important private sector initiatives and measures by the state to facilitate greater and more meaningful participation of black people in the economy.

“Between 2017 and 2020, nearly 500 empowerment transactions were submitted for registration to the BBBEE Commission. In key sectors such as construction, property, information and communications technology, tourism and transport, black ownership has exceeded targets.

“Economic transformation and economic growth are intertwined. There cannot be one without the other.”

Speaking about progress made to create a generation of black industrialists last year, Ramaphosa said government approved R2.5bn to support nearly 180 black industrialists in the form of loans from the Industrial Development Corporation of SA (IDC) and National Empowerment Fund (NEF) and grants from the department of trade, industry and competition incentive scheme.

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An additional R40bn has been pledged by government and the private sector.

“Over the next three years a further R21bn has been committed by the IDC, NEF and other institutions to support black industrialists. An additional R25bn has been committed to support black, women, youth and worker-owned companies.”

Breaking the cycle of underdevelopment through black economic empowerment is not just a moral imperative, it also makes business sense
President Cyril Ramaphosa

Ramaphosa said it is clear much more work needs to be done to address the challenges with which black businesses grapple. These include the difficulty to access start-up and expansion capital and the ability of SMMEs to find markets for their products and take on large-scale empowerment transactions.

“Breaking the cycle of underdevelopment through black economic empowerment is not just a moral imperative, it also makes business sense. The continued exclusion of the black majority from the economy’s mainstream constrains economic growth, which ultimately impacts all business,” he said.

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Expanding the country’s entrepreneurial base is fundamental to growth, said Ramaphosa,  as it tackled inequality.

“We have a shared responsibility to drive the effort to entrench BBBEE because it is about eradicating inequality. Unequal economies breed unequal societies, and unequal societies don’t grow and flourish. It is not only wrong, but also unsustainable, for businesses to keep their management and ownership structures mostly white or male.”

 

 

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