[ad_1]
The EU-South Africa Partners for Growth project has published a new study looking at the effects of Black Economic Empowerment (BEE) in South Africa and the impact these policies have on international investment.
The study, which was funded by the European Union, found that South Africa offers many attractive assets for foreign investors, such as its diversified and advanced economy, abundance of natural resources, and well-developed infrastructure.
Unfortunately, investors remain concerned about the lack of clarity on political and structural reforms, the group said. They added that the policies often elicit a ‘deer in the headlights’ response from even the most seasoned investors.
“As B-BBEE proponents sought to increase the regulatory and measurability aspects of B-BBEE, the policy, primarily effected through the B-BBEE Codes of Good Practice, has become quite complicated and complex, often frustrating business rather than encouraging transformative practices. “
Participants in the study represented a sample of EU investors of various profiles, from medium-sized companies to large multinationals, spanning various industrial sectors, from manufacturing to services.
Some of the key findings include:
- Respondents showed a strong awareness of the imperatives of B-BBEE.
- The effects of the implementation of B-BBEE in the company are far-reaching, beyond the provision of resources for a mere administrative exercise. The frustrations experienced when implementing B-BBEE range from ‘too many ambiguous and often changing rules’, to trying to stay focused on business imperatives while addressing the complexities of B-BBEE compliance.
- The costs incurred through B-BBEE stood out as a key challenge experienced by companies. Interviewees provided candid responses to B-BBEE-related expenses and the resulting concerns about the financial viability of these costs, as well as concerns about the sustainability of their businesses.
- Equivalent Equity Programs (EEP) and the Youth Employment Service (YES) initiative have not taken off in the way the South African government intended. EEP processes are generally considered complex and, again, unaffordable even for large companies. Companies tend to shy away from the YES initiative, as they remain wary of the staffing and commitment placement that are an imminent component of it.
- Discussions on the aspect of contributions to skills development yielded the strongest responses. Clearly, EU companies have gone beyond simply adopting the skills element of the B-BBEE scorecard, offering skills development, often in specialized areas of study that the current education system cannot be expected to meet. . These skills initiatives add significant value to the respective apprenticeship candidates, as well as to the respective industries; however, these initiatives are not always recognized through current B-BBEE policy.
- The EU companies interviewed have called for skills development to be more prominent in the B-BBEE landscape.
Incoming changes
In May, the Employment and Labor Department said it will amend and enact changes around South Africa’s employment equity. regulations to address issues related to equal opportunities and inclusion.
Director General for Employment and Labor Thobile Lamati said this will include a push for more transformational changes at the top levels of South African companies.
Citing the government’s 2018-2019 employment equity report, Lamati said that black Africans currently make up 23.2% and 40.2% at the senior and middle management levels, as reported by designated employers.
He said the government will now push for an annual increase of at least 2% in the representation of black Africans at the senior and middle management levels.
He added that the Labor Department plans to set sectoral targets to bring it to at least 50% in the next five years (2024).
Lamati said the department also plans to amend the existing Employment Equity Act to help it meet these transformation goals within the same time frame.
In July 2019, Labor Minister Thulas Nxesi announced a planned amendment bill that will regulate the establishment of sector-specific employment targets to address the underrepresentation of blacks, women and people with disabilities.
It will also ensure that a certificate of employment fairness compliance becomes a precondition for access to state contracts.
Read: New data shows the composition of South Africans with employment
[ad_2]
