The funding of black economic empowerment in South Africa

[摘要] ENGLISH ABSTRACT: This study considers Black Economic Empowerment (BEE) in South Africa, and inparticular, the various funding structures of Black Economic Empowermenttransactions. Whilst these structures have a variety of forms, past experience hassuggested some fundamental problems with the actual funding sources and structures.Various definitions and interpretations of Black Economic Empowerment within thecontext of this paper are discussed. Two BEE strategies are identified, one of whichnamely, the creation of a broader, more sustainable group of black entrepreneurs forSouth Africa will be the focus of this paper. The issue of entrepreneurialempowerment will remain an ongoing theme throughout all chapters in this paper.The second BEE strategy, namely, poverty alleviation and employment creation isonly briefly discussed although its importance is not underestimated. From the studyit is concluded that BEE ought not be a strategy aimed at the enrichment of a selectgroup of black elite. Lessons learnt from past failures are also highlighted.A historical analysis of the provision of funding to historically disadvantaged people(HDP)1 in South Africa is presented. The theme of inequality in providing access tofinance for black entrepreneurs and small businesses is looked at in this context. Thehistorical analysis starts with the early years in South Africa and then focuses on theperiod 1990 – 1999.This report also provides a critical assessment of some of the biggest shortcomings ofthe pyramid structures and complex financial engineering of the first attempts ofBlack Economic Empowerment in the narrow sense of the word. It is established thatthe Special Purpose Vehicle funding structures of the late 1990s were a failure.Further, this study looks at current financing options and possible solutions. Somerecent examples are also provided of BEE funding structures which seem to haveworked. Traditional government institutions such as the Industrial DevelopmentCorporation, in particular, have also come a long way in developing more viable funding in transactions with BEE companies. It is also noted that recent alternativefinancing structures by the private sector are addressing some of the key challenges ofBEE such as ownership, control and the promotion of sustainable black businesses forthe transformed South African economic landscape going forward. However, manyobstacles remain with the potential sources of funding of BEE such as traditionalbanks and life assurers in South Africa who are still not more accessible to the poor.Fundamental problems have also been identified in the analysis of the DevelopmentFinance Institutions (DFIs) of government such as the National Empowerment Fund,Khula Enterprises and the Land Bank which are also anticipated to play a crucial rolein the provision of financing for BEE over the coming years.This study highlights the significant cost involved with the implementation of theBEE strategies. The single biggest challenge to the economic empowerment of thepreviously disadvantaged is access to funding. About the need for broad-based BlackEconomic Empowerment in South Africa, there is no dispute. But it is important thatthese costs are weighed against other sustainable development objectives. The privatesector often seems to see BEE as a cost rather than an opportunity. But while theshortcomings of numerous empowerment initiatives, exacerbated by the 1998 stockmarket crash, may have caused the financial sector to get cold feet about thesetransactions, the sector can come up with some creative options that go beyond oldproblems. Therefore, the future role of government financed institutions together withthe private sector remains critical in ensuring that these objectives are met.In conclusion, the discussion on the funding of Black Economic Empowerment inSouth Africa must be seen within the context of the political and economic landscapeof the 1900s and then in particular, the history of the past ten years.Narrowly defined black economic empowerment has gained significant momentum inrecent years due to the economic restructuring of the business sector which has beenpropelled by recent government legislation such as the Mining Charter, the BlackEconomic Empowerment Commission's recommendations, the Department of Tradeand Industry's discussion documents and other legislation currently in the pipeline.However, the economic landscape still looks bleak. Real economic growth has beeninadequate since large parts of our population are still unemployed. A significant hurdle still facing our economy is the high degree of wealth inequality that exists. It iswithin this context that one should assess the many policy and funding initiatives thathave been taken and the strategies proposed to redress historical imbalances in thecountry.The paper itself is comprised of six parts. This executive summary only serves toprovide a brief overview of the various areas covered in this study. Chapter Oneanalyses the various definitions of the term Black Economic Empowerment, theirrelevance and the development of BEE in South Africa over the years. This leads to adiscussion in Chapter Two on the problem statement, being the funding of BEE.Chapter Three is divided into seven sub-sections and provides a historical analysis ofthe funding obstacles facing black people since the early 1900s, then looks atdevelopments of BEE since the early 1990s with a critical assessment of the failuresof empowerment and the funding structures utilized during this period. Chapter Threealso identifies various similarities and lessons learnt from examples of empowermentexperiences in other countries. Chapter Four looks at the estimated size of the fundingrequirement and current sources of financing from the private and public sector.Certain conclusions are drawn from this overview. Chapter Five looks at the majorrisks facing the impact of BEE and the financing thereof in the future. Chapter Fivealso applies the criteria for appropriate funding of BEE to a recent BEE transaction inthe form of a case study. Some possible solutions are also put forward in this sectionof the analysis. Chapter Six summarises and concludes. 1 Note that HDP incorporates all disadvantaged groupings such as the Black, Indian, Colouredpopulations of South Africa. In historical terms it also includes the various tribes that existed in South Africa during the early years as well as those who were slaves.Africa during the early years as well as those who were slaves.

[发布机构] Stellenbosch University