Practicalities around Black Economic Empowerment and small and medium enterprises in South Africa

Abstract

Broad-based black economic empowerment (BBBEE) and its antecedent black economic empowerment (BEE) remain highly emotive terms in South Africa today. There is a school that firmly believes that BEE is a tax placed upon businesses and that its only effect is to reduce competitiveness. This form of institutionalised racism points to the ANC wanting to “take over everything whites have built up” (de Lange, 2002). On the other hand, the economic and social transformation of South Africa is seen as key for the future of our country and remains a fundamental goal of the democratic government, as the majority of black South Africans continue to operate outside the parameters of the mainstream economy. For this part of the population, BEE has not been implemented nearly as steadfastly as possible. Add to this the acknowledgement that “SMEs will play a prominent role in the second decade of our democracy and beyond as we seek to accelerate economic growth, reduce unemployment and bridge the gap between the first and second economies,” (Mpahlwa, 2005) and we have a hodge-podge of popular opinion. This paper aims to enrich this debate by providing empirical evidence of how the various elements of BEE legislation are experienced by SMEs and whether or not BEE is perceived to be value-adding.