BLACK ECONOMIC EMPOWERMENT (BEE) and Small Business South Africa

The government controls the BEE program through the Economic Strategy of 2003. Organizations must comply with BEE regulations if they want to qualify for several of the incentive schemes or obtain contracts from the government. The BEE strategy aims to empower previously disadvantaged blacks through management positions and ownership of businesses. According to the strategy, businesses must have a set percentage of black people in management, shareholding and partnerships. Any person or company who wishes to establish an operation in South Africa should get acquainted with the procedures and regulations. 

Each sector has its own BEE scorecard that indicates how well a business has adapted to BEE requirements. The process of becoming BEE compliant was published by DTI in 2004. The plan outlines voting rights, economic interests, and accrual of bonus points, human resources, and investment policies regarding empowered entities. Businesses that are not BEE compliant will be penalized in the near future. 

Enterprises are classified according to the total of blacks in top or ownership positions:

* Black enterprises have more than 50% black ownership.
* Black empowered businesses have 25% or more black ownership or one 
  quarter of the managers are black people.
* Black influenced businesses have 5.1% black ownership.
* Black engendered enterprises have more than 25% black women managers.
* Black community endeavors have at least one black shareholder that represents
  the larger group.

If you plan to open a business in South Africa, you should consider a BEE partner, as this will enhance your chances for obtaining large contracts and better finance.

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APPLICATIONS AT BEE FUND SURGE

The National Empowerment Fund (NEF), the agency which supports business enterprises owned and managed by black entrepreneurs, effectively processed 1 645 enquiries and screened 887 applications in the past six months, it said Thursday.

It provides financial and non-financial solutions to black-empowered entrepreneurs and has funded portfolio approvals in excess of R2bn since inception and has disbursed more than R1.5bn to date, says Pre-Investment Division head Seison Reddy.

Reddy added that the Pre-Investment division provides a dedicated and professional customer care interface amid challenges such as incomplete and poor quality of business plans received.

Letters confirming receipt and processing of applications were dispatched within the targeted three days, while the applications were screened within three weeks.

Reddy noted the division experienced a significant increase in enquiries and applications during the second quarter of the year, which was attributed to its various awareness campaigns. These included the NEF Imbizo and Investor Education initiatives which involved a national road show covering the Northern Cape, Eastern Cape and Free State.

The campaign will be rolling out to other provinces from February.

The online NEF's Business Planner Tool, which was launched in 2009 as an intervention aimed at addressing the challenges faced by black entrepreneurs in completing viable business plans, continued to attract growing volumes of users.

To date a total of 8 729 users have accessed the business plan tool with 6 744 users having completed their plans.

On completion of the plans users may approach any financier, as they are not restricted to approaching the NEF.

This tool provides a step by step guide to aspirant entrepreneurs on how to complete bankable business plans which encompass accurate financial projections.

The organisation continues to employ innovative solutions aimed at improving the time it takes to screen applications and responses to applicants. It also has a walk in centre staffed by competent product advisors, Reddy added.

The NEF was established in 1998 in order to promote and facilitate black economic equality and transformation. Its mandate is to be the catalyst of Broad-Based Black Economic Empowerment (BB-BEE) in South Africa.

The objectives of the NEF is to support business enterprises owned and managed by black entrepreneurs, as well as in the promotion of savings and investment schemes for black people, and in so doing, developing an understanding of equity ownership and a culture of savings amongst its beneficiaries.

The NEF believes the establishment and promotion of a savings and investment culture among black people, supported by clear and accessible savings and investment products, is key to assisting South Africans to move from second economy to first economy participation.


Small Business South Africa - Black Economic Empowerment and Small Business South Africa
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