Thesis (MA)--University of Stellenbosch, 2004. / ENGLISH ABSTRACT: This study considers Black Economic Empowerment (BEE) in South Africa, and in
particular, the various funding structures of Black Economic Empowerment
transactions. Whilst these structures have a variety of forms, past experience has
suggested some fundamental problems with the actual funding sources and structures.
Various definitions and interpretations of Black Economic Empowerment within the
context of this paper are discussed. Two BEE strategies are identified, one of which
namely, the creation of a broader, more sustainable group of black entrepreneurs for
South Africa will be the focus of this paper. The issue of entrepreneurial
empowerment will remain an ongoing theme throughout all chapters in this paper.
The second BEE strategy, namely, poverty alleviation and employment creation is
only briefly discussed although its importance is not underestimated. From the study
it is concluded that BEE ought not be a strategy aimed at the enrichment of a select
group 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 to
finance for black entrepreneurs and small businesses is looked at in this context. The
historical analysis starts with the early years in South Africa and then focuses on the
period 1990 – 1999.
This report also provides a critical assessment of some of the biggest shortcomings of
the pyramid structures and complex financial engineering of the first attempts of
Black Economic Empowerment in the narrow sense of the word. It is established that
the Special Purpose Vehicle funding structures of the late 1990s were a failure.
Further, this study looks at current financing options and possible solutions. Some
recent examples are also provided of BEE funding structures which seem to have
worked. Traditional government institutions such as the Industrial Development
Corporation, in particular, have also come a long way in developing more viable funding in transactions with BEE companies. It is also noted that recent alternative
financing structures by the private sector are addressing some of the key challenges of
BEE such as ownership, control and the promotion of sustainable black businesses for
the transformed South African economic landscape going forward. However, many
obstacles remain with the potential sources of funding of BEE such as traditional
banks 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 Development
Finance Institutions (DFIs) of government such as the National Empowerment Fund,
Khula Enterprises and the Land Bank which are also anticipated to play a crucial role
in the provision of financing for BEE over the coming years.
This study highlights the significant cost involved with the implementation of the
BEE strategies. The single biggest challenge to the economic empowerment of the
previously disadvantaged is access to funding. About the need for broad-based Black
Economic Empowerment in South Africa, there is no dispute. But it is important that
these costs are weighed against other sustainable development objectives. The private
sector often seems to see BEE as a cost rather than an opportunity. But while the
shortcomings of numerous empowerment initiatives, exacerbated by the 1998 stock
market crash, may have caused the financial sector to get cold feet about these
transactions, the sector can come up with some creative options that go beyond old
problems. Therefore, the future role of government financed institutions together with
the private sector remains critical in ensuring that these objectives are met.
In conclusion, the discussion on the funding of Black Economic Empowerment in
South Africa must be seen within the context of the political and economic landscape
of the 1900s and then in particular, the history of the past ten years.
Narrowly defined black economic empowerment has gained significant momentum in
recent years due to the economic restructuring of the business sector which has been
propelled by recent government legislation such as the Mining Charter, the Black
Economic Empowerment Commission’s recommendations, the Department of Trade
and Industry’s discussion documents and other legislation currently in the pipeline.
However, the economic landscape still looks bleak. Real economic growth has been
inadequate 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 is
within this context that one should assess the many policy and funding initiatives that
have been taken and the strategies proposed to redress historical imbalances in the
country.
The paper itself is comprised of six parts. This executive summary only serves to
provide a brief overview of the various areas covered in this study. Chapter One
analyses the various definitions of the term Black Economic Empowerment, their
relevance and the development of BEE in South Africa over the years. This leads to a
discussion 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 of
the funding obstacles facing black people since the early 1900s, then looks at
developments of BEE since the early 1990s with a critical assessment of the failures
of empowerment and the funding structures utilized during this period. Chapter Three
also identifies various similarities and lessons learnt from examples of empowerment
experiences in other countries. Chapter Four looks at the estimated size of the funding
requirement and current sources of financing from the private and public sector.
Certain conclusions are drawn from this overview. Chapter Five looks at the major
risks facing the impact of BEE and the financing thereof in the future. Chapter Five
also applies the criteria for appropriate funding of BEE to a recent BEE transaction in
the form of a case study. Some possible solutions are also put forward in this section
of the analysis. Chapter Six summarises and concludes. 1 Note that HDP incorporates all disadvantaged groupings such as the Black, Indian, Coloured
populations 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. / AFRIKAANSE OPSOMMING: Hierdie studie ondersoek Swart Ekonomiese Bemagtiging (SEB) in Suid-Afrika, en in
die besonder die verskillende befondsingstrukture van Swart Ekonomiese
Bemagtigingstransaksies. Hoewel hierdie strukture ’n verskeidenheid vorms mag hê,
het ondervinding getoon dat daar wesentlike probleme is wat die werklike
befondsingsbronne en -strukture betref.
Verskillende definisies en vertolkings van Swart Ekonomiese Bemagtiging binne die
konteks van hierdie verhandeling word bespreek. Twee SEB-strategieë word
geïdentifiseer, waarvan een, naamlik die daarstelling van ’n meer omvattende en meer
volhoubare groep swart entrepreneurs vir Suid-Afrika, die fokuspunt van hierdie
verhandeling sal wees. Die vraagstuk van entrepreneuriale bemagtiging sal ’n
deurlopende tema in alle hoofstukke van hierdie verhandeling bly. Die tweede SEBstrategie,
naamlik armoedeverligting en werkskepping word slegs vlugtig bespreek,
alhoewel die belang daarvan nie onderskat word nie. ’n Gevolgtrekking van die
studie is dat SEB nie ’n strategie behoort te wees wat op die verryking van ’n
uitgesoekte swart elite-groep gerig is nie. Lesse wat uit mislukkings van die verlede
geleer is, word ook belig.
’n Geskiedkundige ontleding van die voorsiening van befondsing aan voorheen
benadeelde mense in Suid-Afrika word gebied. Die tema van ongelykheid in die bied
van toegang tot finansiering vir swart entrepreneurs en klein besighede word binne
hierdie verband bekyk. Die geskiedkundige ontleding begin met die vroeë jare in
Suid-Afrika en fokus vervolgens op die tydperk 1990 – 1999.
Hierdie verslag bied ook ’n kritiese evaluering van sommige van die grootste
tekortkomings van die piramidestrukture en ingewikkelde finansiële geniëring van die
eerste pogings tot Swart Ekonomiese Bemagtiging in die eng sin van die woord. Daar
word bewys dat die Gespesialiseerde Voertuig-befondsingstrukture van die laat
1990’s ’n mislukking was. Hierdie studie kyk boonop na huidige finansieringsopsies
en moontlike oplossings. ’n Aantal onlangse voorbeelde van SEBbefondsingstrukture
wat klaarblyklik suksesvol was, word ook gebied. Tradisionele
regeringsinstansies, soos die Nywerheidsontwikkelingskorporasie in die besonder, het ook heelwat vordering getoon wat die ontwikkeling van meer lewensvatbare
befondsing in transaksies met SEB-maatskappy betref. Daar word ook gelet op die
feit dat onlangse alternatiewe finansieringstrukture deur die privaat sektor sommige
van die sleuteluitdagings van SEB, soos eienaarskap, die beheer en bevordering van
volhoubare swart besighede vir die transformerende Suid-Afrikaanse ekonomiese
landskap, aanspreek. Daar is egter steeds talle struikelblokke wat die potensiële
befondsingsbronne van SEB betref, soos tradisionele banke en lewensversekeraars in
Suid-Afrika wat steeds nie meer toeganklik vir die armes is nie. Wesentlike probleme
is ook geïdentifiseer in die ontleding van die regering se
Ontwikkelingsfinansieringsinstansies, soos die Nasionale Bemagtigingsfonds, Khula
Enterprises en die Landbank, wat na verwagting ook ’n beslissende rol in die
voorsiening van finansiering vir SEB in die komende jare sal speel.
Hierdie studie belig die aansienlike koste wat by die implementering van die SEBstrategieë
betrokke is. Die grootste enkele uitdaging vir die ekonomiese bemagtiging
van voorheen benadeeldes is toegang tot befondsing. Die behoefte aan omvattende
Swart Ekonomiese Bemagtiging in Suid-Afrika word nie betwis nie. Maar dis
belangrik dat hierdie koste opgeweeg moet word teen ander volhoubare
ontwikkelingsdoelwitte. Dit wil voorkom asof die privaat sektor SEB as ’n uitgawe
eerder as ’n geleentheid beskou. Maar alhoewel die tekortkominge van talle
bemagtigingsinisiatiewe, wat deur die ineenstorting van die aandelemark in 1998
vererger is, daartoe kon gelei het dat die finansiële sektor bra lugtig vir hierdie
transaksies is, kan die sektor tog met skeppende opsies vorendag kom om ou
probleme die hoof te bied. Die toekomstige rol van staatsgefinansierde instansies in
samewerking met die privaat sektor bly dus deurslaggewend om te verseker dat
hierdie doelwitte bereik word.
Kortom, die bespreking van die befondsing van Swart Ekonomiese Bemagtiging in
Suid-Afrika moet gesien word binne die konteks van die politieke en ekonomiese
landskap van die 1900’s en die geskiedenis van die afgelope tien jaar in die besonder.
Eng gedefinieerde swart ekonomiese bemagtiging het in die laaste paar jaar
aansienlike stukrag verkry danksy die ekonomiese herstrukturering van die
sakesektor, wat verder aangedryf is deur onlangse regeringswetgewing soos die Mynbouhandves, die aanbevelings van die Swart Ekonomiese
Bemagtigingskommissie, die Departement van Handel en Nywerheid se
samesprekingsdokumente en ander wetgewing wat tans beplan word. Die
ekonomiese landskap lyk egter steeds allesbehalwe rooskleurig. Reële ekonomiese
groei is onvoldoende aangesien groot gedeeltes van ons bevolking steeds werkloos is.
’n Betekenisvolle struikelblok wat ons ekonomie steeds in die gesig staar, is die groot
mate van ongelyke welvaart wat bestaan. Dit is binne hierdie verband wat die talle
beleids- en befondsingsinisiatiewe geëvalueer moet word wat onderneem is en
strategieë wat voorgestel is om die geskiedkundige wanbalanse in die land aan te
spreek.
Die verhandeling self bestaan uit ses afdelings. Hierdie inleiding dien slegs om ’n
bondige oorsig te gee van die onderskeie temas wat in hierdie studie gedek word.
Hoofstuk Een ontleed die verskillende definisies van die uitdrukking Swart
Ekonomiese Bemagtiging, hul tersaaklikheid en die ontwikkeling van SEB in Suid-
Afrika oor die jare. Dit gee aanleiding tot ’n bespreking in Hoofstuk Twee van die
probleemstelling, naamlik die befondsing van SEB. Hoofstuk Drie is in sewe
onderafdelings verdeel en bied ’n geskiedkundige ontleding van die
befondsingstruikelblokke wat swart mense sedert die vroeë 1900’s in die gesig staar,
waarna dit ontwikkelings op die gebied van SEB sedert die vroeë 1990’s ondersoek,
met ’n kritiese evaluering van die mislukkings van bemagtiging en die
befondsingstrukture wat in hierdie tydperk toegepas is. Hoofstuk Drie identifseer ook
verskillende ooreenkomste tussen en lesse wat geleer is uit voorbeelde van
bemagtigingsondervinding in ander lande. Hoofstuk Vier kyk na die geskatte omvang
van die nodige befondsing, asook huidige bronne van finansiering uit die privaat en
openbare sektor. Sekere gevolgtrekkings word aan die hand van hierdie oorsig
gemaak. Hoofstuk Vyf belig die grootste risiko’s wat die impak van SEB in die gesig
staar, asook die toekomstige finansiering daarvan. Hoofstuk Vyf pas boonop die
kriteria vir genoegsame befondsing vir SEB op ’n onlangse SEB-transaksie in die
vorm van ’n gevallestudie toe. ’n Aantal moontlike oplossings word ook in hierdie
afdeling van die ontleding gebied. Hoofstuk Ses vat saam en kom tot ’n slotsom.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/16411 |
| Date | 12 1900 |
| Creators | Phillips, Natalie Emma |
| Contributors | Smit, Ben, Terreblanche, Sampie, University of Stellenbosch. Faculty of Economic and Management Sciences. Dept. of Economics. |
| Publisher | Stellenbosch : University of Stellenbosch |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | 212 leaves |
| Rights | University of Stellenbosch |
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