South Africa: Black Economic Empowerment Considerations for Foreign Investors

Black Economic Empowerment (BEE) redresses the legacies of South African apartheid. The apartheid system was designed to restrict non-white South Africans from any or meaningful participation in the South African economy. Wealth was confined to a racial minority. The result was an economic structure, still in existence today, that excludes the vast majority of South Africans who are black people.  Thus, the South African government set about in recent years to adopt meaningful strategies and policies that would include the participation of the majority of South Africans in its economy.  One such strategy was BEE.  It gives previously disadvantaged groups (black Africans, Coloreds, Indians and some Chinese–who are South African citizens) economic opportunities previously not available to them. It includes measures such as employment equity, skills development, ownership, management, socioeconomic development and preferential procurement. The concerns of foreign multinationals in South Africa appear mostly to focus on whether they are required to dispose of equity in their South African operations to be BEE-compliant They have generally overlooked the fact that ownership is but one of the elements of consideration, and that, based on the extent to which they procure from black entities, employ black people, or provide contributions toward the development of other black enterprises, they might be more BEE-compliant than they think.

 

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