The good, the bad and the ugly of the new BEE codes

Staff Reporter

Staff Reporter

The Broad-based Black Economic Empowerment codes of good practice came into effect this year. Here's a look at why they've been generally well received - as well as a few of the idiosyncrasies that will need some ironing out.

Most people agree on the pressing need to transform the economy, but until a few months ago there was much uncertainty about exactly what would be required of businesses. But on February 9 a collective sigh of relief was breathed by the business community as the new codes of good practice kicked in, introducing a number of welcome compromises and concessions.

Overall, the codes have been well received, but according to Jonathan Goldberg, member and facilitator of the Institute of Directors Southern Africa (IoD) there are some unintended consequences that are beginning to emerge fromimplementation of the codes.

The definition of a "black" person in terms of the codes is likely to upset a few people, said Goldberg. Black still means African, Coloured and Indian - but the person must have been a South African citizen before 1994 in order to qualify as "black".

Therefore, said Goldberg, "anyone who gained citizenship after 1994 doesn't qualify for recognition". This is likely to have far-reaching implications for companies that are owned by, for example, Zimbabwean-born South African citizens.

Chinese-South African citizens, who feel that they were discriminated against during the apartheid years, are challenging the definition of "black" in the constitutional court.

On a positive note, the codes grant 100percent black economic empowerment recognition to companies with turn-over of less than R5million.

"The exemption from black economic empowerment of microenterprises and their recognition as level 4 contributors is a major boost for small business owners who would otherwise struggle to adhere to the requirements," said Goldberg.