At work today, I came across a contract, dating from last year, between our company and a South African one. Attachments to the contract included a certificate verifying that this company was certifiably a Black Empowered Enterprise, as well as an audit report the point of which seemed to be to verify whether the company was one of three categories (Black, Black Empowered or Black Women Owned, if I recall correctly).
I was intrigued since I’ve never run into anything like this before. How common is this type of certification in South Africa? I’m assuming there are some kind of tax or legal benefits from being certified as a Black/Black Empowered/Black Women Owned Enterprise. What are these benefits? And is there a specific reason why the company would include this documentation as attachments to a business contract? Is it standard procedure?
Black Ecconomic Empowerment (BEE) has become South Africa’s affirmative action, but on a business level rather than an individual level. The BEE guidelines include employment equity and apply mostly to companies wishing to do business with government or to purchase state-owned assets. More info. I would guess that Black Women Owned is just a sub-class of BEE, but I don’t know.
This policy has been criticised as it appears to favour the few rather than the majority, and has created a prosperous black upper/middle class without changing the lot of the majority of Black South Africans who are still trapped in poverty.
Having said that, I have been living outside South Africa for over 6 years now, so my information is second hand or based on what I read on the net - there are other, local South Africans on the board, I will let them comment on the practical realities/impact of the programme.
Sounds similar to USA where various government-funded projects tried to direct a certain percentage of the contracts to ‘Minority Owned Businesses’. A sort of affirmative action program, intended to open up government contracts to more minority businesses.
Had a rather surprising side effect in some cases: the costs to the government went down. Basically, more bidders on these contracts (including some smaller companies hungry for business) sometimes leads to lower bids.
Can also lead to some fraud; I know of a case where an electrician put the company in his wife’s name, then bid for contracts as a minority (female) owned business.
My business is BEE - since I’m a 50 % owner, and Coloured. It’s helped me land the odd contract with local government. So I’m not complaining, but then I’m not a recent White Male graduate…
The other, somewhat related, thing you see is PDI - for “previously disadvantage individual” This includes Blacks, handicapped and women.
It mostly comes into play with companies bidding for government/public sector work, although other large companies are also adopting it as a standard for their subcontractors, and there is legislation to require some Employment Equity measures for any company above a certain size (I think 50 employees?), with more legislation coming in - but this generally means PDIs and not strictly BEE, although the two terms are used loosely. It’s a form of Affirmative Action.
There’s been a lot of criticism of BEE locally, as there would be with any other affirmative action policy. How much of it comes from disempowered white males, I can’t say. Read the relevant Wiki articles here and here.
I’d say the SA firm put the addendum in as proof that they were locally compliant, and possibly habit (because it’s the SOP here).