A study of a number of firms based in the European Union (EU) and doing business in South Africa identified empowerment legislation as a major deterrent to investment.
The study’s report, EU Investors’ Responses to Broad-Based Black Economic Empowerment (B-BBEE): A Skills Enhancement Model, argued that South Africa had much to commend itself. It noted that EU-based firms were committed to supporting South Africa and assisting in transformation.
However, BEE had ‘become rather convoluted and complex, often frustrating businesses rather than encouraging transformative practices.’
BEE ownership requirements were a matter of special concern.
EU ambassador to South Africa, Dr Riina Kionka, said that this element of the empowerment setup was highly challenging since many EU investors are family firms, and cannot cede equity.
EU-based firms have ‘found it more difficult to achieve the B-BBEE ownership target, and on average, they have achieved 48% of the maximum target against this element of the codes,’ she said.
They had performed well on other indices such as socio-economic development.
The report recommended revised requirements that gave increased weight to such matters as skills development.
A similar study of EU-based enterprises in 2018 returned similar concerns. Although the government indicated it was willing to discuss them, it said that it would not be able to give up on BEE.