BEE Partner, South Africa Economy Watch

There is much detail in this section. It is, arguably, one of the most important issues in the context of BEE. BEE, and particularly ownership, has developed a bad name because the wrong partners have been sought. It is all very well to have a paternalistic approach and give ownership to staff members or some unfortunate person, but is this a sound business principle? It may be, but normally it is not. The point is, if an empowerment deal is not based on sound business principles, then a sustainable relationship is unlikely. Read the rest of this entry »

What are the qualities that a business needs to look for in a BEE partner? The answer lies in both parties’ ability to identify the qualities inherent in themselves. There is little value in a partnership where skills and abilities are replicated. To form a mutually beneficial BEE deal, both parties must know themselves and their proposed partner before a decision can be taken. Standard management principles must be applied to BEE deals. Flamboyant creativity should be balanced with practical conservatism. Read the rest of this entry »

The Boston Consulting Group (BCG) categorized businesses into four groups:

• Start-ups (BCG uses the term “Question mark”.)
• Stars
• Cash cows
• Dogs.

Start-ups are new ventures with no track record. Start-ups usually require capital investment and do not produce any cash benefits for the owners. A start-up can evolve to a star or a dog. They are high-risk entities making them difficult to value and will find it hard to obtain empowerment partners. Read the rest of this entry »

Once the type of partner required has been established, the source of that partner is more easily identified. Determine who you want and consider the areas such a person would frequent. A question that small business owners may wish to consider in sourcing empowerment partners is, “Who is my target market and who can bring me closer to that market?” Read the rest of this entry »

In any event, while perceived power symmetries may explain the willingness of both the ANC and the NP to enter into negotiations, the balance of power eventually shifted quite clearly to the ANC. The National Party sought, for example, a guaranteed white veto in the legislature (similar to that assured in Zimbabwe’s 1979 negotiations), and a leading role in writing the final constitution. Read the rest of this entry »

Faced with both domestic and international pressures, the South African state was “substantially weakened” by the late 1980s and early 1990s. As Pierre du Toit notes, many activities were beyond the reach of state control: corruption, dirty tricks, and clandestine murder among them. Thus the prospect of a negotiated settlement brought great risk (the potential loss of hegemony) as well as opportunity (the prospect of stemming economic losses and maintaining political control) for the government, as it did for the ANC. Nonetheless, both parties anticipated that they might use their positions and the perceived weakness of the other party to gain from negotiation. Read the rest of this entry »

The economy and poverty remain, in our view, the principal obstacles to future stability in South Africa. As noted, growth is insufficient to meet population needs, and the controversial GEAR policies have to a considerable extent removed the state from the direct provision of economic resources to the poor in terms of redistribution, and have instead placed this critical role in the purview of “the market.” Read the rest of this entry »

Since large residual white populations remained in southern Africa after independence, a considerable degree of accommodation has been required to reduce conflict between the owners of the resources and the new majority “owners” of the state. South Africa’s 4.5 million whites continue to dominate industry, commercial agriculture, the financial sector, mining, and the vast majority of agricultural lands and resources. Read the rest of this entry »

Potential partners should be courted before finalising the partnership, This can be done by offering the Black party a position on the board or management to assess the fit of the respective parties. Small business may not ordinarily hold board meetings although it may become a useful practice. A board meeting that includes the business’s accountant, BEE party and other relevant parties is a beneficial exercise. Apart from this it is also good business practice. Read the rest of this entry »

The parties involved in the structuring of a deal vary according to the size of the deal. The professional fees for listed deals can reach as high as R10 million rand just for the opinion of the various parties involved in the structure. Put in context with the size of the deals, however, this is not as extreme as it appears. QSE deals will need fewer and leis expensive professionals and the costs will be reduced to a fraction this amount. Read the rest of this entry »

As a result of historical circumstances, Black people wanting to get involved in business usually have limited access to finance.

There are relatively few empowerment companies who want to buy equity stakes in small business. It is also unlikely that a business owner or employee has the knowledge to obtain empowerment funding to buy the equity. Read the rest of this entry »

The QSE Codes make no specific mention of the sale of assets. However, they do provide that unless otherwise stated, all the Statements under Codes 000 — 700 are applicable. The sale of assets was not developed with QSEs in mind as it developed from pressure from large mining concerns. Read the rest of this entry »

How much credit does the seller warrant in terms of ownership? It is not real ownership but amounts to quasi, or representative, ownership. This is addressed in Section 4 of Statement 102.

The Codes term the measured business that sells the asset as the “Seller” and the BEE entity that buys the asset as the “Associated Enterprise“. They do not refer to the BEE party because often the sale is made to a business that is not exclusively owned by a Black party. I will use these terms to explain the calculation. Read the rest of this entry »

Section 3.2 of Statement 102 provides the criteria for the sale of assets to qualify for recognition as an ownership alternative and achieve ownership points. The transaction must adhere to all the following criteria:

• It must result in the creation of a sustainable business opportunity for the Black party.
• It must result in the transfer of specialised skills or productive capacity to Black people. Read the rest of this entry »