THE government is moving into a new phase of black economic empowerment (BEE) meant to foster the creation of black entrepreneurs and industrialists in the productive sectors of the economy, Lionel October, director-general of trade and industry, said in Parliament on Tuesday.
He said the first phase was an elitist one involving the transfer of share ownership, while the second phase was meant to redress that shortcoming by providing for more broad-based initiatives such as employee share ownership schemes.
Mr October said in a briefing to the trade and industry portfolio committee on the Broad-Based Black Economic Empowerment (BBBEE) Amendment Bill that there was a need to align BEE with government’s development and transformation agenda.
The bill provided for the creation of a BBBEE commission within the Department of Trade and Industry to conduct monitoring and compliance as there was no adequate institutional mechanism for this, Mr October said.
He noted that compliance in sectors such as agriculture, manufacturing and retail was very low.
The amendment bill will align the law with the BEE codes of good practice, which have been amended to award more points for sustained entrepreneurial and enterprise development by including the companies into supply chains.
Mr October said there had been wide consultation on the bill, of which the first draft was released in December 2011.
The bill creates the offence of fronting and introduces stiff penalties for it. The maximum penalty for individuals for misrepresenting BBBEE status is 10 years’ imprisonment or a fine of 10% of annual turnover for companies.
It also provides for the regulation of verification agencies.
Opposition parties were united in opposing the racial basis of the proposed law.