Chapter 1 - BEE

Question 1

Outline/Describe/Explain/Discuss the purpose of BEE

Answer 1

• To bring the majority of South Africans into the mainstream of the economy
• To push the country’s economic growth in the right direction by increasing the number of black people that manage, won and control the country’s economy, and decreasing income inequalities
• To provide clear and comprehensive criteria for the measurement of B-BBEE compliance across sectors of the economy
• To implement a preferential procurement policy such as buying from BEE businesses

Question 2

Discuss/Explain/Evaluate the impact of BEE (advantages and/or disadvantages/negatives) on businesses

Answer 2

Advantages

Disadvantages

• Provides benchmarks for business
• When BEE was first implemented not all businesses benefited from it. In some cases, it had a negative impact, such as the collapse of NAIL and the dismantling of the Mvela Group
• Some BEE investors had limited to no funds
• Some black partners were taken on board just to comply with the BEE requirements without adding value to the business
• Many employees get jobs based on BEE ratings rather than on proficiency
• Many companies have been severely disadvantaged due to their BEE rating
• BEE processes and procedures can be costly for a business