Abstract
The subject of this dissertation is a fairly contentious issue, with advocates on all sides debating the effectiveness and value of affirmative action, as defined in the Black Economic Empowerment legislature. The goal is to determine the affect of BEE on the management of Small and Medium Enterprises in South Africa, although SME’s have been found by this study to have an influence on the effectiveness of BEE.
An overview of the origins and history of affirmative action policies, cumulating in BEE, are discussed, and the various policies and their effectiveness are examined. Special emphasis was placed on the study of the Black Economic Empowerment Commission, and the recent policies around the enforcing of BEE compliance on corporate South Africa. The biggest problem with the implementation of BEE was found to be financing. Many financial models have been attempted to provide the necessary funding for empowerment to happen, but all seem to be flawed in some way or another. Insight was gained into how BEE policies are structured, the particular goals they are trying to achieve, and conclusions were drawn on how best these goals could be met.
The study then provides an overview of the position and value of Small and Medium Enterprises in the South African economy and the particular issues that management of these enterprises face. The value of SME’s to the government’s policies of addressing massive unemployment in South Africa is examined, and certain conclusions are drawn around how effective these policies are. The various constraints and peculiar problems of the SME sector are examined, in order to place the topic of the dissertation in context.
The dissertation then discusses the approach that was taken by the author in gathering the information and research material that was used to write the paper. These methods included meticulous research of the subject matter in the written press, internet sources, online libraries, as well as many personal interviews with leading industry and government personalities.
This information is then used to discuss the effect of BEE in practice, with particular emphasis on impact that BEE has had and is having on the SME sector of the South African economy. Discussion is provided around the application of the BEE scorecard, as well as a section covering finance, both local and foreign, of BEE deals. The opinions of the industry leaders interviewed are discussed and particular issues raised by them are examined in the light of the previous discussions around BEE and SME’s.
Lastly, the dissertation presents a set of conclusions drawn by the author, and backed up by industry comment. These conclusions provide a clear understanding of the impact that BEE is having on SME’s, as well as how SME’s will have an effect on the long-term success of BEE in South Africa.
Prof. S. Kruger