BEE is essentially a growth strategy to redress the disproportion of wealth distribution in South Africa’s economy. It is a Government initiative to help and support designated groups in South Africa which has suffered from a disadvantage prior to 1994. This initiative is driven by legislation and regulation. The BEE Act of 2003 was used as framework for the Codes of good practice issued by the Department of trade and industry to encourage and measure Broad Based Black Economic Empowerment within all government bodies, public and private organizations.
The Codes of Good Practice measures a companies’ empowerment progress in seven areas:
- Direct empowerment through ownership and control of enterprises and assets.
- Management at senior level.
- Human resource development and employment equity.
- Indirect empowerment through:
- Preferential procurement,
- Enterprise development, and
- Corporate social investments.
The codes are binding on all state of bodies and public companies, and the government is required to apply them when making economic decisions on:
- Licensing and concessions,
- Public-private partnerships, and
- The sale of state-owned assets or businesses
The ongoing success and growth of the BEE codes is generally in the encouragement of companies to apply BEE principles in their own procurement policies as this will affect most private companies throughout the supply chain.