Black Economic Empowerment (BEE) is an economic and moral imperative for South Africa if correctly designed, the Democratic Alliance said on Monday.

"BEE as it is currently constituted has created significant distortions in the economy, which have hampered growth and job opportunities without helping the poor," said MP Kobus Marais, DA spokesperson for finance.

"If correctly designed and implemented, not only will it redress the imbalances of the past but it will pull more people into the economy, stimulate competition, improve our skills and productivity, raise our domestic investment levels, reduce poverty, increase employment and broaden our tax base."

He said that sliding share prices and reduced dividend earnings as a result of the economic downturn have resulted in calls for a bail-out of BEE deals which are under pressure.

Restructuring needed

"This short-term reaction to the current economic climate has crowded out the more important question... is BEE as it is currently structured leading to genuine grass-roots empowerment, or does its structure continue to disproportionately enrich the same people?"

Marais said the recent Batho Bonke Empowerment Transaction reaffirmed the idea that although ordinary "broad-based" South Africans do gain some small benefit from these transactions, "it is the rich and well connected that get a far bigger share of the pie".

When this deal was initially agreed upon in 2004, the Absa/Batho Bonke agreement was trumpeted as a landmark BEE deal in which more than 1.1 million beneficiaries would see tangible improvements in their quality of life, Marais said.

"Last week, Absa announced that after paying for its cost of funding the consortium, it would redeem 50.1 percent of its options and would realise approximately R1-billion in value for the Batho Bonke shareholders.

"Through their shares in Mvelaphanda Holdings, Mark Wilcox and Tokyo Sexwale are reported to control nine percent of the Batho Bonke shares.

"In terms of this deal, these shares are now worth more than R90- million.

"On the other hand, the 'small' partners in this deal, various small businesses, women's groups, community trusts and black Absa employees, will receive an average of R800 each."

Marais said this was "more than a 114 000 times less than that which two individuals received from the transaction".

"In essence, wealthy BEE partners are hiding their gains behind the claim to mass empowerment, when in fact the parties who make up the 'mass empowerment' receive comparatively little," he said.

Sapa

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