Organised agriculture in SA has called for in-depth, objective research into the value of the “continuing consequences principle” of Black Economic Empowerment, versus the “once empowered, always empowered principle”, as well as into continuing with affirmative action in a sector that promotes the country’s food security and supports its economy.
As opposed to being “once empowered, always empowered,” the “continuing consequences principle”, included in the BEE Codes of Good Practice 17 months ago, enables companies to claim up to 40% of the 20 points available for ownership on the BEE scorecard if empowerment partners leave. This gives companies time to find new BEE partners, but they lose points over time.
The principle was designed to give black investors the option to opt out of BEE ownership schemes early, provided that wealth has been created while their investments were at work and that these investments have lasted at least three years. However, companies raised concerns that the potential early exit of black investors would undermine their BEE status, so several of them introduced “lock-in” clauses in their empowerment transactions to prevent early exit.
Dr John Purchase, CEO of the Agricultural Business Chamber (ABC), told Farmer’s Weekly he believes the “once empowered, always empowered principle” should have replaced the “continuing consequences principle” from the start. “In the absence of the ‘once empowered, always empowered principle’, agribusinesses have had to use some sort of lock-in conditions out of necessity,” Dr Purchase said. “While the ‘continuing consequences principle’ does offer some measure of compromise, it’s not sufficient.” Agribusinesses will certainly view this principle as an option, but each will have to develop and tailor-make its own BEE strategy according to its business strategy, given the Codes of Good Practice requirements.”
Affirmative action needs debate
Meanwhile, the ABC doesn’t have high hopes for a quick conclusion to government’s affirmative action policies for the agribusiness sector and other industries, despite rumours to the contrary emanating from the upper echelons of the ANC in recent weeks. While deputy president and minister in the presidency Kgalema Motlanthe recently made some reasonable comments on why some issues about affirmative action policies required debate, Dr Purchase cautioned that too much shouldn’t be read into these statements, given the ANC’s firm stance and support for affirmative action and also that of its partners, especially the Congress of South African Trade Unions (COSATU). “The ABC does, however, believe that the issue needs open, scientific debate as it’s clear that a lack of skills in the agricultural sector is hampering investment, growth and development.
As a result food security, over time, becomes hugely compromised.” r Purchase said the ABC would certainly welcome such debate, as well as amendments to the Employment Equity Act that will ensure the best talent is freely available to agribusinesses to ensure an internationally competitive sector. t the same time, TAU SA’s assistant general manager for communications, Henk van de Graaf, welcomed Motlanthe’s comments. He said that an end to affirmative action would have a positive impact on the country’s economy as a whole, as it would enable young, educated people to envisage a future for themselves in the labour market and prevent them from taking their expertise out of the country. – Lloyd Phillips
