SHIRNAÉ BRONWYNNE LONDT

Transcription

1 BLACK ECONOMIC EMPOWERMENT A STUDY OF RECOMMENDATIONS BY THE BLACK ECONOMIC COMMISSION AND THE PRACTICAL EFFECTS OF THE APPLICATION THEREOF RELATIVE TO SIMILAR EXPERIENCES IN OTHER DEVELOPING COUNTRIES SHIRNAÉ BRONWYNNE LONDT A thess submtted n fulflment of the requrements for the degree of Magster Legum (Mode III) n the Faculty of Law, Unversty of the Western Cape. Supervsor: Adv Wandrag 15 November 2005

2 BLACK ECONOMIC EMPOWERMENT A STUDY OF RECOMMENDATIONS BY THE BLACK ECONOMIC EMPOWERMENT COMMISSION AND THE PRACTICAL EFFECTS OF THE APPLICATION THEREOF RELATIVE TO SIMILAR EXPERIENCES IN OTHER DEVELOPING COUNTRIES SHIRNAÉ BRONWYNNE LONDT KEYWORDS 1. Black Economc Empowerment Commsson 2. Black Economc Empowerment Companes 3. Market Captalsaton 4. Fnancal Structure 5. JSE Lstng 6. Hstorcally Dsadvantaged Group 7. Transformaton 8. Equalty of Ownershp 9. Poverty Relef 10. Access to Jobs

3 ABSTRACT BLACK ECONOMIC EMPOWERMENT A STUDY OF RECOMMENDATIONS BY THE BLACK ECONOMIC COMMISSION AND THE PRATICAL EFFECTS OF THE APPLICATION THEREOF RELATIVE TO SIMILAR EXPERIENCES IN OTHER DEVELOPING COUNTRIES SHIRNAÉ BRONWYNNE LONDT Magster Legum n the Department of Law, Unversty of the Western Cape. The market value of Black Economc Empowerment (BEE) companes lsted on the JSE Securtes Exchange (JSE) has fallen to only 2% of the overall market captalsaton of the JSE. Many BEE companes have dsappeared from the exchange and there have been many falures. In the context of the report of the BEE Commsson (BEE Com), t s essental to understand why these falures have occurred and t s essental to research methods of structure, captalsaton and lstngs to ensure that ownershp of the economy s farly dstrbuted n future as per the recommendatons of the BEE Comm. The motvaton for ths research project s based on the fact that as a member of the Hstorcally Dsadvantaged Group n ths country, and after havng qualfed n the Faculty of Law wth a commercal background, I would lke to attempt to make a meanngful contrbuton to the transformaton that should take place to facltate equalty of ownershp of the economy.

4 The proposed research s crtcally mportant as the recommendatons of the Commsson have to be mplemented as a matter of urgency, gven the current slow growth rate of the economy and gven the fact that as many more new enterprses could be lsted on the JSE, t would provde further access to jobs, thereby postvely mpactng on the unemployment stuaton thereby contrbutng to poverty relef. 15 November 2005

5 DECLARATION I declare that black economc empowerment a study of recommendatons by the black economc commsson and the practcal effects of the applcaton thereof relatve to smlar experences n other developng countres s my own work, that t has not been submtted before for any degree or examnaton n any other unversty, and that all the sources I have used or quoted have been ndcated and acknowledged as complete references. Shrnaé Bronwynne Londt 15 November 2005 Sgned:

6 ACKNOWLEDGEMENTS I would lke to express my sncere apprecaton and most grateful thanks to the followng: Adv. Wandrag for her support and her gudance. Rochelle Jannecke for assstng me n takng ths thess to completon. Dr. Walter de Wet Head of Economc Research & Rsk at Pan-Afrcan Investment & Research Servces for hs assstance. Mrs. Snyders, the law faculty offcer, for her assstance and support. The staff at The Law Faculty of The Unversty of the Western Cape. My mother Shrley and father Rowland for ther support and encouragement. Allen Arrow for always beng prepared to assst. Thand Malnga for her support and encouragement. All my famly and frends for ther encouragement. Fnally my deep grattude to my husband Lonel for hs love, support and encouragement.

7 DEDICATION To my darlng husband Lonel Jacobs, for all your love, support and encouragement and wthout whom ths would not have been possble.

8 CONTENTS Ttle Page Keywords Abstract Declaraton Acknowledgements Dedcaton v v v INTRODUCTION 1 CHAPTER 1 CHAPTER 2 THE ESTABLISHMENT OF BLACK ECONOMIC EMPOWERMENT AND BLACK ECONOMIC EMPOWERMENT COMPANIES 2 Introducton 2 Aparthed The Defnton of Black Economc Empowerment 4 A Descrpton of Black Economc Empowerment 6 The Objectves of and when BEE s appled 7 Establshment of Black Economc Empowerment Companes 8 Codes of Good Practce for Broad- Based Black Economc Empowerment 11 Concluson 11 THE DEVELOPMENT OF ECONOMIC OWNERSHIP IN COUNTRIES WHERE THERE HAVE BEEN HISTORICALLY DISADVANTAGED CITIZENS 12 Introducton 12 Overvew of Inda 12 Hstory of Inda 14 Industralsaton n Inda 15 Dvde and Rule n Inda 16 The Return of Gandh to Inda 16 Poltcal Hstory 18 Common Mnmum Program 20 Hstory of Malaysa 24 Bumputra 27 Defnton of Bumputra 28 The Crss of 1969 n Malaysa 29 The Malaysan New Economc Polcy 31 A Bref Hstory of the Malaysan Economy before the New Economc Polcy 31 The Goals of the New Economc Polcy 32

9 Bumputra Laws 35 Concluson 36 CHAPTER 3 THE SOUTH AFRICAN ECONOMY 38 Introducton 38 Defnton of Economy 38 An Overvew of the South Afrcan Economy 38 The Crss that the Aparthed Economy Created for South Afrca 39 Transton from the Aparthed Economy to the Democratc Economy 42 The South Afrcan Economy as t Exsts now 43 South Afrca s Fnancal Polcy 45 Banks n South Afrca 46 Investment Ratngs 46 South Afrca s Economc Growth 47 A Further Overvew that Serves as a Gude to the South Afrcan Economy 51 Currency 51 Fscal Year 51 Trade Organsaton 51 Growth Domestc Product (GDP) 51 Labour Force 52 Labour Force by Occupaton 52 Unemployment Rate 53 Populaton Below Poverty Lne 53 Household Income or Consumpton by Percentage Share 53 Dstrbuton of Famly Income 53 Inflaton Rate 53 Investment 54 Budget 54 Publc Debt 54 Agrcultural Products 54 Industres 55 Industral Producton Growth Rate 55 Electrcty 55 Ol 56 Natural Gas 56 Current Account Balance 56 Exports 56 Imports 57 Reserves of Foregn Exchange and Gold 58 External Debt 58 Economc Ad Recpent 58

10 Challenges for the South Afrcan Economy 58 Concluson 59 CHAPTER 4 JSE SECURITIES EXCHANGE (JSE) 60 Introducton 60 What s the Johannesburg Securtes Exchange 60 Hstory of the Johannesburg Stock Exchange 61 Facts About the Johannesburg Stock Exchange (JSE) 61 Systems Utlsed by the JSE 63 The JSE Securtes Exchange and what t means to South Afrca 65 Securtes Servces and the JSE Securtes Exchange 66 The Objectve of the Securtes Servces Act 36 of Exchanges n South Afrca 68 Innovaton and Products Used by the JSE 69 Authorty of the JSE 70 General Powers of the JSE 70 Procedures to Lstng on the JSE 71 Company Requrements for Lstng on the JSE 71 Pre-lstng on the JSE 71 The Requrements for Lstng on the JSE 72 Man Board 72 Alternatve Exchange (AltX) 73 Man Board Requrements 73 Alternatve Exchange Requrements AltX 74 Black Empowered or Black Owned companes on the JSE 75 Companes lsted on the Man Board 75 Companes lsted on AltX 76 An Example of a Fnancal Structure or Scheme of a Black Economc Empowerment Transacton 77 The Object of the Scheme 77 A Synopss of the BEE Transacton between Dnatla Investment Holdngs and the Bdvest Group Lmted 78 Dagram 84 Concluson: The Role the JSE Should Play 85 CHAPTER 5 THE BLACK ECONOMIC EMPOWERMENT COMMISSION (BEE COM) 87 Introducton 87 The Establshment of the Black Economc Empowerment Commsson 87 Black Busness Councl 88 Issues the BEECom was Apponted to Address 90

11 The BEECom Objectves 90 The Defnton of BEE as gven by the Black Economc Commsson 91 The Challenges Black Economc Empowerment Commsson faced 92 The BEE Natonal Strategy 93 BEECom Targets 96 Recommendatons by the Black Economc Empowerment Commsson 97 Investment for Growth - A New Path to Development 97 Recommendaton 97 An Integrated Human Resource Development (HRD) Strategy 98 Recommendaton 98 Access to Fnancal Servces and Captal 99 Recommendaton 100 Affrmatve Procurement 101 Recommendaton 102 The Enablng Framework 103 Recommendaton 103 An Empowerment Framework for Publc Sector Restructurng 103 Recommendaton 104 Rural Development and Access to Land 104 Recommendatons 105 The Role of Busness Organsatons 106 Recommendaton 106 A Crtcal Overvew of the BEE Commsson and ts Recommendatons 107 Concluson 109 CHAPTER 6 POVERTY RELIEF 110 Introducton 110 Poverty 110 The Causes of Poverty n South Afrca 112 The Extend of Poverty n South Afrca 114 The Measures Government Plans to take for Poverty Relef 116 Can Black Economc Empowerment Address Poverty 118 Wll Poverty Relef come easy wth more Black Economc Empowerment Deals 123 The Recprocal Beneft of Black Economc Empowerment Companes and Poverty Relef 123 Concluson 124

12 CHAPTER 7 JOB CREATION 125 Introducton 125 Unemployment Stuatons n South Afrca 125 The Underlyng Problems of Unemployment n Southern Afrca 127 Contrbuton of Black Economc Empowerment Companes to Job Creaton 131 Implementaton of Procurement Polces 131 Recommendatons and Solutons for Job Creaton 133 Concluson 135 CHAPTER 8 CHAPTER 9 THE COURSE COMPANY LAW HAS TO TAKE TO ENSURE THE EXISTENCE OF BEE COMPANIES 136 Introducton 136 Corporate Reforms 136 The Kng Code Report on Corporate Governance for South Afrca 137 Secton Other Reforms 139 Concluson 139 THE IMPORTANCE OF BLACK ECONOMIC EMPOWERMENT 140 Introducton 140 Black Economc Empowerment s Important 140 BEE as an Economc Drver 142 CHAPTER 10 CONCLUSION 145 Introducton 145 Legtmacy of Black Economc Empowerment 145 The Seven Secrets of Growth for Economc Development 148 Comparson of BEE to Polces Implemented By Countres such as Inda and Malaysa 150 Inda 150 Malaysa 152 The Economc Value of BEE 153 Concluson: An Analyss of the Outcomes of Recommendatons by the Black Economc Empowerment Commsson 156 Investment for Growth - A New Path to Development 156 An Integrated Human Resource Development (HRD) Strategy 156

13 Access to Fnancal Servces and Captal 156 Affrmatve Procurement 156 An Empowerment Framework for Publc Sector 157 Rural Development and Access to Land 157 The Role of Busness Organsatons 157 BIBLIOGRAPHY 158 ADDENDUM Scheme of Arrangement n Terms of Secton 311 of the Companes Act 61 of 1973 Share Certfcate of Bdvest Group Lmted

14 INTRODUCTION When the Afrcan Natonal Congress (ANC) came to power n 1994, t dentfed Black Economc Empowerment as a major vehcle for addressng the economc njustces of Aparthed. Questons have been rased whether Black Economc Empowerment, the current process, has resulted n the enrchment of an elte few rather than empowerment of the mllons who stll reman excluded from partcpatng n the economy. Many ask whether Black Economc Empowerment s the answer to South Afrca s problems. Despte success of the past ten years, vast racal and gender nequaltes n the dstrbuton of the access to wealth, ncome, sklls and employment persst. As a consequence, our economy contnues to perform below ts full potental. One needs to know why ths s so. The nature of the study of Black Economc Empowerment s to analyse or evaluate the current state of Black Economc Empowerment n the economy vs a vs the hstorcal past and the proposed future as set out by the recommendatons n the Black Economc Commsson Report. The key ssues examned through the research are: Black Economc Empowerment. Reasons, f any why, there has been a declne of the shares that Black Empowerment companes hold of the total market captalsaton. Methods of how to such declne can be avoded n the future. The JSE Securty Exchange. How to enable more Black Economc Empowerment companes to be lsted on the JSE. The South Afrcan Economy, poverty and job creaton. To examne the necessary amendments Company Law has to address n order to facltate Black Economc Empowerment. To examne all the necessary requrements for Black Economc Empowerment companes to have an equtable share of the JSE, f possble. Polces appled to other developng countres. Black Economc Empowerment Commsson.

15 CHAPTER ONE THE ESTABLISHMENT OF BLACK ECONOMIC EMPOWERMENT AND BLACK ECONOMIC EMPOWERMENT COMPANIES Introducton In order to understand why Black Economc Empowerment (BEE) exsts as a powerful entty that could take us to a boomng economy, one has to understand the hstory that led to the mplementaton of BEE. Many wll not understand why drastc measures are taken to shape the South Afrcan economy, just lke many do not know the mpact ths country s past had on t or how damaged the stuaton n ths country s because of our past. In ths chapter, focus wll be on Aparthed, the consequences thereof and the mplementaton of a concept known as Black Economc Empowerment. The focus wll also nclude the formaton of Black Economc Companes. Aparthed Aparthed s a term whch referred to a system of segregaton or dscrmnaton on grounds of race. 1 Ths system was n place from the year 1948 to the year Pre 1994, Aparthed represented the codfcaton of all the laws and regulatons that poltcally, economcally, and socally oppressed the majorty of the populaton, whch conssted largely of Afrcans and ncluded Coloureds as well as Asans. 3 Race dstncton was used to control access to South Afrca s productve resources and access to sklls. 4 The consequences of the Aparthed system were just not about race oppresson, prejudce, unjust behavour or bas. It was also about gender oppresson whch was ultmately the abusng of power and placng control n 1 South Afrcan Concse Oxford Dctonary. (2002). Page 48 2 South Afrcan Concse Oxford Dctonary. (2002). Page 48 3 Aparthed. (Onlne). Avalable 11 September Broad-Based Black Economc Empowerment Act, 53 of 2003.

16 the nterest of a mnorty whte populaton. 5 Thus the South Afrcan economy was based to a very large extent on domnaton, explotaton and margnalsaton of the black majorty. 6 Racal oppresson led to whte power, prvleges and wealth that only benefted whte people. 7 Gender oppresson led to the abuse of women whch led to the mpovershed role of Afrcan women, beng dened basc, socal and economc rghts, beng barred from lvng n ctes, from ownng land, nhertng, borrowng money and partcpatng n poltcal and socal struggles. 8 Although we now lve n a country of democracy, South Afrca s economy stll excludes the vast majorty of ts people, namely Black ncludng Coloureds and Asans, from havng sgnfcant ownershp of productve assets and the possesson of advanced sklls. 9 The majorty of South Afrca s people generates and earns a low level of ncome and ths leads to South Afrca s economy performng below ts potental. 10 In order to ncrease the effectve partcpaton of Black people n the economy, further steps had such as Black Economc Empowerment (BEE) had to be taken. 11 The stablty and the prosperty of the economy n the future, could have and would have been undermned to the detrment of not only Black people, but of all South Afrcan s, rrespectve of race, f BEE was not ntroduced. 12 Therefore the Broad-Based Black Economc Empowerment Act 53 of 2003 came nto exstence to establsh a legslatve framework for the promoton of Black Economc Empowerment. 13 Further 5 Busness Map. (2005). Bee Commsson Report. (Onlne). Avalable 14 September 6 Busness Map. (2005). Bee Commsson Report. (Onlne). Avalable 14 September 7 Busness Map. (2005). Bee Commsson Report. (Onlne). Avalable 1 September 8 Busness Map. (2005). Bee Commsson Report. (Onlne). Avalable 14 September 9 Broad-Based Black Economc Empowerment Act, 53 of Broad-Based Black Economc Empowerment Act, 53 of Broad-Based Black Economc Empowerment Act, 53 of Broad-Based Black Economc Empowerment Act, 53 of Broad-Based Black Economc Empowerment Act, 53 of 2003.

17 more, the Act promotes the achevement of the consttutonal rght to equalty, also to ncrease broad-based and effectve partcpaton of black people n the economy and promotes a hgher growth rate, ncreases employment and more equtable ncome dstrbuton. 14 The Act also establshes a natonal polcy on broad-based black economc empowerment so as to promote the economc unty of the naton, as well as protect the common market and promote equal opportunty and access to government servces. 15 The Aparthed system led to structural dstortons n the economy. 16 One cannot comprehend the full extent of damage the Aparthed system had done to the South Afrcan people and the economy, and to rectfy or brng ts people and ts economy nto balance from ths damage, a concept such as Black Economc Empowerment s appled. The Defnton of Black Economc Empowerment What s Black Economc Empowerment (BEE) also further defned as Broad- Based Black Economc Empowerment (BBBEE)? There are varous defntons to Black Economc Empowerment, better known as BEE and whch wll be referred to as BEE. The followng defnton was adopted by the Black Economc Empowerment Commsson. The Black Economc Empowerment Commsson defned BEE as an ntegrated and coherent soco-economc process. 17 BEE s located wthn the context of the country s natonal transformaton programme, namely the RDP (Reconstructon and Development Programme). 18 The am of BEE s to redress the mbalances of the past by seekng to substantally and 14 Broad-Based Black Economc Empowerment Act, 53 of Broad-Based Black Economc Empowerment Act, 53 of Busness Map. (2005). Bee Commsson Report. (Onlne). Avalable 14 September 17 Executve Summary Report of the BEECom (2002). (Onlne). Avalable 25 Aprl 18 Executve Summary Report of the BEEC 2001.(2002). (Onlne). Avalable 25 Aprl

18 equtably transfer and confer the ownershp, management and control of South Afrca s fnancal and economc resources to the majorty of ts ctzens. 19 BEE seeks to ensure broader and meanngful partcpaton n the economy by black people n order to acheve sustanable development and prosperty. 20 BEE was adopted at the Growth and Development Summt (GDS) to nclude strateges to ensure the broadest ownershp of productve assets and resources, ncrease levels of employment n the formal economy, ncrease household ncomes, expandng lteracy and sklls development and extend basc servces to those who do not currently have them. 21 The Growth and Development Summt s vew was also that the promoton of BEE, should beneft women, workers, youth, people wth dsabltes and those lvng n rural areas. 22 Government consulted wth varous nterest groups n South Afrca, n order to formalse the BEE program of the government nto the so-called Broad Based Empowerment Act 53 of The Broad Based Black Economc Empowerment Act 53 of 2003 extended or broadened on BEE to Broad Based Black Economc Empowerment (BBBEE) and defnes Broad-Based Black Economc Empowerment as the economc empowerment of all black people that ncludes women, workers, youth, people wth dsabltes and people lvng n rural areas through dverse but ntegrated soco-economc strateges that nclude, but not lmted to a) ncreasng the amount of black people that manage, own and control enterprses and productve assets; 19 Executve Summary Report of the BEEC (2002). (Onlne). Avalable 25 Aprl 20 Executve Summary Report of the BEEC (2002). (Onlne). Avalable 25 Aprl 21 Defnton adopted at the Growth and Development Summt. (2005). (Onlne) Avalable 27 June 22 Defnton adopted at the Growth and Development Summt.(2005).(Onlne) Avalable 27 June 23 De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper

19 b) facltatng ownershp and management of enterprses and productve assets by communtes, workers, cooperatve and other collectve enterprses; c) human resource and sklls development; d) achevng equtable representaton n all occupatonal categores and levels n the workforce; e) preferental procurement; and f) nvestment n enterprses that are owned and manage by black people; 24 A Descrpton of Black Economc Empowerment Black Economc Empowerment can be descrbed as a method that s amed at ncreasng the number of black persons that partcpate n and manage the South Afrcan economy. 25 Ths nvolves economc ownershp by prevously dsadvantaged ndvduals and mples economc nterest, proft sharng, rsksharng whch nclude the sharng of cost and wealth creaton. 26 Black economc empowerment s [thus] seen as an external factor that nfluences any entty that ntends to do busness n South Afrca. 27 An entty s defned as somethng wth a dstnct and ndependent exstence 28, so ths external factor whch s recognsed here as Black Economc Empowerment, nfluences any ndependent exstence such as and not lmted to a company, close corporaton, sport organsatons and non-proft organsatons. Further more, ths external factor has a certan mpact on the country and ts 24 Broad-Based Black Economc Empowerment Act, 53 of De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper 26 De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper 27 De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper 28 South Afrcan Concse Oxford Dctonary. (2002). Page 385

20 enterprses. 29 If Black Economc Empowerment s seen as an economc entty, the economc entty must, as wth any external factor, adjust to be compettve n the market. 30 The potental mpact on the enterprse wll dffer dependng on the target market of the enterprse. 31 As the external factor, ths s BEE, moves through the transmsson channels of the economy, all enterprses wll be affected, be t drectly or ndrectly. 32 BEE as the external factor may hold sgnfcant advantages as well as rsks for an enterprse, dependng on how t s handled. 33 The Objectves of and when BEE s appled The Broad- Based Black Economc Empowerment Act 53 of 2003 embodes the followng objectves: The objectves of the Act are to facltate Broad-based Black Economc Empowerment by; a) promotng economc transformaton n order to enable meanngful partcpaton of black people n the economy; b) achevng a substantal change n the racal composton of ownershp and management structures and n the skll occupaton of exstng and new enterprses; c) ncreasng the extent to whch communtes, workers, cooperatve and other collectve enterprse own and manage exstng and new enterprse and ncreasng the access to economc actvtes, nfrastructure and sklls tranng; 29 De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper 30 De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper 31 De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper 32 De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper 33 De Wet, W. (2005). Development opportuntes n Black Economc Empowerment. Unpublshed paper

21 d) ncreasng the extent to whch black women own and manage exstng and new enterprses, and ncreasng ther access to economc actvtes, nfrastructure and sklls tranng; e) promotng nvestment programmes that lead to broad-based and meanngful partcpaton n the economy by black people n order to acheve sustanable development and general prosperty; f) empowerng rural and local communtes by enablng access to economc actvtes, land, nfrastructure, ownershp and skll; and g) promotng access to fnance for black economc empowerment. 34 If the South Afrcan economy s to reach ts potental, one has to accept that Black Economc Empowerment s mportant and f appled correctly the process wll create jobs for many South Afrcans. Other advantages wll be rural development, urban renewal, poverty allevaton, measures to empower black women, sklls and management development and tranng, educaton, meanngful ownershp and access to fnance for households and for the purpose of conductng busness. 35 Establshment of Black Economc Empowerment Companes After understandng what BEE s about and after applcaton thereof, t should be clear why or how Black Economc Empowerment companes come nto exstence. Black Empowerment Companes are companes that are owned or partly owned by black persons and has the ablty to empower companes whch are whte owned or companes acqured under the Aparthed laws. 34 Broad-Based Black Economc Empowerment Act, 53 of Executve Summary Report of the BEEC (2002). (Onlne). Avalable 25 Aprl

22 The face of companes as we know t has changed. In lght of ths, an order of transparency s needed for clear dstncton between companes and or enterprses. It s mportant to defne the followng companes: 1) Black Company: In a Black Company, 50.1% must be owned by black persons and there should be substantal management control by black persons. 36 Ownershp refers to economc nterest whle management refers to the membershp of any board or smlar governng body of the enterprse. 37 2) Black Empowered Company: In a Black Empowered Company, 25.1% must at least be owned by black persons and there should be substantal management control by black persons. 38 Ownershp refers to economc nterest. Management refers to executve drectors. Ths s whether black enterprse has control or not Busness referral and Informaton Network. BEE. 27 June (Onlne) Avalable 37 Busness referral and Informaton Network. BEE. 27 June (Onlne) Avalable 38 Busness referral and Informaton Network. BEE. 27 June (Onlne) Avalable 39 Busness referral and Informaton Network. BEE. 27 June (Onlne) Avalable

23 3) A Black Women-Owned Enterprse: A Black Women Owned Enterprse must at least have a 25.1% representaton of black women wthn the black equty and management porton. 40 4) A Communty or Broad-Based Enterprse: Ths knd of enterprse has an empowerment shareholder / s that represent a broad base of members such as a local communty or where the benefts support a target group, for example black women, people lvng wth dsabltes, youth and workers. 41 Shares are held va drect equty, non-proft organsatons and trusts. 42 5) A Co-operatve or Collectve Enterprse: A Co-operatve or Collectve Enterprse s an autonomous assocaton of people who voluntarly jon forces to meet ther economc, socal, cultural and nspratonal needs through the formaton of a jontly-owned enterprse and democratcally controlled enterprse. 43 The above types of companes can be used as methods and processes to transform and empower companes that prevously were not empowered. There s no doubt that the BEE concept as an external factor s an nfluence, to the economy needs, but wth concept applcaton, there should be constant and effectve montorng to evaluate the progress and success of the concept. 40 Busness referral and Informaton Network. BEE. (2005). (Onlne) Avalable 27 June 41 Busness referral and Informaton Network. BEE. (2005). (Onlne) Avalable 27 June 42 Busness referral and Informaton Network. BEE. (2005). (Onlne) Avalable 27 June 43 Busness referral and Informaton Network. BEE. (2005. (Onlne) Avalable 27 June

24 The Codes of Good Practce for Broad-Based Black Economc Empowerment presents a bass for complance to BEE. Codes of Good Practce for Broad- Based Black Economc Empowerment The BEE Codes of Good Practce are to be appled n the development, evaluaton and montorng of BEE charters, ntatves, transactons and other mplementaton mechansms. 44 The statement contans basc prncples and essental consderatons, as well as gudance n the form of explanatory, and other, materal. 45 It presents a bass for greater clarfcaton to BEE. Concluson Black Economc Empowerment can be seen as an effectve vehcle whch separates the past (Aparthed) from the present. In order for effectve transformaton to take place, the people of South Afrca have to embrace Black Economc Empowerment. Ths tool wll allow the economy to reach ts potental. However oppresson was not exclusve to South Afrca and oppresson n other countres wll be dscussed n the next chapter. 44 BEE Code of Good Practce. (2005). (Onlne) Avalable 16 September 45 BEE Code of Good Practce. (2005). (Onlne) Avalable 16 September

25 CHAPTER TWO THE DEVELOPMENT OF ECONOMIC OWNERSHIP IN COUNTRIES WHERE THERE HAVE BEEN HISTORICALLY DISADVANTAGED CITIZENS Introducton As mentoned, oppresson s not or was never exclusve to South Afrca. Varous other countres had ther own forms of oppresson. In ths chapter a look wll be taken at countres such as Inda and Malaysa where ctzens too where hstorcally dsadvantaged. Emphass wll be on the hstory that led to the oppresson n Inda and Malaysa as well as the restructurng programs mplemented by the respectve governments whch resulted to the development and growth of ther economes, where they fnd themselves today. Overvew of Inda Several European countres, ncludng the Portuguese, Dutch, French and Brtsh took advantage of fractured kngdoms fghtng each other to establsh colones n Inda durng the mddle of the second mllennum. 46 In 1857 a faled nsurrecton (a volent uprsng aganst authorty) 47 aganst the Brtsh East Inda Company caused most of Inda to come under admnstratve control of the crown of the Brtsh Empre. 48 The Indan ndependence movement followed after a prolonged and largely non-volent struggle for ndependence led by Mahatma Gandh who s regarded offcally as the father of modern 46 Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October 47 South Afrcan Concse Oxford Dctonary. (2001). Page Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October

26 Inda. 49 Inda ganed ndependence from Brtsh rule on the 15 August 1947 and became a republc on 26 January Inda has had ts share of sectaran volence and nsurgences n dfferent parts of the country because of ts mult-ethnc and mult-relgous make-up. 51 Inda has held tself as a secular, lberal democracy barrng a bref perod from 1975 to 1977 durng whch the Prme Mnster Indra Gandh declared a state of emergency wth the suspenson of cvl rghts. 52 In 1962 there was a bref war between Inda and Chna because of unresolved border dsputes. 53 Ths resulted n wars n 1947, 1965 and 1971 wth Pakstan and a border altercaton n the northern state of Kashmr n Inda became an unoffcal member of the nuclear club n 1974 after conductng an underground nuclear test, whch was followed by fve more tests n Economc reforms that started n 1991 have transformed Inda nto one of the fastest growng economes n the world, not wthstandng the Chnese economy, and added to ts global clout Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October 50 Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October 51 Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October 52 Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October 53 Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October 54 Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October 55 Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October 56 Hstory of Inda. (2005). Wkpeda, the free encyclopeda. [Onlne]. Avalable 31 October

27 Hstory of Inda The greatest cause of dversty n Inda s the Caste System. 57 The South Afrcan concse oxford dctonary defnes Caste as each of the heredtary classes of Hndu socety, dstngushed by relatve degrees of rtuals purty or polluton and of socal status. 58 Caste s a word that derves from the Portuguese casta and ths means breed, race or knd. 59 Castes are ranked, named endogamous (n-marryng) groups and membershp thereof s acheved by brth. 60 Inda s made up of thousands of caste and sub-castes and these large knshp-based groups are fundamental to South Asan socal structure. 61 In Inda, each caste s part of a locally based system of nterdependence wth other groups, nvolvng occupatonal specalsaton and s lnked n complex ways wth networks that stretch across regons and throughout the naton. 62 Many castes are tradtonally assocated wth an occupaton. 63 In Inda these caste consst of hgh-rankng Brahmans, mddlerankng farmer and artsan groups, such as potters, barbers and carpenters and very low-rankng groups also referred to as untouchables and these would be the leatherworkers, butchers, launderers and latrne cleaners. 64 There s some correlaton between rtual rank n the caste herarchy and economc prosperty. 65 In Inda members of hgher-rankng castes tend, on the whole, to be more prosperous than members of lower-rankng castes Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 58 South Afrcan Concse Oxford Dctonary. (2001). Page Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 60 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 61 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 62 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 63 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 64 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 65 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 66 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October

28 Many lower-caste people lve n condtons of great poverty and socal dsadvantage smlar to that f the South Afrcan s Prevously Dsadvantaged People. 67 The Caste system n Inda today stll nvolves hundreds of mllons of people although t has undergone sgnfcant changes. 68 Inda s consttuton forbds negatve publc dscrmnaton on the bass of caste n ts preamble. 69 Although Inda s consttuton forbds caste as a bass for dscrmnaton, caste rankng and caste nteracton whch s stll negatve, have occurred for centures and would n all probablty contnue to do so, more n the countrysde than n urban settngs and more n the realms of knshp and marrage than n personal nteractons. 70 Inda s splntered nto a mllon selfcontaned fragments whch are often socally solated because of relgon, language, caste and trbe. 71 Industralsaton n Inda The frst textle mll began operatng n Bombay n 1853 and the frst jute mll was n operaton n Bengal two years later and by 1905, more than 200 cotton textle and 36 jute mlls were functonng. 72 A large ron and steel plant that contnues to operate to ths day was also establshed n Bhar. 73 The ron steel plant as well as some of the mlls as mentoned above were created by Indan captal but most were under control of Brtsh captal. 74 Ths led to the Brtsh 67 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 68 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 69 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 70 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 71 Inda-Caste and Class. (2005). Hstory. Inda [Onlne]. Avalable 1 October 72 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 73 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 74 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd

29 reapng enormous profts n labour and cheap raw materals and vast markets developng n Inda. 75 The Brtsh government expectedly extended all patronage to Brtsh-owned ndustres and dscrmnated aganst Indan captal. 76 Incpent conflct between Brtsh and Indan entrepreneurs was brought about by the ntroducton of the modern ndustry. 77 Dvde and Rule n Inda The Brtsh government wanted to create dvson between the Muslms and the Hndus and n 1906 the All Inda Muslm League was founded. 78 Ths s when the Brtsh polcy of weakenng the Natonal Movement by creatng dssensons wthn t, bore frut for the frst tme. 79 The All Inda Muslm League demanded specal concessons from government for the Muslms and stood up n support of the partton of Bengal. 80 The Brtsh government then responded to the movement by resortng to represson. 81 The Return of Gandh to Inda Mohandas Karamchand Gandh returned to Inda n 1915 from South Afrca, where he had expermented wth new forms of resstance to the aparthed regme. 82 Wth hs return, Gandh was exposed to the njustces to masses of Indan people, at the hands of both ther Indan and foregn masters. 83 The njustce was n the form of the msery of the lower castes perpetrated by the upper castes, the nhuman treatment of bonded agrcultural labourers n several regons and the deprvaton from whch Indan women suffered 75 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 76 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 77 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 78 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 79 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 80 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 81 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 82 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 83 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd

30 everywhere. 84 Most of the Indans stll lved n vllages at the tme and Gandh realsed that t was there where Inda s real strength lay. 85 The ndustral workers were also beng exploted and Gandh realsed that ther lvng condtons had to mprove and that Indan mll owners had to sacrfce a part of ther proft for ths purpose. 86 A Non Cooperaton Movement was launched n the late 1920 s. 87 Massve numbers of women joned the movement and people responded by gvng up ther studes and jobs. 88 Boycott of European owned cloth became a publc cry and as a token or gesture of defance, bonfres of such cloths were made. 89 Hndus and Muslms forgot all about ther dfferences and a surge of human bond unted the dverse people n ths hour of magnfcence. 90 Early 1930 the movement of cvl dsobedence was launched. 91 The government derved large revenue from a monopoly of the manufacture of salt and Gandh decded to manufacture salt on the Gujarat coast, wthout havng to pay taxes or where he dd not have to pay taxes. 92 In 1935 the Brtsh Parlament passed the Inda Act. 93 The Act proposed a bcameral legslature n whch prnces would nomnate ther representatves and about 14 percent of the people of Inda, who had been gven the rght to vote, would elect the others. 94 Wth the Second World War and after the Act was mplemented the world was ferment and ths perod placed Inda s Natonal Movement n context of the developng global stuaton and establshed lnkages between local and nternatonal ssues. 95 In 1942 thngs 84 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 85 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 86 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 87 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 88 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 89 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 90 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 91 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 92 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 93 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 94 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 95 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd

31 came to a head wth the launch of another massve movement n whch the Congress gave a call to Indans to ensure that the Brtsh qut Inda. 96 The Congress appealed to the masses to do whatever was necessary even f t meant death to acheve freedom. 97 Wth the Muslm League, the Brtsh worked out a soluton to establsh a separate electorate for the Hndus and the Muslms wth each communty electng ts representatve. 98 Ths valdated the League had begun to propound, that Hndus and Muslms were two separate natons, thus equatng relgon wth naton. 99 The League demanded a separate ndependent state for the Muslms and the state was to be called Pakstan. 100 Independence took shape through wdespread communal rotng n the most nhuman way. 101 Freedom thus came to Inda through ths tragedy on the 15 August Inda s splt nto two states because of relgous dfferences and the two states are known as the State of Inda and the State of Pakstan. 103 Poltcal Hstory Indan s Natonal government has been controlled by the Indan Natonal Congress for most of ts ndependence. 104 In 1977, a unted opposton, under the banner of the Janata Party, won the electon and formed a non-congress government for a short perod after the unpopular emergency rule. 105 In 1996, the Bharatya Janata Party(BJP), a poltcal party wth a rght wng natonalst deology, became the largest sngle party, and establshed for the 96 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 97 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 98 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 99 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 100 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 101 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 102 Israel, S. Insght Gudes Inda 1 st edton. (1985). APA Producton (HK) Ltd 103 Indan General Informaton. (2005). [Onlne]. Avalable 6 November 104 Inda-Wkpeda, the free encyclopeda. (2005). Poltcs. [Onlne]. Avalable 7 November 105 Inda-Wkpeda, the free encyclopeda. (07/11/2005). Poltcs. [Onlne]. Avalable 7 November

32 frst tme a serous opposton to Congress. 106 Power however, was held by two successve coalton governments who stayed on wth the support of the Congress. 107 In 1998, the BJP formed the Natonal Democratc Allance (NDA) along wth smaller partes and became the frst Non-Congress Government to sustan the full fve year term after t returned to power n In the 2004 Indan electons the Congress party returned to power and they formed a government n allance wth the Communst party of Inda and several regonal partes. 109 Ths new formed party was called the Unted Progressve Allance. 110 The unted Progressve Allance (UPA) s the present rulng coalton of poltcal partes n Inda. 111 The Unted progressve Allance ncludes the followng partes: Indan Natonal Congress (INC), Rashtrya Janata Dal (RJD), Dravda Munnetra Kazhagam (DMK), Natonal Congress Part (NCP), Pattal Makkal Katch (PMK), Telangana Rashtra Samth (TRS), Jharkhand Mukt Morcha (LMM), Marumalarch Dravda Munnetra Kazhagam (MDMK), Lok Jan Shakt Party (LJSP), Indan Unon Muslm League (IUML), 106 Inda-Wkpeda, the free encyclopeda. (2005). Poltcs. [Onlne]. Avalable 7 November 107 Inda-Wkpeda, the free encyclopeda. (2005). Poltcs. [Onlne]. Avalable 7 November 108 Inda-Wkpeda, the free encyclopeda. (2005). Poltcs. [Onlne]. Avalable 7 November 109 Inda-Wkpeda, the free encyclopeda. (2005). Poltcs. [Onlne]. Avalable 7 November 110 Inda-Wkpeda, the free encyclopeda. (2005). Poltcs. [Onlne]. Avalable 7 November 111 Unted Progressve Allance. (2005). [Onlne]. Avalable Allance 7 November

33 Jammu & Kashmr Peoples Democratc party (JKPDP), Republcan Party of Inda (Athvale) (RPI(A)), Republcan Party of Inda (Gava) (RPI(G)), All Inda Majls-e-Ittehadul Muslmen (AIMIM) and Kerala Congress (KC) 112 Common Mnmum Program In 1971 a seres of reform polces were mplemented by the government, rulng Inda at the tme and the Common Mnmum Program has extended and mproved on those reform polces. Inda has a boomng economy that s growng at a rapd speed and the Common Mnmum Program (CMP) s the result of the Indan Economy farng so well. The Unted Progressve Allance (UPA)/ (Government) released the common Mnmum Program to assst the furtherance of Inda s economy. They have sx basc prncples for governance and t s to: to preserve, protect and promote socal harmony, to ensure that the economy grows at least 7-8% per year n a sustaned manner and to generate employment so that each famly s assured of a safe and vable lvelhood, to enhance the welfare and well-beng of farmers, farm labour and workers and gve the assurance of securty for ther famles, to empower women n all aspects such as poltcally, educatonally, economcally and legally and to provde for full equalty of opportunty and to unleash the creatve energes of the people Unted Progressve Allance. (2005). [Onlne]. Avalable Allance 7 November 113 UPA s Common Mnmum. (2005) Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November

34 The CMP s appled n each sector of Inda s economy and bref extracts of the varous sectors and whch strategy s appled wll be dscussed Employment The UPA Government enacted a Natonal Employment Guarantee Act. 115 Ths provdes a legal guarantee of employment for at least 100 days Agrculture The UPA Government wll ensure that publc nvestment n agrcultural research and extenson, rural nfrastructure and rrgaton s stepped up. 117 The rural cooperatve credt system wll be revved. 118 The UPA Government wll ntroduce a specal programme for dry-land farmng and watershed and wasteland development programmes wll be taken up on a massve scale. 119 The UPA admnstraton wll ensure the mplementaton of mnmum wage laws for farm labours. 120 Government wll make amendments to ensure the democratc, autonomous and professonal functonng of cooperatves UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 115 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 116 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 117 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 118 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 119 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 120 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 121 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November

35 3. Educaton and Health Funds wll be rased for spendng on educaton and 50% of moneys rased wll be spent on prmary and secondary schools. 122 Ths wll be done n phases. 123 A natonal cooked nutrtous md-day meal scheme, funded manly by the Central Government, wll be ntroduced n prmary and secondary schools. 124 Publc spendng wll be rased on health wth focus on prmary healthcare. 125 Drugs consdered as lfe savng wll be made avalablty at reasonable prces Women and Chldren Legslaton on domestc volence and gender dscrmnaton wll be enacted as well as programmes for the development of women and chldren. 127 Complete legal equalty for women n all spheres wll be made a practcal realty UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 123 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 124 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 125 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 126 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 127 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November 128 UPA s Common Mnmum. (2005). Programme Common Mnmum Program of UPA Government. [Onlne]. Avalable 7 November