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Black Economic Empowerment (BEE): South Africa

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The Black Economic Empowerment (BEE) policies in South Africa have been redressing economic imbalances among historically disadvantaged communities requiring consideration by all firms planning to do business with the South African government - and within the general business community as well. With the existence of the BEE, has this contributed to non-market based quotas and below market prices for equity sales to black firms and investors? Will this make it hard to attract foreign firms to do business in South Africa?

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With the existence of Black Economic Empowerment policies in South Africa, there are non-market based quotas and below market prices sales to black firms and investors. The government target under the Black Economic Empowerment of 25 percent of the private sector into black ownership requires large capital outlays. The blacks and black owned companies in South Africa do not have the required capital. This leads to deals in which passive black owners are brought into businesses to satisfy the authorities. The effect is that ownership deals are unproductive and their entry ...

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