South Africa has released new rules governing black economic empowerment (BEE), a policy aimed at transferring wealth to the country's black majority

BBC News:

One aim of the new codes is for more people to benefit from BEE deals.

South Africa has embraced BEE as a means of giving economic as well as political power to the black majority.

The policy has been criticised for creating a new class of very wealthy black businesspeople while most black people remain poor.

The leading financial newspaper Business Day commented: "The new rules will go some way towards answering questions that have been asked of some empowerment deals, in which established businessmen claim to represent broad groupings of black individuals without identifying the beneficiaries."

A Department of Trade and Industry (DTI) statement on the new guidelines speaks of a need for "a more inclusive approach to empowerment that would begin to narrow the divide between the first and second economies by putting mechanisms in place to accelerate the entry of black people into the first economy".

The new guidelines promise to address "a lack of underlying economic substance to some BEE deals".

"Many BEE transactions boasted high percentage levels of legal black ownership, but often the actual economic benefits accruing to black shareholders proved to be significantly lower," the DTI says.

The codes incorporate formulae for assessing the extent to which a deal or a company has embraced BBE principles.

Finance expert Kobus Gertenbach told Business Report newspaper that the codes were "an incredibly sophisticated set of legislation", but would require large companies to adopt new accounting systems and internal processes, and to generate large reports annually.

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