Original publish date – Sun, 23 May 2010 10:45:22 +0000, Gavin

This no doubt adds a bit of controversy in that one major flaw with BEE is fronting. To some extent it goes without saying the issues being described are purely based on the outdated discredited Narrow Based system because it is less likely to have a company “front” on the Broad Based BEE scorecard and almost impossible for that to occur for Ownership because the company would earn no points.

In essence we have to sort out a problem – fronting. Their solution is regulation. The regulation is based on the Broad Based BEE scorecard and the fronting occurs on the narrow based scorecard. Which means it is more difficult to create an “ethical” scorecard and quite easy to front!

The EconoBEE Solution: The Broad Based BEE scorecard is brilliant – so use it. Instead of announcing a problem like fronting change the PPPFA which is causing this problem to properly integrate the BBBEE act.

Simply in my opinion, fronting is as a consequence of outdated government policies and all effort should be placed on correcting the cause and not treating the symptom.


The Black Economic Empowerment Advisory Council held its third meeting at the Union Buildings in Pretoria today (20 May 2010).
The Council, which was established in December 2009 in terms of the Broad-Based Black Economic Empowerment Act, is chaired by President Jacob Zuma. It held its inaugural meeting on 4 February 2010.
In his opening remarks, President Zuma said much progress had been made in advancing black economic empowerment, but not enough. He said the Council would need to advise government on how to ensure it happens faster and benefits broader society.
President Zuma said the Council would need to answer the question: “In the South African context, where many people were excluded for centuries, how do we level the playing field?”
“This Council needs to look at what needs to happen in the economy,” he said.
Minister of Trade and Industry Rob Davies said that many elements of the BBBEE Framework had been put in place, including sector charters, codes of good practice, and verification processes: “We find ourselves at a moment when we need to assess the impact of that work.”
“There is a great deal of work that needs to be done to make empowerment a contributor to development and economic growth,” he said.
One of the challenges that the Council would need to advise on was the abuse of the empowerment process through practices like fronting. It would also need to look at the alignment of government’s preferential procurement policy with black economic empowerment. The Council also identified weaknesses in verification and accreditation procedures.
Members of the Council emphasised the need to ensure that economic empowerment was indeed broad-based, and said that this consideration should be at the centre of the interventions that the Council would propose to government.

The meeting adopted the Council’s Constitution which outlines, among other things, the powers, functions and administration of the Council.
The meeting established four sub-committees to address a number of key issues that are central to the work of the Council. These are:
1. Ownership and structuring of BBBEE deals
2. Enterprise Development, Access to Finance and Procurement
3. Human Resource Development
4. Legislation, Charters, Compliance and Enforcement

In the course of developing recommendations to the council, the sub-committees may co-opt experts and commission research as required.
The sub-committees will report to the next meeting of the Council, which is due to be held in September 2010.
Issued by:
The Presidency
Union Buildings
20 May 2010



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