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Posted: 2006-05-20 / Author: Business Day

B E E Now ‘vital’ For Winning New Business

BEE for SA Businesses

Black economic empowerment is increasingly regarded as important for winning business across all regions of SA, says a report released by Grant Thornton at the weekend. Omega Replica Watches

South African business owners reported a 19-percentage point increase in the importance of black economic empowerment in winning business since a 2003 survey.

The latest research was carried out among 7000 owners of medium-sized businesses in a range of industries in 30 countries, including 300 businesses in SA, between September 1 and October 31 last year. Of the South African business owners who took part in the research, 70% indicated that empowerment was a key issue for them in winning business. This was up from 61% last year. In 2003, only 51% of business owners considered their empowerment status to be influencing factor in gaining new clients.

In Gauteng, 73% of businesses reported that empowerment was an issue in winning business, followed by 72% in Durban, 67% in Cape Town and 59% in East London and Port Elizabeth. Business owners in the construction sector indicated that their empowerment status had a significant effect on gaining new clients.

SA’s large listed construction companies joined the empowerment equity race only recently, with the two largest groups in this sector, Aveng and Murray & Roberts, announcing equity deals fairly recently.

In the retail sector, business owners reported an increase in the importance of empowerment in winning new business (69% this year, up from 54% last year). Business owners also identified skills development (63%) and employment equity (67%) as “very important” aspects of their black economic empowerment strategy.

Grant Thorton director of strategic solutions, Lee-Ann Bax, said at the weekend that it was encouraging that business owners were shifting their focus away from addressing only equity as part of their empowerment strategy.

They were also now incorporating broad-based empowerment structures, she said. “What these results reflect is that business owners are focusing on developing and grooming people to move up the ranks, which is in line with the whole black economic empowerment rationale,” Bac said. “However, despite this, there is still a misunderstanding that ownership is the only aspect of empowerment, with mid-sized businesses still feeling pressure from their clients to comply with the ownership aspects of black economic empowerment scorecards.”

Black control of JSE-listed companies appeared to remain at low levels despite increasing importance being attached to empowerment and despite the large number of empowerment deals that continue to be inked. Surveys by the Financial Mail suggest that between 4% and 8% of the JSE’s market capitalization of about R2,5 trillion is in black hands.

The measurement of black influence on the JSE remained a bone of contention, said the business magazine.

Source: Business Day

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