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Black oligarchs penalised - Absa
Brendan Ryan
Posted: Sun, 22 May 2005
[miningmx.com] -- South Africa’s so-called "black oligarchs" are being unfairly penalised by current attitudes in the black economic empowerment (BEE) process.
That’s the view of Francois Laurens, head of business development for Absa Corporate and Merchant Bank, who told a conference on BEE in Johannesburg on Friday that the role of empowerment had to be assessed against the overriding priority of achieving growth in the South African economy.
"The biggest challenge facing the country is to achieve an annual rate of growth in gross domestic product (GDP) of between 4% and 6%. Black economic empowerment has to be assessed against that requirement and it cannot take place at the expense of this primary focus on overall growth," Laurens said.
Laurens said the issue of "broad-based" BEE had become a significant factor in discussions around empowerment charters with an unfavourable
view being taken in some circles of certain successful black businessmen because of the wealth they had already built up.
"Too much emphasis is being placed on the issue of broad-based empowerment. The experience of countries elsewhere is that businesses are built by a few successful entrepreneurs and their success breeds more success. There is a ripple effect from their efforts.
"We cannot get so fixated over ownership that we lose track of the bigger picture," he said.
Laurens did not specifically name any of the "oligarchs", but he’s talking about businessmen such as Tokyo Sexwale, Patrice Motsepe, Mzi Khumalo and Cyril Ramphosa. Two of those - Motsepe and Sexwale - are directors of Absa.
Background to Lauren’s comments - which he did not raise - is the belief in mining circles that some government officials are trying to limit the flow of BEE deals to businessmen like Sexwale and Motsepe because it’s believed they have already made enough money
out of the process.
Laurens questioned the practicality of many broad-based schemes in terms of benefits actually delivered to the participants in the schemes as well as real contributions made to the business that is being developed.
He also called for a weaker rand and for the South African government to introduce "aggressive tax schemes" which would benefit BEE deals.
Funding structures used for BEE deals needed to do more than "enrich the lenders" and that all stakeholders - including vendors, financial institutions and sponsors - should "accept their role" in the BEE process, he said.
At a press conference afterwards Laurens denied a suggestion that banks such as Absa were not doing enough themselves to fund BEE deals through changing their credit assessment and loan systems.
He pointed to Absa’s Incubator Fund as an example of a system set up to meet funding requirements for BEE transactions where capital is not easily accessible from
normal banking channels.
Despite this, he said Absa had been forced to walk away from various mining transactions which were simply not fundable because the broad-based empowerment groups behind them could supply neither funds, security nor a strong-enough team to support their proposals.
Laurens also said the BEE process could not drag on forever. "We have a period of up to a maximum of six years to acheive what must be achieved," he said.
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