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South African businesses will increasingly find themselves operating in new territory. The effects of the broad-based BEE transformation challenge on the general economy short-, medium- and long-term have been the subject of much debate.

South Africa has become increasingly integrated into global markets and, notwithstanding the merits of broad-based BEE, the country needs to confront the facts and challenges of its current reality. It needs to position itself as an advanced economy in a highly competitive and uncompromising global arena.

Some of the areas of concern that exist in relation to BEE implementation include:

•Targets for ownership, management, skills development, supplier and enterprise development and socio-economic development are too onerous and extremely costly for many businesses.

•There are too few potential BEE partners with the right credentials and track record for businesses to transact with.

•The QSE turnover threshold is still too low and excludes medium sized businesses, particularly in high volume, low margin sectors such as retail and distribution.

•Long-term investments are required to act as incubators for new businesses and to mentor a new generation of leaders.

•In certain sectors remuneration packages and structures are just not sustainable.

•Business may not be conducted on the basis of merit and performance.

•Tokenism – parties need to bring something to the table in a broad- based BEE deal.

•Many deals are not commercially viable, nor are many based on sound business principles.

•The sense that broad-based BEE may create a culture of enrichment and entitlement.

•The perception sometimes exists that the Scoreboard deems empowerment equity to be eroded through capital loan repayments.

•The necessity for broad-based BEE partners to bring more to the table than the potential of opening doors to lucrative government and private sector contracts.

•Potential dilution of ownership credentials after sale or loss of shares by black participants.

•Exit clauses enabling a broad-based BEE partner to dispose of their equity, and not specifying clearly to whom they may dispose of their equity.

•Processes to deal with performance problems and unrealistic expectations not being documented.