‘Surprising new rules’ on empowerment are holding investors back, says EU Chamber

Investments have already been put on hold or downscaled, says the EU Chamber of Commerce and Industry in Southern Africa.

The EU Chamber of Commerce and Industry in Southern Africa says uncertainty over SA’s broad-based black economic empowerment policies, and the costs of implementing them, are among the top challenges for European investors in the country.

It says the growing emphasis on ownership over other aspects of the broad-based empowerment policy — such as supply chain or skills development — is compromising existing and prospective investors’ ability to continue with or expand their operations in SA.

“In this respect, members of the EU Chamber have reported that an increasing number of tenders by the state-owned enterprises (SOEs) in SA include a requirement of 51% black ownership for their suppliers,” Stefan Sakoschek, the chamber’s national executive director, said on Friday.

He said the chamber had been informed that “such a discretionary measure lacked sound legal basis” as it would require pre-approval from the Department of Trade and Industry (DTI), based on appropriate studies examining the skills level and other market dynamics in respective commercial sectors.

European companies were now faced “with surprising new rules” in relation to crucial tender procedures. “This has already caused investments to be put on hold or downscaled,” Sakoschek said.

Stefan Sakoschek, Regional Director & Secretary General – EU Chamber

“The EU Chamber, therefore, is urgently requesting [government] to bring clarity on the legal basis of the 51% black ownership requirement in the SOEs’ supply tenders, and calls for a more intensive dialogue with the South African authorities on the future direction of the broad-based black economic empowerment policies and targets.”
Sakoschek said the EU Chamber supported continued economic transformation in SA through empowerment, but this process should be scaled to ensure the long-term sustainability of investments, and the availability of required skills.

Source: Business Day Article

*The ABC is a founding member of the EU Chamber.

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