No need for second round of BEE deals: FirstRand founder

Founder of FirstRand, Laurie Dippenaar, says South Africa has done enough BEE deals, and calls for more transactions are worrying

Calls by some government departments for a second round of Black Economic Empowerment deals to take place because the first round did not make much of an impact, are cause for concern says FirstRand founder Laurie Dippenaar.

He believes a second round of BEE deals could have serious implications on a number of companies, and that reducing the percentage of existing shareholders could affect overseas investments.

“It worries me that certain government departments are now saying that the first wave of BEE transactions didn’t work and are now pushing for a second wave of transactions designed to create narrower pockets of influence through the creation of black industrialists,” Dippenaar said in the latest FirstRand annual report.

The first round of BEE deals had a negative impact on overseas investments as many international companies had to be convinced to keep their investments in South Africa, and doing more BEE deals might discourage them from retaining their investment in the country, Dippenaar told Business Day.

“I am not certain if you keep on having to do this whether they will want to retain the share. A lot of shares are held by pension funds,” he said.

Dippenaar bases his argument on research released in June this year by capital markets consultancy firm Intellidex, which revealed that BEE deals have generated R317 billion for black South Africans in the last 15 years. Intellidex CEO Stuart Theobald said at the time that statements about BEE deals not creating substantial wealth were not true.

“Contrary to popular belief, BEE transactions have not only benefited a small elite of black South Africans, but have generated a significant amount for black people at the grass-roots level through broad-based and employee schemes,” Theobald said.

“What was particularly interesting is to see the value that staff and communities have derived. The numbers indicate that many poor and working-class black South Africans have access to significant resources because of BEE deals.”

Source: destinyconnect

Author: MC World

Share This Post On