1. Home: The EEIP as a BBBEE development instrument:
The BBBEE Codes of Good Practice require that all entities operating in the South African economy make a contribution towards the objectives of Broad-Based Black Economic Empowerment (B-BBEE).
It is, however, acknowledged that there may exist multinationals that have global practices preventing them from complying with the ownership element of B-BBEE through the traditional sale of shares to black South Africans. In this instance, and provided that it can be proven that such entities do not enter into any ownership partnership arrangements in other countries globally, the codes have made provision for the recognition of contributions in lieu of such sale of equity. Such contributions are referred to as Equity Equivalent (EE) contributions.
An EE Programme would entail a public programme/scheme and/or private Programme/scheme designed to fulfil the requirements of B-BBEE ownership. Such a programme needs to be approved by the Minister of Trade and Industry in order to qualify for ownership points on the scorecard.
A proposal for an EE Programme would have to be developed by a representative entity of the foreign multinational for submission to the dti and may either take the form of a private programme or a public programme or a combination of both as provided for in the codes.
EEI Programmes are expected to contribute towards the achievement of the following objectives:
- Enterprise creation and development.
- Foreign direct investment.
- Accelerated empowerment of black rural women and youth.
- Sustainable growth and development.
- Human development with focus on education and skills development.
- Infrastructure investment with emphasis on developing the country’s research and development infrastructure.
- The economic impact of the EE Programme must be aligned to the objectives of the B-BBEE Act.
- The EE Programme must not displace other B-BBEE initiatives to be undertaken as per the scorecard.
- The EE Programme must be broad based in its impact on the black population.
1.3 QUALIFICATION CRITERIA FOR PARTICIPATION IN EE PROGRAMME
- EE proposals must demonstrate commercial viability and long-term sustainability (economically and operationally).
- EE proposals must be aligned to the overall objectives of B-BBEE.
- There must be transfer of business and/or technical skills.
- EE proposals must be measurable against the value of their operations locally with tangible measurable outputs.
1.4 EXAMPLES OF DIFFERENT FORMS OF EE PROGRAMMES
- Enterprise Creation Programmes.
- Economic Development Programmes.
- Projects aimed at technology transfer/diffusion within the small, medium and micro-enterprise sector of the local economy.
- Programmes that promote economic growth and employment creation through the enhancement of technological innovation.