United States wants two sectors of South Africa’s economy to have BEE exemptions

The United States wants the exemptions from Black Economic Empowerment (BEE) regulations that apply in many parts of the South African economy to be extended to mining and telecommunications. 

These exemptions take the form of Equity Equivalent Investment Programmes (EEIPs), which are already granted in most sectors of the economy. 

United States Ambassador to South Africa Leo Brent Bozell III made it clear that this is not an attack on BEE itself or the country’s transformation policies. 

“There is no challenge to BEE, and there never has been a challenge to the policy. That is how it is being demagogued by the government,” Bozell III told BusinessDay TV. 

“All we are saying is that they should allow everyone to participate in what they are supposed to. There is no assault on sovereignty there.” 

Bozell explained that the United States wants EEIP exemptions to be extended to the telecommunications and mining sectors in South Africa.

These are the two sectors that American investors are most interested in, given South Africa’s critical minerals sector and its highly connected population. 

Currently, the BEE requirements in these two sectors act as a tax on capital on arrival, which discourages investment. 

Businesses are expected to cede a significant share of ownership to new shareholders in exchange for the privilege of participating in the South African economy. 

Bozell said this is not a trade-off many businesses are willing to make, resulting in a chilling effect on investment in these sectors. 

“EEIP exemptions are granted to all sectors of the economy, but not to telecommunications and not to mining,” Bozell said. 

“We find this an outrageous situation, given we have so many people who want to invest in mining and given that South Africa so desperately needs that support.”

Ordinarily, Bozell explained, these interests are aligned and should enable a lasting partnership between the two countries. 

However, South Africa’s government has been unwilling to engage on this matter and open the door to billions of dollars’ worth of investment. 

“The President refused to extend the EEIP alternatives to telecoms and mining, which only hurt South Africa,” Bozell said. 

“South Africa desperately needs this kind of investment. We have companies waiting in the wings with billions of dollars ready to invest.”

“Yet, these companies can’t get a mining licence using the same exemptions everyone else gets in other parts of the economy.” 

Bozell repeated that America has no interest in challenging the BEE framework. All it wants is to give the telecommunications and mining sectors what has been given to everyone else. 

“Your government is not being helpful when they can’t do the simplest things, such as give mining and telecoms what they have given everyone else.”