Current Edition >> Archives Section >> Spot Coverage >> July 2001
IN handing it's report to Pres.Thabo Mbeki, the Black Economic Empowerment Commission (BEEC) under chairmanship of Mr. Cyril Ramaphosa, caused quite a stir in business circles about the nature of some of the recommendations, especially the following relating to an "investment for growth accord":
• In a reversion to the previous government ideas of prescribed assets (scrapped under the new government), mainly life and retirement companies would have to place at least 10% of their assets at the disposal of productive investments in areas of “national priority” for five to seven years.
• The private sector must commit itself to economic activities in rural areas and use “anchor projects” to attract others to industrial development zones.
• Banks must have “reviewable” investment targets in black and other underdeveloped areas.
• Trade unions must have guidelines showing their trustees how to influence investments of life assurance companies to achieve the BEEC's aims.
• When making investment decisions, union trustees must think also of social objectives and not only prudent and responsible investment ones.
• Unions should consider joint employer-employee pension contributions to increase employee ownership of targeted companies.
• The Government's Employees Pension Fund should place at least 10% of its assets in investments needed in areas of “national priority”.
• Some privatisation funds must be earmarked for rural development.
• Privatisation and the “restructuring of State assets” must be used in part to force investment in the provision of infrastructure.
Furthermore in order to gradually increase the levies required for skills development as well as acquiring private sector involvement in providing physical schooling needs, it is proposed that Government:
• Should raise money for the purpose of the recommendations by selling its Business Partners Trust stake.
• Stop Khula from giving fiscal guarantees to banks and rather let it work on stimulating micro financing.
• Pay greater resource attention to developing smaller businesses and giving them tax incentives.
• Should think of kick-starting a venture capital sector.
• Should reserve some SME incentives for black businesses.
• Make an empowerment funding agency part of the Trade & Industry Department.
While some of the recommendations are viewed as having definite merit, in general serious questions are being raised about the value being attached in the recommendations to the spirit of free enterprise and natural market forces. Amongst the outspoken views are that some of the recommendations are downright communistic in nature and also boil down to neo-apartheid. It would therefore seem that these recommendations, touching on the core of emerging business in South Africa, would still be the subject of extensive debate.
ALTHOUGH the Internet revolution is underway, international indications are that e-commerce has as yet not even reached the lift-off stage. It is authoritively opinioned that the world is now only in the first four or five years of a 25-year cycle. Most companies have not yet progressed beyond having a Web page and doing a few simple Internet transactions. Only 7% of companies worldwide do complex transactions, have integrated core processes throughout the organisations and managed to develop external value networks.
It is being expected that in the next decade the real power of e-business lies in transactions that are electronic from beginning to end. To maximize the return on investment, to lower costs, to be more efficient, to deliver a better service to clients and gain a competitive edge, all business processes will have to be integrated.
Moreover, it is expected that one will no longer be even aware of the technology - it will be built into all consumer equipment like refrigerators and motorcars. Software and the Internet is to combine different types of equipment, from computers to new so-called tablet computers - portable machines with large screens on which one can write. As integration embraces more processes, relations and appliances, IT infrastructure will become increasingly important. The infrastructure of the future will have to be open, based on general standards so that businesses can link up to clients, other enterprises and billions of appliances, wherever they may be.
One reservation, however, is the slow Internet access due to equipment not keeping pace. Ffor instance in the USA - as the foremost country by far in the world - as yet not even 20% of American households would have broadband access to the Internet within four years.
Meanwhile, globally every year 100 million new Internet users sign on. Research shows that Internet trade will grow to US$5 trillion by 2005, when about 15% of the world's population will have Internet access. Though the US now accounts for 46% of all e-commerce, its share will diminish to 36% by 2005. Last year, the US had 34% of all Internet users, Europe 29%, Asia (excluding Japan) 16%, Japan 10% and the rest of the world 11%.
According to International Data Corporation research about 1 billion people will use the Internet by 2005, generating e-commerce of US%5 trillion. With net turnover now at $354bn, that implies an average annual growth of 70%.
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