Reversal in South Africa: Government Decides Not to Reduce Incentives for Broad-Based Ownership

Less than two weeks after the government of South Africa announced it would reduce the incentives for broad-based employee ownership, it reversed its decision. The original decision would have affected the number of points companies with broad-based employee ownership plans earn for Black Economic Empowerment (BEE) credit. Companies that score high on BEE measures, which were designed in part to encourage capital ownership by black South Africans, get preference for government contracts, a large part of the South African economy.

The original announcement caused what the opposition's shadow minister of trade and industry Geordin Hill-Lewis called "two weeks of complete confusion." In announcing the retraction, Trade and Industry Minister Rob Davies acknowledged the mistake and said, "We are back to the status quo." He said that the original proposed reduction was because the ministry had encountered "dodgy" share ownership schemes that failed to provide substantial benefits to employees.