BLACK economic empowerment legislation could potentially have a positive effect on stimulating entrepreneurial activity, says Nikki Kearns, director of business banking at Standard Bank.

With SA’s level of early stage business activity at a relatively low level compared with other developing nations, she says such an effect could not come at a better time.

Kearns was commenting on the findings of the 2005 Global Entrepreneurship Monitor Report (GEM). The GEM report provides data on the level of entrepreneurship in developing nations, and is intended to stimulate debate and inform policy.

“GEM 2005 indicates that SA’s level of entrepreneurial activity has decreased since the 2004 survey. However, as the effects of empowerment legislation take place and the level of people entering the formal economy – as well as gaining access to banking systems – increases, more people will be in a position to exercise their business creativity than was previously possible.”

With the introduction of the financial sector charter in 2003, certain provisions have been set out for financial institutions to contribute to the redress of past imbalances.

While many of these responsibilities focus on an increase in the executive-level participation of the previously disadvantaged, Kearns says it is the combination of certain measures that will contribute to improved entrepreneurship, such as requirements for skills development, corporate social investment – and notably, the introduction of an initiative to extend bank services to more South Africans. “Empowerment should be seen as a benefit to the economy and business in SA. It enables economic growth and having an empowerment partner will give businesses access to new markets, which in turn will lead to business growth.

“By completing an empowerment transaction, you ensure sustainability for your business.”

Furthermore, with the GEM report indicating a clear correlation between education and entrepreneurial activity, Kearns says it is important to encourage skills development. “Large firms are taking the law seriously, and it is having an impact on all levels of society; while it will take some time, it is plausible that as the effects take hold, empowerment will act as a catalyst to help to stimulate further entrepreneurial activity.”