Date: 03 Apr 2011

Title: BEE, BBBEE under the spotlight
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Pretoria – One of the major shortcomings in the implementation of Black Economic Empowerment (BEE) was the over-emphasis on diversity of ownership and senior management.

This was one of the key issues raised at the Black Economic Empowerment Advisory Council meeting, chaired by President Jacob Zuma on Friday, which discussed how to take the agenda of economic transformation forward and to promote inclusive growth.

“The unintended consequence of this over-emphasis is fronting and tender abuse. We are happy that the Council spoke out so strongly against fronting which is one of the major obstacles to the implementation of BBBEE.

“Fronting is an insult to the dignity of the poor and we have to act decisively against it. I am pleased that the Council is so determined to work with us to act against this heinous practice,” Zuma said.

According to the Presidency, there was special emphasis on the implementation of the New Growth Path and the role of Broad-Based Black Economic Empowerment (BBBEE) in creating jobs at the meeting.

In particular, the meeting stressed that BBBEE was not just about big business deals for a few individuals in society but also had to have a hand in empowering ordinary people.

“In this regard, the Council called for the consistent implementation of broad-based BEE in all sectors of the economy, to ensure that the policy touches the lives of more people,” the Presidency said.

The meeting also noted that BBBEE was central to inclusive growth. Support was given to provisions of the New Growth Path which require a much stronger focus on the broad-based elements of the BEE regulations.

This included ownership by communities and workers, increased skills development and career-pathing for all working people and support for small enterprise and cooperatives, as well as a new emphasis on procurement from local producers in order to support employment creation.

The meeting also pointed out that to contribute to job creation, BBBEE has to, amongst others, promote new enterprise development, encourage local procurement and enhance skills development and employment equity.

Participants also agreed that fronting needed to be eradicated and effective mechanisms, including possible punitive measures against those guilty of fronting practices, needed to be implemented to stamp it out.

“It was agreed that government, with the support of the BBBEE Advisory Council, would ensure a revision of the BBBEE Codes to promote employment creation, investment in small business and cooperatives, broad-based ownership and employment equity,” the Presidency said

The Council also recommended that government should urgently ensure proper monitoring and evaluation of the implementation of the BBBEE Act. – BuaNews

Former union leader Jay Naidoo said that Black Economic Empowerment (BEE) has been hijacked by a “cabal of predatory elite.” In socioeconomic terms, he said, South Africa had become one of the most unequal nations in the world and BEE was partly to blame for this. Other critics of BEE include Minister Trevor Manuel.

“Let me remind you that [BEE] was always meant to be broad-based – and not for the select few? BEE fell short of its aims. It gave us the BEE-elites ,” said Naidoo, speaking in Johannesburg last week at the launch of a checklist of 40 questions verifying the credentials of any BEE organization.

Supporters point to such projects as a Ford Motor Co.-funded center to support black-owned, automobile parts suppliers, and a $65 million program paid by Microsoft to invest in between five and 10 black-owned software development companies.

But, critics say BEE too often rewards people who are already successful. The Economic Development Ministry in November deemed BEE largely a failure, saying it focuses too much on deal making and not enough on supporting new entrepreneurs and creating jobs in a country where unemployment is 40 percent for people between 16 and 30 years old.

Pretoria – The Department of Trade and Industry (dti), together with three universities, is finalising the development of a Standardised National Training Programme for Broad-Based Black Economic Empowerment verification.

“Since the inception of the Codes of Good Practice for B-BBEE, the department has endeavoured to harmonise the verification industry and set standards on B-BBEE verifications,” said the department.

In 2009, the dti gazetted sector charters as sector codes in terms of Section 9(1) of the B-BBEE Act. These are the tourism, forestry, construction, transport, and chartered accountancy sector codes.

The dti said the same measurement principles applicable in the measurement of the generic score-card is applicable in the case of sector codes. It is also the responsibility of every verification agency to familiarise themselves with the sector codes.

“The dti, jointly with the government departments responsible for the gazetted sector codes, has embarked on an awareness campaign to further familiarise verification agencies with the imperative of measuring sector codes.”

Government said it would continue to work with the private sector on issues surrounding sector codes, as buy in from all stakeholders was important for the successful implementation of its B-BBEE strategy.

Sector charters are voluntary industry initiatives by stakeholders with common commercial characteristics looking to promote and give effective, meaningful expression to the purpose of the BBBEE Act.

The stakeholders, once agreed about the targets, weightings and measurements of the industry specific objectives, then submit, through the representative industry body, a written application to the Minister of Trade and Industry to have the Sector Charters gazetted as sector codes of good practice in terms of the B-BBEE Act.

“Once gazetted as such, sector codes are legally binding and enforceable to the sector and industry players who have assented signatory thereto,” said the dti. – BuaNews

Black business groups yesterday decried the lack of progress in implementing the financial sector charter.

MAIN MAN: Lawrence Mavundla took over Nafcoc last month Picture: RUSSELL ROBERTS
“We have made dismal progress,” Edwin Mashego, of the National African Federated Chamber of Commerce and Industry (Nafcoc), said in Johannesburg at a briefing on the charter.

The charter was introduced by Nedlac, the National Economic Development and Labour Council, in 2002 and brought into effect in 2004 to correct, among other things, imbalances in the ownership of enterprises in the financial sector.

“Almost seven years later very little noticeable progress has been made,” said Mashego.

The charter was revised in 2008. In November last year, Trade and Industry Minister Rob Davies gazetted the first phase of the charter in terms of the Broad Based Black Economic Empowerment Act and invited comment.

The Confederation of Black Business Organisations’ vice president, Tsakani Matshazi, said: “We have in place a framework . that tends to be a delaying tactic. This wait-and-see attitude . has a tendency to protect the interests of the incumbent.”

Nafcoc’s Mashego said leaders had failed black business by “trusting the benevolence” of financial institutions to deliver on true transformation.

“Incumbent owners will not relinquish control just because it is good to do so . but they are doing it because it’s to their advantage.

“Institutions that have done things a certain way need to change . up to now they have been dictating things for themselves . we need to take control.” For this reason, Nafcoc planned to establish its own black-empowered bank.

“Nafcoc has taken a resolution that the dreams of its founding fathers to establish its own black-empowered bank are going to be resuscitated, because we know that we cannot rely on the current incumbents to do that,” Mashego said.

But political opportunism has won the day.

The outcomes that this will produce remain to be seen.

To any reasonable person that a society in transition like South Africa will for the foreseeable future be riddled with contradictions and imperfections should be axiomatic. Our constitution expresses a national commitment to strive for a non-racial society, but that we also value the plural character of our society, made up of different racial, language and ethnic communities.

Our Coat of Arms captures it as “Unity in Diversity”.

We are discovering that our ambition entails the re-invention of a South African identity.

The relative speed with which non-racism has been mainstreamed testifies to the ease with which South African political culture adapted to what the law once considered treason. Then racism was neither deemed offensive nor bizarre. It was official state policy.

These positive signs notwithstanding, the reality is that ours is still a deeply divided society, and race remains the most visible line of fracture.

The diabolical genius of the architects of racial oppression encapsulated political domination, economic exploitation and social differentiation in the single category of race, compelling us, even while trying to make race politically irrelevant, to return to it every time public discourse touches matters of equity.

Affirmative Action and Black Economic Empowerment are constitutionally mandated interventions, yet they have generated more heat and anger than any other policies of the incumbent government.

Prior to 1994, no white competed on equal terms with a black person for a job. The loss of previously enjoyed privileges inspires much of the opposition to these measures from bodies like Solidarity.

Strategies to uproot racism have invariably foundered on the resistance mounted by those it previously advantaged.

Yet ours has, thus far, been a relatively stable transition compared to the ongoing rights struggle in the US. But employment equity remains an elusive target and has consequently become the terrain on which racially competitive behaviour is prevalent.

The non-racial aspirations of our constitution might regularly collide with the means that have to be employed to arrive there.

For a long time, the government will have to balance the competing claims of delivering on the highly racialised social deficits from our past, and building a non-racial society. It has to address these twin challenges in an apartheid created environment, where the majority of blacks, coloureds, Indians and whites still live in their respective ghettoes. To evaluate the efficacy of its policies, it has to count heads.

The racial ghettoes we inhabit describe the levels of relative advantage created by apartheid, thus reinforcing stereotypes and threat perceptions.

The disturbing levels of distrust among the three black communities, is a function of competition among them for opportunities and resources.

One may respond to that either by instilling mutual confidence and encouraging co-operation among these communities, as we tried to during the decades of struggle, or to reinforce competition and stimulate further suspicion with hare-brained ideas in the hope that they will translate into votes on election day.

Manyi’s most vocal critics in the DA, Cope and Solidarity, appear to be motivated by such calculations.

Democracy has abolished statutory apartheid, but the societal realities it created are changing very slowly.

Accelerating the pace cannot be regarded as the responsibility of the ANC-led government alone. The laissez faire attitude of business, academia and other potential role-players is neither helpful nor constructive.

South Africa’s non-racial project is a work in progress. Challenges along the path will be legion, but not insurmountable. The first among them is that we are pursuing a non-racial project with human material tempered in the crucible of one of the most vicious systems of racism.

The mindsets that this past produced will invariably re-appear in forms and shapes that will haunt us well into the future.

Manyi’s interview and his remarks in Durban last year are instances in point.

Denying the unfortunate, continuing salience of race as a measure of opportunity in South Africa is not the answer. Every statistic indicates that white males still enjoy a position of relative and absolute privilege in our society, and that rural black women are the most disadvantaged.

Uprooting white privilege, in whatever guise, is an inescapable obligation. South African business has consistently sought to evade the Employment Equity Act and the government has been hesitant in its enforcement.

Pretending that the repeal of explicitly racist laws has now levelled the playing fields is one of the more notorious acts of denial. Trevor Manuel is absolutely correct to remind us that segregation, apartheid and “separate development” were all systems of social engineering, designed to produce highly visible unequal outcomes. Correcting these is not an obsession with “racial victimhood”. It is the pursuance of social justice.

One of those outcomes is precisely the “over-concentration” Manyi complains about. But the solution he proposes is consistent with Verwoerdian notions, hence the well-deserved rap across the knuckles from Trevor Manuel.

Such social engineering also involved the politicisation of differences among the oppressed. The differential treatment of the three black communities by successive white minority governments has produced its own weird patterns of racial tension and prejudice.

As Dr Mamphela Rampele explained: “The coining of the term ‘black’ was a political statement against the divide and rule tactic embedded in the use of ‘racial categories’.”

“Black” became a term expressing inclusivity, something Manyi appears not to grasp.

Creating a non-racial society will necessarily entail action on a number of fronts – political, economic and cultural. Such measures must not only address the disempowerment of the previously racially oppressed but also break down the racial barriers by creating racially integrated communities and spaces for unrehearsed interactions. Exploiting racial tensions for short-term political gain is playing with volatile material.

n Z Pallo Jordan is a member of the ANC NEC. He writes in his personal capacity.

It seems as though the South African Department of Trade and Industry (DTI) isn’t interested in receiving comments or questions regarding broad-based black economic empowerment (B-BBEE) electronically, a member of the MyBroadband forums recently pointed out.

The DTI operates a B-BBEE portal on its website which it says “is designed to help you understand all the legal requirements of B-BBEE” and “contains useful tools to assist you work out your B-BBEE status.”

A link entitled “Contact Us” is displayed on the bottom left of the site and clicking on it leads to a page displaying a form stating: “Type your comments or questions below.” The form further requests your title, first name, surname, email address and daytime phone number. See the image attached to this article.

Unfortunately the contact form isn’t enclosed in HTML form tags, which means the browser doesn’t know to send the data in the completed fields back to the server.

Furthermore, the form’s submit button points to essentially nowhere, so the DTI will never receive your question, comment, or contact details.

According to the B-BBEE site it is “powered by” B1SA. B1SA’s own site touts the company as the “leading provider of B-BBEE management services and technology solutions for small and large business, institutions, industry charter councils, and government organisations.”

“Testament to our capability is that B1SA is the service provider that has developed and continues to service The Department of Trade and Industry’s National B-BBEE website and IT Portal,” B1SA claims.

The DTI was asked for comment about the website and its development but didn’t respond to MyBroadband’s questions by the time of publication.

Briefing journalists in Parliament in Cape Town on Thursday, Economic Development Minister Ebrahim Patel said that reducing red tape for small business owners meant reducing the number forms that had to be filled in, and speeding up the time it took for government agencies to process documents.

It also meant ceating a more co-ordinated system, and setting up one-stop shops, so that business owners were not sent from one place to another just to get the same thing.

Trade and Investment South Africa

Trade and Industry Minister Rob Davies, said that setting up a national one-stop agency for investment approvals would involve bolstering the capacity of Trade and Investment South Africa, which falls under the Department of Trade and Industry and already helps facilitate international investments in the country.

Davies said the campaign to minimise red tape for small businesses would include the roll-out of an initiative to help municipalities cut regulations affecting small enterprises, following the conclusion of a pilot project in a number of municipalities.

Added to this, he said, the new Companies Act, due to come into effect on 1 April, would see less onerous regulations for small companies in South Africa.

Consumer Protection Act

The Consumer Protection Act, due to come into effect on the same date, would also help to stimulate the economy.

Davies cited the example of building regulations, saying that many contractors failed to fit lights and plugs that met the compulsory specifications for electrical installations in new buildings. Under the Consumer Protection Act, homeowners would have recourse, meaning more work for contractors, which he believed would benefit the economy.

“Now what will happen is that everyone who is involved in the process – the retailer, the housing contractor – will no longer be able to say, “I didn’t know about that, that’s what I was given by the shop”. They will now have responsibility for that.

“And we think that is the kind of effective regulation that will protect our consumers against unsafe products and our industries against unfair competition from low-quality products,” Davies said.

Reform of BEE codes

Rural Development and Land Reform Minister Gugile Nkwinti, said reform of the BEE codes would contribute to job creation by incentivising local procurement, entrepreneurship and broad-based ownership.

Other initiatives outlined by Nkwinti, who chairs the government’s cluster on economic sectors and employment, included the establishment of a Companies and Property Intellectual Commission, to take over from the Companies and Intellectual Property Registration Office (Cipro).

The powers of the Competition Commission and Tribunal would also be strengthened through an amendment of the Competition Act aimed at criminalising cartel involvement.

Source: BuaNews

Santam said diluted headline earnings a share totalled R13.43 in the year to December, compared with R8.89 a year earlier.

The results were widely expected after Santam said last month it expected headline earnings a share to increase by as much as 55 percent.

Santam, which is majority-owned by Sanlam, said it was helped by a recovery in its underwriting business and few large industrial accidents and fires.

The insurance company said net insurance premium revenue totalled R13.5 billion, compared with R12.9bn a year earlier.

South African insurers have begun to recover after being hit hard by a 2009 recession that led to a million job cuts and ballooning household debts, causing customers to allow policy payments to lapse.

The sell-off in equity markets after the global economic crisis hit investment portfolios.

Santam said it expected underwriting margins to decline to a range of 4 percent to 6 percent this year due to the weakening rand and higher claim costs after floods spread across the country earlier in the year.

During the period, Santam acquired all of the voting equity interest in Emerald Risk Transfer to obtain specialist underwriting skills in the corporate property environment. It also acquired Indwe Broker Holdings, a black economic empowerment company, saying it was looking to protect its interests.

Chief executive Ian Kirk said: “We are always on the lookout for acquisitions. As far as the business outside South Africa is concerned, we have completed our transactions using the Sanlam footprint.”

Shares in Santam lost 0.52 percent to R127.30 on the JSE yesterday. – Additional reporting by Wiseman Khuzwayo

Molefe, who has a reputation for being a transformation activist, said yesterday that Transnet was well transformed. But he said that did not mean it could not contribute to the broader efforts of transforming the economy.

“One of the things we will push for is the way we do business with our customers, clients and the people to whom we are clients,” he said in an interview. “We want to promote small black businesses in the way we procure, discuss how they are transforming.”

“We will continue to be reluctant to do business with the people who are enemies of transformation,” he added.

On its website, Transnet says companies who are interested in doing business with it must have proof that their black economic empowerment (BEE) status has been rated and they must be at least a level five BEE contributor. A level five BEE contributor is a company that scored 80 out of 100 on all the elements of the BEE scorecard.

Black Lite Consulting managing director Ajay Lalu said for the first time, Transnet would have a group chief executive who was not only committed to BEE but was also active in doing something about it.

Molefe had a strong transformation track record, dating back to when he was at the Public Investment Corporation.

“This will play a role in his leadership of Transnet,” said Lalu.

“I think you will see a shift in the way that Transnet procures from the private sector as they will not only have to have a good BEE rating, but they will have to be black-owned, managed and controlled.

“There are a lot of white-owned companies who have a good BBBEE (broad-based BEE) rating, however a good BBBEE rating does not necessarily translate into a well transformed firm.”

Molefe, whose appointment has attracted controversy as some media reports have suggested that he was appointed due to the influence of the Gupta family, said he applied for the job and was not aware the Gupta family had anything to do with his appointment.

“A week before I was appointed, the newspapers were saying (that) I would not be appointed because I am a (former president Thabo) Mbeki person. I am nobody’s person, I am just a South African wanting to contribute to the development of my country.”

Molefe said he did not think that having operational experience of the business was key to the position of chief executive.

“I don’t think you need a train driver to come here and be a chief executive or a rail engineer to run the company.

“You don’t take the best Maths teacher and make him a principal or the best doctor a hospital superintendent, that is the mistake we have been making and the government wants to move away from that.

“My job is about enhancing revenue, a chief executive motivates and I bring my financial skills,” he said.

The executive committee, which has three posts held by acting people, will be finalised within two weeks. – Business Report

He said the contents of the revised regulations would be discussed with the Parliamentary Standing Committee on Finance and Appropriations and the National Economic, Development and Labour Council, also known as NEDLAC.

Also announced in the post-Cabinet statement was that Public Enterprises Minster Malusi Gigaba would determine the way forward to achieve uniformity of remuneration in state-owned enterprises.