Oct 02, 2012
Amended BBBEE codes open for public commentBack
Africa|Building|Education|Sustainable|Technology|Africa|Asia|South Africa|Manufacturing|Rob Davies
© Reuse this
Speaking at the launch of the revised BBBEE codes, Minister Rob Davies said BEE remained an imperative in South Africa.
“It is not just a social or political imperative . . . but an economic imperative as well. Control of companies in the country should be reflective of the demographic and we cannot expect to grow as an economy if business leadership is in the hands of the small minority.”
The current generic scorecard contains seven elements and these have been reduced to five, with a total of 105 points assigned to the five elements. All companies, except the exempted micro enterprises (EMSs) should comply with all the elements of the scorecard.
"There is also some adjustment to the points allocated and the qualification criteria. There is also an enhanced recognition of the status of black-owned micro enterprises,” said Davies.
He said one of the new things being proposed in the revised codes was the introduction of minimum requirements for priority elements. These are ownership, skills development and enterprise and supplier development. Qualifying small enterprises are required to comply with two of the elements, although ownership is compulsory, while large entities will have to comply with all of the requirements.
The thresholds for EMEs and QSEs have also been adjusted, with EMEs increasing from R5-million to R10-million and QSEs increasing from between R5-million and R35-million to R10-milion and R50-million. The Minister explained that inflation was the rationale behind the increases.
All entities would be forced to comply with priority elements under the following conditions: QSEs would need to comply with at least two of the priority elements, which include compulsory black ownership and education for sustainable development or skills development; while large entities would need to comply with all priority elements.
Entities that did not meet the thresholds in these elements would be discounted in BBBEEE levels.
In terms of fronting, Davies said that the bill has also been amended to include much more comprehensive definitions of fronting. “We are also establishing a commissioner who will be responsible for the investigating of these kinds of practices. We are also looking into penalties attached to those kinds of practices.”
Law firm Webber Wentzel stated that the revised codes contained a controversial amendment, which could result in a reduction of companies’ empowerment ratings.
Webber Wentzel partner and BEE expert Safiyya Patel said the most sweeping proposed amendment was likely to be the introduction of sub-minimum targets for the priority elements.
“If they do not achieve the minimum compliance for any of the priority elements, their overall contributor status will be reduced by two levels if they are large entities or by one level if they are qualifying small enterprises. “
Patel noted that this meant that companies that had until now overlooked any black shareholding requirements and focused on all the other elements of BBBEE would be adversely impacted.
“For example, a large company that may have 7% black ownership, but is a level three contributor, will be automatically reduced to a level five contributor because it does not meet the 10% minimum black ownership target,” she added.
Meanwhile, Davies said that the manufacturing sector, which was seen as critical to the development of the economy, was, by and large, not transformed.
“We certainly want to promote local production. . . but we are not able as government to put targets down and tell private sector to buy from certain local manufacturers.
“However, we have signed a localisation accord with Cosatu, which saw us setting up a 75% procurement target. Very little has happened in this regard, and even our own government designations are behind.
“We need to look at how we can make localisation a tool and once that happens, we need to look at how we can get black-owned companies much more active in this space,” Davies noted.
He pointed out that other countries, particularly in Asia, made use of symbiotic relationships between small and large business. “They have active supplier development as they want to insure inputs come from the small players. These large business also partake in active mentoring, skills development, trading and capacity building.
“This is the sort of model that we need to create and develop in this country. Through incubation programmes, which are running in the country at the moment, larger companies could assist smaller companies to become productive players in the economy,” he said.
Davies announced at the recent International Small Business Congress in Sandton that the DTI had established an incubation support programme for small businesses, which would see 250 incubators set up through the country by 2015.
The programme would encourage private sector partnerships with government to foster collaboration between small and big businesses, whereby big businesses assist small, medium-sized and micro enterprises with skills and technology transfer, supplier development and creating marketing opportunities for small businesses.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Creamer Media Senior Researcher and Deputy Editor Online
Other Economy News
Updated 1 hour 8 minutes ago The latest Transparency International report paints a bleak picture on corruption in Africa, with more than half of those surveyed perceiving corruption to be on the rise – and South Africa emerging as one of the worst performers. The African edition of the Global...
Updated 3 hours ago Public Enterprises Minister Lynne Brown reported on Tuesday that far-reaching interMinisterial committee (IMC) discussions were advancing on how best to reform South Africa’s State-owned companies (SoCs), many of which were currently underperforming. There are around...
Updated 6 hours ago Despite ongoing economic weakness in South Africa and parts of the European Union (EU), the 2015 trade performance has improved, with South African exports to the EU increasing 9.7% to R163.3-billion for the first nine months, while imports have risen 8.1% to...
Updated 10 minutes ago The Nuclear Industry Association of South Africa (Niasa) is not sitting by idly while National Treasury and the Department of Energy mull over the various options for the country’s controversial 9 600 MW nuclear build programme. While Energy Minister Tina...
Updated 16 minutes ago While a resurgence in manufacturing in Africa has been popularly touted as the silver bullet that will accelerate the continent’s economic growth prospects, The Economist management editor and columnist Adrian Wooldridge has suggested that Africa’s industrial...
Updated 21 minutes ago The established Kimberley-based surface diamond mining company Ekapa is acquiring control of the Kimberley Mines from De Beers at a time when the price of diamonds in South African currency has hit the highest ever level. Already enjoying a very healthy margin margin...
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...