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Feb 17, 2012

BEE a priority for companies, survey finds

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KPMG partner and restructuring advisory head Warren Watkins discusses the 2011 BEE survey results. Camerawork: Nicholas Boyd. Editing: Darlene Creamer.
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Advisory firm KPMG’s 2011 and sixth yearly ‘Black Economic Empower- ment’ survey results have shown a significant improvement in participating companies’ scorecards.

Speaking at the survey results presentation, in Parktown, Johannesburg, early this month, KPMG CEO Moses Kgosana said the business of broad-based black economic empowerment (BBBEE) was imperative for the organisation.

“I am delighted that BEE has become a boardroom topic and that organisations that were only focusing on quick fixes now realise that achieving BEE credentials is an ongoing process,” he explained.

Kgosana said organisations had, over time, come to the realisation that it was no longer about acting on BBBEE requirements, but about ensuring they had poli- cies and evidence of BEE-related work, such as skills development programmes, besides others.

KPMG partner and restructuring advisory head Warren Watkins highlighted the fact that BEE ratings for business entities averaged about 67% for 2011, compared with 55.03% in 2010.

He argued that this increasing invest- ment in BBBEE was encouraging, given the tough economic climate in South Africa.

“On average, respondents have increased their efforts geared towards supporting small black-owned entities, as evidenced by the significant increase in enterprise development (ED) scores from 3 points in 2006 to 12.41 points in 2011. Average ED scores are now 80% of the stipulated target,” said Watkins.

Meanwhile, the survey established that elements of ownership and socio- economic development, indicated as focus areas in previous surveys, are now less of a priority among respondents, as these elements’ scores are within acceptable range levels.

A total of 43% of 2011 respondents, compared with 27% in 2010, indicated that they had set minimum preferential procurement target levels for their suppliers, while 69% of respondents indicated that BBBEE level-four supplier contributor status was the preferred target level set by respondent organisations, as procuring entities were then able to recognise 100% of their procurement spend from level four suppliers.

“The challenge remains for organisa- tions to keep ahead of BBBEE scorecard measurement and target changes, as four out of the seven elements’ measurement criteria are changing, owing to the pro- posed changes to the BBBEE Amendment Bill. “The changes are likely to have a negative impact on subsequent scorecard ratings,” said Watkins.

Kgosana noted that employment equity and skills development elements seem to be lagging.

Watkins concluded that, with the pro- posed changes to BBBEE law, implementation challenges will arise but, with proper consultation and working closely with transformation officers, companies could achieve the necessary points.

Edited by: Martin Zhuwakinyu
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