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Jul 10, 2012

Davies warns of stricter BEE codes

Construction|Johannesburg|Africa|Building|Industrial|Locomotives|Africa|South Africa|Equipment|Manufacturing|Manufacturing Sector|Service|Infrastructure|Rob Davies|Operations

Black economic empowerment points would be deducted from businesses not investing in enterprise and skills development, Trade and Industry Minister Rob Davies said on Tuesday.

Too few companies were giving sufficient support to these areas in terms of the BEE Act and Codes of Good Practice.

"Far too few companies are involved in this space," he said at a summit hosted by infrastructure company Aveng for its emerging black suppliers in Midrand, Johannesburg.

BEE legislation would be tweaked to ensure more attention was given to supporting small business.

"If you don't earn a percentage of the target (for these sectors), we will deduct points from the overall scorecard," he said.

Davies said the government wanted to encourage a symbiotic relationship between big and small companies. By developing black entrepreneurs, particularly black industrialists, corporates would contribute to South Africa's industrialisation, and to a significant manufacturing sector.

"We want to see this space occupied increasingly by black manufacturers and black industrialists," he said.

Accordingly, the government's infrastructure rollout, as well as the industrial development action plan, stipulated that a certain percentage of equipment was sourced from local suppliers. This policy had already been implemented when sourcing buses, electricity transmission lines, and locomotives.

"This is the way we are intending to move forward," he said.

The government would also double the number of small business incubation programmes from 30 to 60 in the next three years, said Davies.

Aveng CEO Roger Jardine said big business must be an active participant in capacity building, skills transfer, employment equity, and empowerment through business operations.

"Big business cannot afford to be blind to developmental challenges," he said.

Jardine called for the construction sector to conduct its business in an ethical manner. An ongoing Competition Commission investigation into anti-competitive behaviours in the sector had sparked public concern.

Companies found guilty of collusion by the competition authorities could be banned from doing business for 10 years, he noted.

"If the same logic was applied to other companies (in other sectors), it would severely hamper the economy."

Following a similar investigation in the UK, a code of conduct had been promulgated across the industry.

The Office of Fair Trading had fined companies for anti-competitive behaviour, but recommended against imposing further sanction. It was felt that banning companies would affect competition among the remaining players, Jardine said.

"We must embrace an integrity pact and adopt a code that addresses past practices and focuses on eradicating unlawful practices. We must all commit to conducting our business ethically."

Companies should also pay the taxes they owed to the SA Revenue Service.

Aveng had paid R3.6 billion in taxes over the past three years, enough to finance 51 000 low-cost homes.

"Your taxes will make a difference," Jardine promised, adding that Aveng would make tax assistance available to its suppliers.

Edited by: Sapa
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