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Author Topic: BEE codes' stark choice: comply or go bust  (Read 1253 times)

Offline Nolan

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BEE codes' stark choice: comply or go bust
« on: January 01, 2007, 08:42:36 pm »
BEE codes' stark choice: comply or go bust
IOL / Sunday Independant
December 24 2006 at 01:26PM

Business in South Africa is set for a fundamental shift when black economic empowerment (BEE) codes come into effect next year. They will make it mandatory for companies to adopt new ways of conducting their affairs or face the prospect of going out of business.

The government's codes of good practice, approved by the cabinet this month, will put the brakes on fronting by firms and other forms of misrepresentation of BEE status.

The codes will make it possible to measure the proportion of black ownership of a company and will make provision for the BEE credentials of businesses to be verified.

"It's about a change in power relationships, not on the shopfloor but at boardroom level," said Siyabonga Ndabezitha, Business Unity South Africa's chief officer for transformation policy. He said the codes were groundbreaking in that the government would not wield a big stick. Instead, businesses would be expected to self-manage their adherence to the codes and exercise care in choosing with whom they did business.

Ndabezitha said the codes were geared towards promoting small-to-medium business enterprises and would, over the next decade, change the way businesses operated.

"There's no legal requirement that says you must comply with BEE, but if you want to remain in business it will be the only way to go," he said.

He said that once the codes were gazetted, businesses that wanted to get work from the government or the parastatals would have to prove that they were complying with them.

"If you are not compliant, you could find your company being barred from providing goods and services to a provider who is, and [the compliant company] would be penalised on its BEE scorecard for dealing with you," he said.

The government has no intention of imposing harsh penalties on businesses that fail to transform in the spirit of the codes. The expectation is that sanctions will come from businesses that will be penalised for dealing with firms that do not comply with the code.

The codes are divided into three main categories: companies that earn less than R5 million a year will be exempt, businesses earning between R5 million and R35 million will have to meet four of seven requirements of the codes, and businesses earning R35 million or more will have to comply with all seven requirements.

Phase 1 of the codes, which came into effect in October last year, dealt with the conceptual framework, verification, sector transformation charters, ownership, the recognition of the sale of assets and management.

The second phase deals with the BEE scorecard and its elements: employment equity, skills development, preferential procurement, enterprise development, socio-economic development, the definition of qualifying small enterprises and the treatment of multinationals.

The scorecard will reveal a company's performance in achieving equity in the workplace, and the extent to which it develops the skills of black employees, buys goods and services from BEE-compliant suppliers and black-owned entities, and contributes to enterprise development and to socio-economic development.

BEE companies will be recognised based on a status table of eight levels. A level one company with a score of 100 would be required to have black ownership of more than 25 percent, 50 percent of its management would have to be black, as would 80 percent of its staff.

The company would have to spend 3 percent of its payroll on training and 70 percent of its procurement would have to be from BEE-empowered companies.

A company at level eight would have a BEE score of between 30 and 40, and would have a 10 percent recognition grading.

The government will encourage public and private sector enterprises to do business with companies that have a higher BEE status.

"The face of business is set for a major change," said Jimmy Manyi, president of the Black Management Forum.

"The codes are part of the reconstruction process in South Africa.

"We have had a smooth political transition but there will not be economic change without intervention … so corporate South Africa has to embrace the codes with an attitude that it was the right thing to do, instead of viewing it as regulations one has to comply with."

Manyi said small businesses would get a fillip from having the doors to opportunities with bigger organisations being opened to them, there would be a greater thrust towards making finance more easily available to small businesses and many smaller companies would benefit from the expertise of big-corporation executives.

"It can only make us better as a country when everyone, from rural to urban area, has a stake in the fortunes of the nation," he said.

He said the codes were structured to put pressure on companies to comply - or go out of business.

Companies would be rated on how empowered their business partners were.

Polo Radebe, the department of trade and industry's chief director of empowerment, said she expected the codes to be published in the Government Gazette early next month.

Radebe said the department would set up guidelines and accreditation processes that could be used by verification agencies to assist businesses manage their scorecard.

"For the first time we will have the ability to monitor and measure [BEE] programmes," she said.

She said the codes of good practice were developed in consultation with chambers of business, big business, black business, labour and civil society.

"The codes are a truly South Africa product with extensive support from the international community," she said.

Offline Nolan

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Re: BEE codes' stark choice: comply or go bust
« Reply #1 on: January 01, 2007, 10:11:12 pm »
Comply or go bust?

These are words of desparation if I ever heard them.

Most of the businesses in SA in 1994, and in fact way before, were more than willing to help and mentor 'previously dissadvantaged people' to start their own businesses. Businesses which could compete on an equal footing with their 'white' counterparts. The existing businesses in the country would be able to sustain the economy and the new businesses would grow the economy.

This would have had a snowball effect that would have firstly rolled HUGE amounts of money up to government, which they in turn could have rolled back down to the man on the street by funding education, on-the-job training and self-employment programmes.

But no....that is not the way they chose to do it....they chose to kick the best qualified people in the country out of their jobs and force companies to take on less qualified, and more importantly - less experienced, people. And 12 years later they are still doing it!!!

If in 1994 the government had said to businesses - okay you have had a good ride being protected and all, but now the party is over and it's payback time. You will become a mentor to a 'previously dissadvantaged' business and help them to find their feet so that more jobs can be created for all SA'ns. From now on you will employ people based on their ability and suitability only. How many 'previously dissadvantaged' people is your company able to train to become skilled employed so that they can equally compete for jobs in another company, we will help with a subsidy in this regard. What can we as government do to help your business grow by 30% so that you can use that 30% to employ more people?

Then SA would REALLY have been the breadbasket of Africa that it deserves to be and not the protege of Zimbabwe that it is today.

I cannot believe that government are so stupid as to think that by forcing companies to replace the best people in the company to do the job, just because they happen to be white, and by forcing companies to take on dark skinned owners and managers that it will suddenly create Utopia?

If things were done the right way, ie incentivised businesses, then 12 years down the line we would have had at least double the amount of businesses in SA than in 1994, they would have been sustainable, there would have been a HUGE amount of new, experienced and skilled workers available to fill the positions in the new and existing companies. The existing companies would have initially been helped to increase their revenue by 30% so that they could employ more people. That would mean those new people would bring in more revenue for the companies and that means even more jobs.

Humans, and business owners in particular, will fight back at any attempt to force them to do anything that they may or may not want to do. Just the fact that someone has told you, you WILL do this, then you will go out of your way NOT to do it. If someone asks you do something you will do it if you can. But if someone incentivises you to do something then you will go out of your way to do it.

Most importantly the brain drain that the country is experiencing would never have occured as the whites would not have needed to leave. They would not have feared for their jobs. They would not have to be forced to train someone to be their boss. Let's be honest - how the hell can you, or who the hell will train someone else to take the job you have been working your butt off for 20 years? That is the most ridiculous thing I have ever heard.

They would however have gladly trained someone to do their job if they knew that it was not going to affect their own job because it was for another, new company. Everybody likes to feel important and that they are worth something. What better way to feel you are worth something than to be asked to teach someone what you know because you are good at what you do? At the same time all colours would have learnt to work together during this ongoing process as it would have been a co-operative and willing process with no fear of job loss, only excitement at the prospect of gaining employment and the satisfaction of helping someone.

If only.....

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Re: BEE codes' stark choice: comply or go bust
« Reply #1 on: January 01, 2007, 10:11:12 pm »