BEE – the new landscape
Since the Broad-Based Black Economic Empowerment (BEE) Act was gazetted in 2004, the only constant in the emotive legislation, has been change. Some say the intended change is taking too long.
This perceived slow pace of transformation has led, this month, to the falling of statues, land invasions and service delivery protests. 11 years after the advent of BEE.
The amended codes of good practice partially gazetted in 2013, are aimed at speeding up transformation, and again elicit a very emotional response. With the increased focus on black ownership, the further dividing of “black” into racial sub groups, and the introduction of scoring penalties for failing to reach certain targets, some businesses are feeling the pinch and predicting gloom.
Black-owned businesses with a turnover under R50 million now have no requirement to contribute to any BEE elements or initiatives and are essentially given a free pass to do business with whomever they please, with an automatically granted high BEE level. “About time”, say many of these business owners, who questioned why they were tasked with contributing towards the very legislation that was intended to benefit them.
Ultimately, larger businesses, and those with less than 50% black ownership will need to pick up the slack.
Undoubtedly, one of the most difficult targets to achieve under the amended codes, will be that of the enterprise and supplier development element. Previously, companies had to spend 70% of their procurement spend with BEE rated suppliers to score 12 points and only 9% of this with black owned businesses, to score an extra 3 points. Compare this to the amended codes where 80% spend with BEE suppliers earns you only 5 points, and if 40% of this is spent with black owned businesses, you earn a further 9 points. A massive turnaround in focus.
“Where are we to find these black suppliers?” businesses ask. The amended codes appear to shift the responsibility for creating and developing these black-owned businesses away from government and onto business at large. Points are awarded for developing potential black-owned suppliers to become viable suppliers, for awarding them 3-year contracts and for contributing towards creating jobs within these suppliers.
Will these changes in the amended codes see the rapid and significant change that the youth of our country are clamouring for?
Probably not, at least, not rapidly. Developing other businesses while still running your own is not going to happen overnight. But with some planning, some trial and error, some initiative and collaboration, it will happen. And as these black-owned businesses grow, and expand, and as we become less reliant on imports and the unemployed become employed, transformation will be happening. It will never be fast enough for the youth. The average age in South Africa is around 25.
Is BEE intended to appease the unimpressed youth? Perhaps not intentionally, but creatively employed, could go a long way towards calming the tension and frustration and dissatisfaction currently seen in our country.
With points now awarded for training unemployed people, or those other than your employees we see where this creativity may be applied. Apprenticeships for potential staff for a budding new supplier will improve your score under skills development as well as supplier development. It’s easy to see the return on investment for this type of contribution. It benefits your company, your potential supplier and the learner. It benefits South Africa.
So, BEE is changing. It’s less a box ticking exercise and much more a strategy focused on sustainability and real change. Expect to see fewer large equity transactions and more meaningful skills development and supplier development initiatives. This is truly broad-based black economic empowerment.
Conversations with…Marike Müller
In this issue, we chat to Marike Müller who was appointed as the Regional manager in the Eastern Cape branch of Grant Thornton Verification Services in September last year – a time of pivotal change for the company. She has been with Grant Thornton Verification Services for just on 2 and a half years, and prior to joining us served first as an admitted criminal attorney to the high court and later as a BEE consultant in industry.
Marike, you have had a meteoric rise in the company first employed as a senior analyst, just over 2 years ago, took on the mantle of regional manager just 6 months ago. You also became a SANAS technical signatory in this time. How have you found the pace of development and how do you keep yourself up-to-date with latest trends and changes in the industry?
When I joined Grant Thornton I was very open about what I wanted to achieve and made a decision to discard the 9-5 mindset and dedicate my time to working hard, improving my skill and attending courses to become an expert in the field. I still apply this attitude on a daily basis and I stay on top of everything by reading articles, attending workshops and most importantly I take advantage of the networking opportunities I am exposed to on a daily basis.
How do you find that your experience in court and the legal profession helps you in the BEE industry?
My legal background definitely provides an advantage. Apart from the work experience in the corporate environment, I enjoy the research and logical thinking applicable to BEE. I find that my knowledge about contracts, statutory requirements and understanding legal documents serves as a very handy tool when I work on big projects.
What has been the most challenging circumstance for you in your new role?
Change. Changes contain the seeds of opportunity and those opportunities can be relationships, points of view, new career direction or ideas. We all see difficulties and obstacles until we absorb their wisdom and gather the essential lessons for further growth. I can only hope that the way I seize opportunities out of change will help to inspire others to do the same.
What advice would you give to other leaders who have risen above their peers in a technical industry?
I don’t think leaders always realise the influence they have on colleagues and various other facets in the organisation. I live by the following principle: “…with great power, comes great responsibility…”. Every leader should demonstrate courage, learn from failure and strive for excellence. Achieving excellence is the pinnacle, and my advice will be to go beyond the call of duty, doing more than what is expected and maintaining the highest standards. Look after the smallest detail and be prepared – always.
What do you foresee the impact of the amended codes of good practice as having on the corporate and manufacturing landscape in the Eastern Cape?
This is a very interesting topic not only from a business perspective but also on a personal level, as the changes will affect everyone in the Eastern Cape. More specifically, it will affect the workforce in the Eastern Cape and surrounding areas. What is quite astounding and refreshing to see is the combined effort and genuine interest to transform this country and some of the biggest projects sprout from the Eastern Cape. The CDC recently announced that they will conduct a study to assess the viability of establishing a cargo airport and aeronautical space in the IDZ. The impact on the manufacturing industry will be huge in this area and I foresee exciting times, change and opportunity that will be stimulated by the amended codes.
You deal with many of verification services’ largest clients in the Eastern Cape, as their main point of contact. How have they, in general, planned for the implementation of the amended codes next month?
The majority of our client base acted proactively by obtaining a BEE certificate issued under the current codes and, in the interim, they attended our training on the amended codes. In addition to that, our clients requested assistance in converting their current score to the amended codes which enabled us to conduct gap analyses which are of vital importance going forward.
Do you think that transformation has occurred in line with the mandate set out by government with regards to the BEE Act?
Yes and no. As we all know, the country’s businesses were non-compliant after the release of the B-BBEE Codes in 2007. In 2012 a survey confirmed that the average level of businesses was a level 4. Therefore, in only five years our country showed the world that transformation is indeed possible and the majority of businesses had embraced transformation. It transpired however, that it was the smaller businesses that contributed to the progress. Therefore, the changes relevant to the amended codes speak to larger entities and the codes address specific areas that need attention. In my opinion transformation has occurred to a certain extent, however the amended codes should take the country to new heights in terms of transformation.
Other than your alarm clock, what gets you out of bed in the morning?
Coffee! Secondly, I accept that nothing is permanent. My career and life is dynamic and how I cope with the process will not only affect my growth but also my ability as a manager to influence others. I set challenging goals for myself to make every single day interesting and I strive to maintain a positive and grateful attitude. If you accept that your life is a gift, every moment is precious and getting up in the morning becomes easier.
It’s well known internally that you are the cupcake and biscuit-baking queen, do you have any other interests that help you unwind from the hectic pace of BEE verification?
Thank you, I will most definitely accept the accolade. My husband and I both enjoy the outdoors including camping and we like to break away for a weekend, leaving the laptops and phones at home. We plan to tour Africa in our Land Rover in the near future and the planning and research around that is a project on its own! We also share a love for rock climbing but our fitness levels are debatable at this stage, therefore I stick to ballet and enjoy documenting all our adventures in scrap books.
Contact Marike Müller, regional manager of Grant Thornton Verification Services, Eastern Cape, for assistance
Early Inspiration – empowering children in the early stages of life
We were very proud and excited when one of our socio-economic development sector clients recently won a national award for the essential work that they do which focuses on childcare in underprivileged areas.
Early Inspiration was founded in 2010 and is the brain-child of Dr. Lauren Stretch, a graduate of NMMU and UNISA. It is focused on the development of young children aged birth-6 and was recently lauded with the Best Early Childhood Development (ECD) Training Intervention Programme award at the SAECD Awards – an initiative of the National Development Agency.
It is well known how important it is for children to be given appropriate and meaningful stimulation, support, nutrition and environment in these very crucial years as it creates a foundation for later education and life. Having completed her doctorate in Education focusing on the impact of teacher and caregiver training in early childhood development, Lauren put her passion to work and set up Early Inspiration to assist child-care workers with training and understanding of children’s needs in this stage of their life.
In the process, Early Inspiration has also helped to create jobs for these caregivers by helping them to set up ECD centres and providing them with the resources necessary to effectively run a business whilst maintaining the integrity and ethos behind Early Inspirations’ ideals with regards to the development of children.
The win of the award just cemented the work that Dr Stretch and her team have been doing. The award criteria are quite stringent and take into account various areas of the programme including governance, costs, objectives, innovation, sustainability and impact of the programme, to mention but a few. It’s clear Lauren has put her brain power to excellent use in the consideration of all of the areas, and their practical application, which would have been judged rigorously and this is praiseworthy.
In Lauren’s own words, “…early childhood development is vital for the success of our country. The programme was created specifically to empower those who are unskilled and working in the underprivileged sector of South Africa, and provide them with knowledge and understanding of how children develop. By understanding this they can enhance growth and provide a stimulating environment, unleashing young children’s potential…”
Given the nature of the work that they do, Lauren is also looking into ways in which their work can help to boost the B-BBEE scorecards of companies through skills development and enterprise development, should they want to make contributions to the initiative. With the amendments to the codes of good practice coming into effect next month, this new avenue couldn’t have been timelier.
Grant Thornton Verification Services sends a huge congratulations to Lauren and her team for the win and also the excellent work which they are doing in the underprivileged communities of Port Elizabeth.