Paul Janisch

Capital adequacy ratio explained. This is why we have direct and indirect ownership in the FSC

What really, is going to break the camel’s back as far as the banks are concerned, is the main issue of capital adequacy ratios or capital requirements.

Capital adequacy ratio is a measure of banks’ capital expressed as a percentage of a bank’s risk weighted exposure.

Also known as capital to risk weighted assets ratio (Crar), this risk is used to protect depositors and promote the stability and efficiency of financial systems around the world.

There are two types of capital that are measured: (i) Tier One Capital, which can absorb losses without a bank being required to cease trading. (ii) Tier Two Capital, which can absorb losses in the event of a winding-up and so provide a lesser degree of protection to depositors.

via www.moneyweb.co.za

This article relates to Zimbabwe's 51% bank indigenisation programme.

The Financial Services Sector Code (gazette no 35914) – summarised scorecard

The code is not yet finalised but this is a good summary of the whole scorecard. If you want a downloadable version take a look here

The Financial Services Sector Code (gazette no 35914)

The FSC was gazetted under section 9(1) of the B-BBEE Act on the 26^th of November, 2012 and is binding on all stakeholders operating in the Financial Services Sector. This includes (but is not limited to)

• Banking;
• Long-term insurance;
• Short-term insurance;
• Re-insurance;
• The management of retirement, pension and collective investment scheme assets;
• Management of formal collective investment schemes;
• Financial Services Intermediation and Brokerage;
• Management of investments on behalf of the public, including, but not limited to, private equity, members of any exchange licensed to trade equities or financial instruments in South Africa and entities listed as part of the financial index of a licensed exchange; and
• Underwriting Management Agents.

It does not apply to the international trading operations of those entities who operate in South Africa.

The commencement date of the code is 1 January, 2012.

Definitions

• Exempt Micro Enterprises (EMEs) – enterprises whose annual turnover falls below R5 million per year. These enterprises are exempt from any form of B-BBEE and are automatically level 4 contributors. EME's that are more than 50% black owned are level 3 contributors.
• Qualifying Small Financial Institutions (QSFIs) – a financial institution with designated investments of less than R50million and whose annual turnover falls between R5 million and R35 million.

 

FSC Scorecards

 

Companies complying with Empowerment Financing

Element	Points
Ownership	14 + 3 bonus
Management Control	8+ 1 bonus
Employment Equity	15 + 3 bonus
Skills Development	10
Preferential Procurement	16
Empowerment Financing	15
Enterprise Development	5
Socio-economic Development	3
Access to Financial Services	14
TOTAL	100 + 7 bonus points

Companies excluded from complying with Empowerment Financing

Element	Points
Ownership	14 + 3 bonus
Management Control	8+ 1 bonus
Employment Equity	15 + 3 bonus
Skills Development	10
Preferential Procurement	16
Enterprise Development	15
Socio-economic Development	3
Access to Financial Services	14
TOTAL	95 + 7 bonus points

 

complying with Empowerment Financing

 

QSFI's must select 5 out of the 9 elements with ownership being compulsory. Once the choice of elements is made these elements are used each year.

Element	Points	Weighting
Ownership	14 + 3 bonus	20%
Management Control	8+ 1 bonus	20%
Employment Equity	15 + 3 bonus	20%
Skills Development	10	20%
Preferential Procurement	16	20%
Empowerment Financing	15	20%
Enterprise Development	5	20%
Socio-economic Development	3	20%
Access to Financial Services	14	20%
TOTAL	100 + 7 bonus points	100%

Companies excluded from complying with Empowerment Financing

QSFI's must select 5 out of the 9 elements with ownership being compulsory. Once the choice of elements is made these elements are used each year.

Element	Points	Weighting
Ownership	14 + 3 bonus	20%
Management Control	8+ 1 bonus	20%
Employment Equity	15 + 3 bonus	20%
Skills Development	10	20%
Preferential Procurement	16	20%
Enterprise Development	15	20%
Socio-economic Development	3	20%
Access to Financial Services	14	20%
TOTAL	95 + 7 bonus points	100%

Contributors are measured using the table below.

Contribution Level	B-BBEE score range	Recognition level
Level One Contributor	≥ 100 points	R1.35/R1 spent
Level Two Contributor	≥ 85 points but < 100 points	R1.25/R1 spent
Level Three Contributor	≥ 75 points but < 85 points	R1.10/R1 spent
Level Four Contributor	≥ 65 points but < 75 points	R1/R1 spent
Level Five Contributor	≥ 55 points but < 65 points	R0.80/R1 spent
Level Six Contributor	≥ 45 points but < 55 points	R0.60/R1 spent
Level Seven Contributor	≥ 40 points but < 45 points	R0.50/R1 spent
Level Eight Contributor	≥ 30 points but < 40 points	R0.10/R1 spent
Non-Compliant Contributor	< 30 points	R0/R1 spent

FSC B-BBEE scorecard

Equity element

Ownership. Total points - 17 (including 3 bonus points)
Description		Weighting points	Compliance Target
	Voting rights
Exercisable voting rights in the enterprise in the hands of black people.		3	25% + 1 Vote
Exercisable voting rights in the enterprise in the hands of black women.		1	10% + 1 Vote
	Economic interest
Economic interest of black people		3	25% + 1 Vote
Economic interest of black women		1	10% + 1 Vote
Economic interest of the following black natural people in the enterprise black designated groups black participants in employee ownership schemes black beneficiaries of broad-based ownership schemes; or black participants in co-operatives		1	2.5%
	Ownership Fulfilment
Net Equity Value		3	No restrictions
Direct or Indirect Ownership in Excess of 15% (including Equity Equivalents and Asset Sales)		2	10%
	Bonus points
Black new entrants		2	10%
Ownership by ESOPs and Co-ops		1	10%

 

Management element

 

Management Control. Total points –9 (including 1 bonus point)
Description		Weighting points	Compliance Target
	Board participation
Voting rights of black board members as a percentage of voting rights of all board members		0.5	50%
Voting rights of black women board members as a percentage of voting rights of all board members		0.5	25%
Black executive members of the board as a percentage of all executive members of the board		1	50%
Black women executive members of the board as a percentage of all executive members of the board		1	25%
	Top management
Black senior top management as a percentage of all senior top management		1.5	40%
Black women senior top management as a percentage of all senior top management		1.5	20%
Black other top management as a percentage of all other top management		1	40%
Black women other top management as a percentage of all other top management		1	20%
	Bonus Point
Black independent non-executive board members as a percentage of all independent non-executive board members		1	40%

 

Employment Equity

 

Employment Equity. Total points – 18 (including 3 bonus points)
Description	Weighting points	Compliance Target
Black disabled employees as a percentage of ALL employees	0.5	3%
Black women disabled employees as a percentage of ALL employees	0.5	1.5%
Black senior management as a percentage of all senior management	3	60%
Black women senior management as a percentage of all senior management	2	30%
Black middle management as a percentage of all middle management	3	75%
Black women middle management as a percentage of all middle management	2	37.5%
Black junior management as a percentage of all junior management	2	80%
Black women junior management as a percentage of all junior management	2	40%
BONUS POINTS
Bonus Point for meeting or exceeding the Economically Active Population (EAP) targets in senior management	1	87.5%
Bonus Point for meeting or exceeding the Economically Active Population (EAP) targets in middle management	1	87.5%
Bonus Point for meeting or exceeding the Economically Active Population (EAP) targets in junior management	1	87.5%

 

Skills Development

 

Skills Development. Total points – 10
Description		Weighting points	Compliance Target
Skills development expenditure on learning programmes specified in the Learning Programmes Matrix
Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for Black employees as a percentage of the financial institution's leviable amount		3	3% of payroll (3x SDL)
Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for Black Women employees as a percentage of the financial institution's leviable amount		1.5	1.5%
Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for disabled Black employees as a percentage of the financial institution's leviable amount		0.5	0.3%
Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for disabled Black Women employees as a percentage of the financial institution's leviable amount		0.5	0.15%
	Learnerships
Number of Black employees participating in Learnerships or Category B, C and D Programmes as a percentage of total employees		3	5% of staff
Number of Black Women employees participating in Learnerships or Category B, C and D Programmes as a percentage of total employees		1.5	2.5%

Preferential Procurement

Preferential Procurement. Total points – 16
Description	Weighting points	Compliance Target
B-BBEE procurement spend from all suppliers based on the B-BBEE procurement recognition levels as a percentage of total measured procurement spend	8	70%
B-BBEE procurement spend from all Qualifying Small Enterprises (QSEs) or from Exempted Micro-Enterprises (EMEs) based on the applicable B-BBEE procurement recognition levels as a percentage of total measured procurement spend	3	15%
B-BBEE procurement spend from any of the following suppliers as a percentage of total measured procurement spend
Suppliers that are 50% Black owned	2.5	12%
Suppliers that are 30% Black Women owned	2.5	8%

 

Empowerment Financing and Enterprise Development

 

Enterprise Development for those exempted from Empowerment Financing

Enterprise Development. Total points – 15
Description	Weighting points	Compliance Target
Qualifying ED contributions made by the measured entity as a percentage of the target	15	3 % of Cumulative NPAT

Empowerment Financing – Long Term Insurers

Empowerment Financing. Total points – 15
Description	Weighting points	Compliance Target
Targeted Investments	12	R27bn
BEE Transaction Financing	3	R15bn
TOTAL FOR LONG TERM INSURANCE SECTOR	15	R42bn

Empowerment Financing – Banking Sector

Empowerment Financing. Total points – 15
Description	Weighting points	Compliance Target
Targeted Investments     Transformational Infrastructure     Black SME Financing     Black Agricultural Financing     Affordable Housing	12	R48bn
BEE Transaction Financing	3	R32bn
TOTAL FOR BANKING SECTOR	15	R80bn

Enterprise Development for those needing to comply with Empowerment Financing

Enterprise Development. Total points –5
Description	Weighting points	Compliance Target
Qualifying ED contributions made by the measured entity as a percentage of the target	5	0.2 % of NPAT

Socio-Economic Development

Socio-Economic Development. Total points – 3
Description	Weighting points	Compliance Target)
Cumulative value of all Socio-Economic Development Contributions made by a financial institution as a percentage of the cumulative net profit after tax	3	2012 = 0.75% of NPAT 2013 = 0.7% of NPAT 2014 = 0.6% of NPAT

Socio-Economic Development (exempt from Access to Financial Services)

Socio-Economic Development. Total points – 3
Description	Weighting points	Compliance Target)
Cumulative value of all Socio-Economic Development Contributions made by a financial institution as a percentage of the cumulative net profit after tax	3	0.7% of NPAT

 

Access to Financial Services (Banking Sector) – 14 points

	Access Method	Qualifying Market/area	Points	Qualifying Criteria	Range	Target
1	Geographic Access (Reach)		5	One or more of:
1.1	Transaction point	50% or more of households falling within LSM 1-5	1	Draw cash or purchase from their accounts	5km	85%
1.2	Service point		1	Reset a pin, Money transfers, GET a statement and initiate account queries	10km	70%
1.3	Sales point		2	replace a card, deposit cash into their accounts, or acquire: a transaction account, a funeral policy, a savings account, or a loan.	15km	60%
1.4	Electronic Access	Individuals earning less than R5,000 per month increasing by CPIX p.a.	1	TBC
2	Banking Densification	Individuals in the LSM 1-5 group nationally	2	Access to cash withdrawal facility per measuring unit	TBC	1500
3	Product Related Access	Individuals in the LSM 1-5 group nationally	3	Number of active accounts for qualifying products per institution	National	TBC
4	Affordable Housing Origination	Qualifying measures as per metrics agreed	2	Mortgage and development loans to qualifying households	National	TBC
5	Consumer Education	Qualifying individuals in the LSM 1-8 group	2	Consumer, Primary and Basic Education	National	2012 = 0.25% 2013 = 0.3% 2014 = 0.4%

Access to Financial Services (Short-Term Insurance Sector) – 14 points

Access to Financial Services	Weighting	Industry Targets
Appropriate Products	2	8
Insurance Policies	10		Maximum sum insured:
Motor vehicle		6%	R60k
Household Contents		6%	R100k
Property/Homeowners		3%	R350k
Black SMEs – equipment contents		15%	R100k
Black SMEs – premises		10%	R500k
Agriculture		6%	TBD
Livestock		6%	R600k
Co-operatives		6%	TBD
Consumer Education	2		Year 1: 0.25% Year 2: 0.3% Year 4: 0.4%

 

Financial Services Code (FSC) Scorecard

Here is a breakdown of the various elements that make up the gazetted FSC and their scores.  Whilst there are strong similarities to the generic codes the FSC is still very financial sector orientated.  As such there are odd little references that only those in the industry would adequately understand.  As a general rule the migration from a generic codes implementation to an FSC implementation would probably not be that hard - I know that most of the bigger financial institutions have been measuring this stuff for years.  You'll also notice that the "Access to Financial Services" is incomplete,  I believe these TBCs and TBDs will be sorted out shortly.

I've read this document - so if you need someone to come in and explain it against the generic codes I would jump at the opportunity to do this for a nominal fee. 

Official FSC now available

In case you were wondering when we would see this thing being gazetted - here it is from an incredibly reliable source.  It's still not up on the DTI's website.

By the way, in case you read the shockingly inaccurate report in the pro-government New Age last week .  This document is not 10 years old, it is substantially different to the original.  It is based on what the FSC affectionately called the "Kevin Lester draft" which drew an incredible amount of inspiration from the 2007 codes.

You've got to love this quote

The New Age has learnt that the Department of Trade and Industry (DTI) has sent the 10-year-old version of the FSC for gazetting without adjusting controversial features that have caused discomfort in many quarters. These features include the controversial once empowered, always empowered principle, and the lower black ownership target which were favoured by the banking industry.

Here's the original FSC - you decide whether the New Age report is at all accurate.  I don't think that this version will be up for very long.

 

 

FSC has been gazetted!!!!!

If you don't believe me then take a look at this notice.  Thank you for sending it to me Mr O'Neil.

I haven't got the final gazetted codes but I've got a wide number of drafts.  

It is speculated that Rob has pushed this one out to take heat off him for the new codes.  I know that Nedbank will be now focusing on the FSC for the next verification but they have assured me that they are still going to submit their comments to the DTI on the new codes.  I think that have a legitimate concern here because if the codes go through in their current guise and this is very possible because Rob is known to bulldoze things through, then it will be a matter of time before the FSC needs to be aligned to the new codes.

We've got about two weeks to submit our comments - please try not to attack the DTI, Rob and his adviser goons personally, it will be counter productive.           You can leave that to me.

Die drol en die banke

A disgusting title - it comes from the Afrikaans saying "die drol in die drinkwater".  The drol is matter floating around in the drinking water which renders the drinking water undrinkable.  The drol in this case is Rob and the drinkwater is the FSC.  Fin24 ran an article this morning on the status of the FSC

The standoff between bankers’ associations and parties calling for increased empowerment is nowhere near being resolved.

Our drol doesn't want the once empowered, always empowered rule, but the banks do.  And therein lies the impasse.  It's such a small concession from such a great figure; yet so stoic is he that he will not allow his unblemished record for, amongst other things, understanding how an economy works, to be tarnished by this issue.

Yet he publishes charters that are a joke.

What a mighty man, we are so lucky to have him as our minister of trade and industry.

No wait on a serious note - the banks want the FSC because it's a well balanced document and also they want have to consider the new codes that will kill BEE altogether.  Now if Minister Davies played his cards properly he'd have at least one charter that someone's doing something about whilst the rest of the economy rejects his new codes.

Will he, no he won't.  He's at the beck and call at the BBC - and bank BEE deals are "money for jam".

 

Why we should be overjoyed that ABSA may lose some of its BEE shareholding

There's been a bit of press about this, mostly about the fact that Tokyo wants to sell out via Mvelaphanda Holdings' 40% interest in Batho Bonke. Batho Bonke owns about 4% of ABSA. This is a joyous thing, a mitzvah, a blessing, a wonderful occurrence and other superlatives. Besides raising cash for Tokyo's campaign to remove the useless showerhead (although everyone I have spoken to says that Tokyo might outdoos Zuma in the doos stakes) it will apparently give about 1.2 million people a little bit of cash. And this is what the empowerment thing is about.

But alas it will have an impact on ABSA's BEE score. I think the worst that will happen is that ABSA will lose about 3 points which will drop them to a level 4. ABSA is the first to lose some shareholding; at some stage all the big banks will drop their shareholding and are unlikely to do another deal – they'd be bloody stupid if they did. This will level everything and then when you take the FSC's once empowered principle into account, the ownership scores will remain consistent.

But this is so irrelevant – what matters is that ABSA has done something for a lot of people. ABSA should be singing from the rooftops about this, they'll be the first to do so. They should go on a feelgood marketing campaign showing the poor people who have benefited (I wouldn't mention Tokyo – we all know that that he doesn't need the cash). They should use this as a starting point to provide banking services to the beneficiaries, throw a little ED money into the programme to teach these people to start creating their own businesses, co-ops etc. But whatever they do they must ignore the narrow-minded HBR (Hola Bon Renaissance) Foundation. The Sowetan reports that

HBR wants the government to acquire the shares through any of the public-owned financial entities, including the Public Investment Commission, the Industrial Development Corporation and the National Empowerment Fund and "warehouse them until another BEE consortium interested in investing in the banking sector is identified".

Everyone should ignore the HBR – this narrow-minded perception of black ownership can never create wealth, it will only bankrupt an already corrupt government.

Well done in advance ABSA, Maria give me a call if you want me to help you with this long term ED and marketing campaign.

FSC Continuing Consequences (or once empowered etc)

(Before I start, I have prepared a comprehensive presentation on the draft FSC that I am more than happy to present to any concerned person).

The issue of once empowered, always empowered was always going to be a deal breaker under the FSC. The appetite to go off and re-negotiate another deal after billions in costs for the first one just wasn't there. The compromise is contained in paragraph 3.5 of the ownership statement in the new draft. As with the balance of the FSC, it actively incorporates the DTI's generic codes (not merely referring to them) and in many cases improves on the original codes. The basic rules contained in the DTI's continuing consequences still remain, viz (as per paragraph 3.5 of the DTI's generic codes);

• the black participant has held shares for a period of 3 years;
• value must have been created in the hands of black people;
• transformation has taken place within the measured enterprise.
• black participation arising from continued recognition of black ownership cannot contribute more than 40% of the score on the ownership scorecard.
• a written tripartite agreement between the Measured Enterprise, the black Participant and a lender must record the loan or security arrangement, unless the Measured Entity is the lender; and
• the period over which the points were allocated or recognised will not exceed the period over which the shares were held.

The FSC takes these principles and provides formulas and concrete explanations in each of these cases. But it makes it very clear that it is only those shares that were sold/loss after 1 January, 2011. What I'm not sure about is when this kicks in. For example say the black shareholder sells out on the 2^nd of January, 2011 and they'd been a shareholder for five years. This principle will only be promulgated sometime this year (2012). Do the continuing consequences start on the day of promulgation or do they start on the 2^nd of Jan, 2011 – which means that one and half years will have passed and the company may only recognise that ownership level until the 2^nd of Jan, 2016.

The machinations of the principle are contained in paragraph 5 of Annex 100 (C) which I have reproduced in its entirety below.

Some may scoff at this and say, yes but you only get 40% of the points. But that isn't the point, the point is that the big companies that fall under the FSC are all pretty much in the same boat when it comes deals and vesting. If each gets a 60% reduction in their ownership score then they'll still be much of a muchness. There'll be a slight discrepancy between some of those companies whose deals vest after others. But eventually there will be no ownership points and those companies will be measured out of a maximum of 91 points, which is still a level 2. See the FSC scorecard below

FSC ownership scorecard

FSC elements and points (taken from FSC Draft phase 1)

Annex 100 (C) paragraph 5

 

Calculation of the Recognition of Ownership after the Sale of Shares by Black Participants:

 

The calculations referred to in Paragraphs 3.5.1.2 of FSCode 100, Statement 100, use the following formula:

 

For Paragraphs 2.1 and 2.3 of the Ownership Scorecard

 

A=B x C x D

Where

A is the percentage of rights of ownership that survive the sale of an Equity Instrument by a black Participant in Paragraph 3.5.1.2 to 3.5.4.3

B is the percentage of rights of ownership for each of the indicators in the ownership scorecard that were attributable to the black Participant immediately before his or her sale

C The net value realized/created in black hands after the liquidation of debt as a % of the value of the Sale Shares of each of the indicators immediately prior to exit

The net value created in black hands is equal to the current value of the shares less any own contribution made by the BEE party at the inception date of the transaction

D is the most recently determined BEE Recognition Level of the Measured Entity (which must be less than 1 year old) based on its Generic Scorecard result for all Elements other than ownership determined using statement 000

For Paragraphs 2.2, 2.4 and 2.5, A shall be equal to the percentage held by black Women/Designated Groups immediately before their sale of shares multiplied by the result of the calculation under this Paragraph 5.1.

 

For Paragraph 2.6 of the Ownership Scorecard

 

In relation to calculating the percentage of ownership rights that survive after the sale of shares specifically for Paragraph 2.6 of the Ownership Scorecard the following calculation shall apply:

A= B X C X D

Where A is the percentage of rights of ownership that survive the sale of an Equity Instrument by a black Participant in Paragraphs 3.5.1.2 to 3.5.4.3

B is the percentage of the Equity Instruments diluted, determined on the date of measurement immediately before his or her sale

C value of the equity interests sold (less) the value of any own contribution made at the inception date of the deal in relation to the shares sold (less) the carrying value of any acquisition debts of the relevant black Participants on the date of sale or loss divided by the value of the measured entity at the date of sale or loss

D the recognition level of the measured entity excluding ownership immediately prior to the loss or sale

Illustrative example

Assume that BEE consortium holds 10% of a measured entity at 01/01/2009 (the commencement date). 50% of this holding is attributable to black women and 50% is attributable to Black Designated Groups

As at the commencement date the value of this holding is R150 (enterprise value R1500) and the value of the associated debt is R100.

BEE Consortium provided R10 own cash contribution and R90 was debt funded in lieu of the purchase price of R100 for 10%

Through corporate action this holding is diluted fully at 31/12/2012

At 31/12/2012, the value of this holding has grown to R180 and the debt is R80. The value of the business is therefore R 1800.

The measured entity is a level 3 contributor excluding ownership as at 31/12/2012.

Calculation for Paragraphs 2.1 and 2.3 of the Ownership Scorecard:

A=B x C x D

B = 10%

C = ((180-80-10)/180) = 50%:

R180 is the value of the shares sold, R80 is the debt outstanding and R10 is the value of the consortium's own contribution at the inception of the transaction.

D = 110%

The continued recognition under Paragraphs 2.1 and 2.3 of the scorecard will therefore be:

10% * 50% * 110% = 5.5%.

The continued recognition under Paragraphs 2.2, 2.4 and 2.5 of the scorecard will therefore be:

50% x 5.5% = 2.75%

Calculation for Paragraph 2.6 of the Ownership Scorecard:

A=B x C x D

B = 10%

C= (180 -80 - 10) /1800 = 5%

D= 110%

The continued recognition under Paragraph 2.6 is therefore 10% * 5% * 110% = 0.55%.

From Rob Davies’ desk with a cursory glance at the FSC

Almost like a fireside chat – except we don't get to hear words of wisdom being spoken, we can read them at our own leisure (however in the case of the AgriBEE charter – you only have 60 days in which to do so.)

Rob signed this in November 2011, but published last week. Denel's limited facilitator status is contained in the last paragraph.

The B-BBEE Facilitator Status granted to Denel (Pty) Ltd is designated and confined exclusively for dealings with Its associate companies namely Turbomeca Africa (Pty) Ltd, Cart Zeiss Optronics (Pty) Ltd, and Rheinmetall Denel Munition (Pty) Ltd. And therefore all business dealings within the Denel Group including any other subsidiary, joint venture and associate company will fall outside the scope of this exemption.

On the AgriBEE charter – it would appear that not all the people that it intends to benefit are happy with it

Motsepe Matlala, a commercial farmer and owner of Mafata Farm near Ermelo in Mpumalanga, said the current AgriBEE charter would not attract investment to farming. BEE was a policy that needed an overhaul because black people should not strive to gain equity stakes in white peoples' businesses. Instead, black South Africans should use their resources to build a sustainable and profitable environment for self-sufficient black agribusinesses, explained Matlala. "Look at the recession, companies have gone bust. The current framework is a drawback… BEE as a whole needs a re-look. We need to come up with creative means and ways to build sustainable black businesses in the sector," he said.

I like what Matlala is saying here – this is not about 25% of a white business, it must be about generating new sustainable businesses. Also – he's not alone calling for a re-look at BEE, Matthews Phosa has also called for a radical reformation along very similar lines

South Africa needs to radically reform its black economic empowerment policies to stop black entrepreneurs from being "parasites" dependent on white businesses. So said ANC treasurer-general Mathews Phosa. "We need to create strong black businesses. We haven't done that," he said. "[We must] not do BEE on the basis of the value of the share price, which is what happened in the past 20 years. The bulk of BEE deals were based on the share price whether it was high or low.

I suppose the question here is whether the codes that have been mooted in that dubious presentation talk to this ideology.

And slightly on that subject, I got an email from a very prominent person (in BEE circles) informing me that neither THAT PERSON or another person were involved in the drafting of the codes (no genders or agendas here). My response to THAT PERSON was that THAT PERSON should be relieved that THAT PERSON was not involved in the drafting because THAT PERSON's legacy would always be tarnished by the promulgation of such a document. My sources do however contradict THAT PERSON's refutation.

FSC

A lot more needs to be written about the FSC – and I will do so later this week. Thena Wage (sic) ran a little article on the FSC this morning. When reading the FSC we must view it as a major victory in the whole BEE space – the 25% direct ownership issue was always going to be a problem. In spite of these issues a compromise has been reached (albeit in draft format – although my sources in the financial industry are behaving as though this thing is already in effect).

Absip president Tryphosa Ramano welcomed the gazetting of the charter. "We know and understand the challenges, and Absip will be hosting roundtable discussions to enable our members to provide their input, which we will then consolidate and present to the minister," he said. "The proposal has gone a long way in transforming the sector, specifically when it comes to access to finance and fuelling the engine of the South African economy, especially the SMME sector."

Ramano said that, in order to grow and sustain the country's economy, all sectors of the population needed access to finance and that the charter would address these and other issues.

This is progress. Real progress.

Phase II of the FSC gazetted

On the 2nd of March too.  It doesn't appear to be on the DTI's website or on gov.za.  You can download it here.  Comments may be submitted until the 1st of May 2012.