Paul Janisch

Consulting, opinions and speaking engagements and a few other topics that I know quite a lot about

If you are looking for a realistic perspective of empowerment in South Africa and southern Africa (including Namibia, Zambia, Zimbabwe and Botswana), I am able to provide that perspective at your AGM or any other presentation. It's relatively clear from this blog that I know what I'm talking about. Over the last 20 years I've gained a very thorough understanding of the following topics

• Government procurement
• Parastatal procurement
• BEE trends within Africa
• Impact of BEE legislation
• Multinationals and empowerment within Africa

And I am very happy to provide you with an overview of these topics.

In addition I have consulted to a wide number of public and private organisations throughout South Africa on

• Public Private Partnerships
• Listed shareholding analysis
• Tax advice on BEE initiatives and tax structures (through a partner)
• Opinions on empowerment commitments that may be contractually binding
• BEE plans for tenders
• Joint Venture BEE certificates
• General opinions (similar to this one)

Or if you need someone to come in and find those points within your organisation for your next verification please contact me and we can discuss what is required. You can email me or phone me on (+2783) 227-1375.

Udemy BEE courses launched at last https://www.udemy.com/user/ownershield/

Please forgive me.  We have been building up our new business and this blog has been used for marketing purposes.  I need to get back to the thought provoking stuff.  We've been asked to write  something on Scottish empowerment.  I'm working on that at the moment.

If you've missed any of our BEE courses, you can go onto our Udemy page and register for one of our courses.  They are delivered by  Rudolf and myself  and only focus on specific aspects of a BEE implementation.  We've done Once empowered, Net Value,  Introduction to Public Sector Compliance, EAP, Intraternships and a few others coming up.  Rudolf is regarded as the BEE tax expert and will do a BEE tax course at the end of November 2023. 

Please take  a look at the courses.  I know they are good because I lack humility and I wrote some of them.   There are many more to come.  And this is the only BEE Channel on Udemy.

There is a free course as well - Once Empowered, Always Empowered.   This is very poorly understood across the industry.

Ownershield Udemy Channel

 

Overview of Intraternships: Fostering Growth from Within

With training budgets slashed and productivity being prioritised it's time to have a good look at the training of staff.  Throwing money at training detracts from productivity.  Focused and customised individual training with re-inforced quizzes are the future.  Think of it as a type of skills development microdosing - but over a longer period of time.

HENCE - INTRATERNSHIPS

Intraternships, a portmanteau of "internal" and "internships," represent a groundbreaking approach to talent development within organizations. Unlike traditional internships aimed at external candidates, Intraternships are designed exclusively for internal staff members. This innovative concept recognizes the untapped potential of existing employees, offering them a unique opportunity for professional growth and skill enhancement within the familiar confines of their workplace.

The key features of intraternships:

Internal Talent Cultivation: Intraternships focus on identifying and nurturing existing talents within the organization. By offering structured learning experiences, companies can harness the expertise and potential of their employees effectively.

Skill Development: Intraternships allow employees to acquire new skills or enhance existing ones, aligning with the organization's current needs or future objectives. This targeted skill development ensures that the workforce remains adaptable and proficient in an ever-changing business landscape.

Knowledge Transfer: Seasoned employees can serve as mentors during Intraternships, facilitating the transfer of institutional knowledge and best practices. This mentorship aspect creates a collaborative environment where experience meets enthusiasm, fostering a culture of continuous learning.

Retaining Institutional Knowledge: Intraternships enable the preservation of institutional knowledge by encouraging experienced staff members to share their expertise with newer employees. This ensures that vital company-specific information is passed down, enhancing organizational stability and efficiency.

There are several application possibilities when it comes to intraternships

Leadership Development: Intraternships can be tailored to groom future leaders within the organization. Promising employees can be exposed to leadership roles, decision-making processes, and strategic planning, preparing them for higher responsibilities.

Cross-Functional Training: Intraternships facilitate cross-functional training, allowing employees to explore different departments or roles within the company. This exposure promotes a holistic understanding of the organization, encouraging collaboration and innovation.

Innovation Hubs: Organizations can establish dedicated Intraternship programs focused on innovation. Internal teams can work on research and development projects, exploring creative solutions to industry challenges while leveraging the company's resources.

Project-Based Learning: Intraternships can be structured around specific projects or initiatives. This approach promotes teamwork, problem-solving, and project management skills among participants, leading to tangible outcomes for the organization.

Diversity and Inclusion Initiatives: Intraternships can be instrumental in promoting diversity and inclusion within the workplace. By providing equal opportunities for employees from various backgrounds, organizations can create a more inclusive environment, fostering creativity and diverse perspectives.

Succession Planning: Intraternships play a crucial role in succession planning by identifying and grooming potential successors for key positions within the company. This proactive approach ensures a seamless transition when senior employees retire or move on to other roles.

Intraternships represent a paradigm shift in talent development, emphasizing the value of internal expertise and continuous learning. By investing in their employees' growth, organizations can enhance employee satisfaction, boost productivity, and maintain a competitive edge in the market. This innovative approach not only benefits individual employees but also contributes significantly to the long-term success of the organization as a whole

Intraternships offer a wide range of benefits for both employees and organizations

Some key advantages:

1. Internal Talent Development: Intraternships provide a structured platform for nurturing internal talent, allowing employees to enhance their skills, explore new areas of interest, and develop expertise within the organization.
2. Cost-Effectiveness: Training existing employees through Intraternships can be more cost-effective than hiring external candidates. It eliminates recruitment expenses and reduces the learning curve associated with new hires.
3. Knowledge Retention: Intraternships enable the transfer of institutional knowledge from experienced employees to newer staff members. This knowledge sharing ensures that valuable company-specific information is preserved and passed down, enhancing organizational stability.
4. Increased Employee Engagement: Offering Intraternship opportunities shows employees that the organization values their growth and development. Engaged employees are more likely to be satisfied with their jobs, leading to higher retention rates and a positive work culture.
5. Promotion of Diversity and Inclusion: Intraternships can be designed to promote diversity and inclusion by providing equal opportunities for employees from different backgrounds. This fosters a more inclusive workplace, encouraging diverse perspectives and ideas.
6. Boosted Productivity and Innovation: Employees who participate in Intraternships gain new skills and knowledge, which can lead to increased productivity and innovation within the organization. They bring fresh ideas and perspectives to their roles, driving continuous improvement.
7. Succession Planning: Intraternships play a crucial role in succession planning by identifying and grooming potential successors for key positions. This ensures a smooth transition when senior employees retire or move on to other roles, mitigating the risks associated with leadership gaps.
8. Enhanced Employee Loyalty: Investing in employees' professional development through Intraternships fosters a sense of loyalty. When employees feel supported in their career growth within the organization, they are more likely to stay committed to the company in the long run.
9. Adaptability and Skill Alignment: Intraternships allow organizations to align employees' skills with the company's current and future needs. This adaptability ensures that the workforce remains competent and capable of meeting evolving business demands.
10. Positive Employer Branding: Organizations that offer Intraternship opportunities demonstrate their commitment to employee growth. This positive employer branding can attract top talent, enhance the company's reputation, and make it an employer of choice in the industry.

Free internship online course 9 November 2023

INTERNAL INTERNSHIPS

The future of skills development

The BEE Codes of Practice allow companies to recognise the salary spend of staff members on Internships, Learnerships and Apprenticeships.  The most interesting and possibly the most neglected skills programme is that of Internships. 

To many an Internship involves bringing external people into the organization for workplace experience.  However the Skills Development Matrix contradicts this concept by referring to people on ABET programmes, which are typically provided for staff.

It follows that Internships can be extended to internal staff members.   This makes a great deal of sense as the internship programme delivers a number of benefits.

• The internship can be tailored to suit the employee and employer. It has an aspect of  on the job training to it to ensure that the skills learned during the academic modules are being applied in the workplace.
• Internships are far less rigid than learnerships with a shorter academic cycle. Many learnerships are not adequately suited to employees and they are very time consuming, often requiring self-study in the evenings.  Often this is impossible due to loadshedding.
• Internships cost less in terms of time and money than learnerships.
• There is distinct prestige advantage to companies where they position their internship programme as the industry standard.

Join us for a free online seminar on the 9^th of November 2023

 

We will cover all the technical aspects of internships for internal staff and provide the necessary evidence that this programmme is acceptable in terms of the BEE codes and how the entire company can benefit from such an internship programme.

The online course starts at 09:00 and should be finished by 10:30.  Space is limited to 100 people.  To book send an email to [email protected]

Rudolf Rautenbach	Paul Janisch
083 759 0374	083 227 1375
[email protected]	[email protected]

The difference between Broad-based Ownership Schemes (BBOS)/Employee Share Ownership Programmes (ESOP) and Trusts

Most people involved in the BEE world, including law firms are of the opinion that a Trust deed needs to fulfil all the requirements contained in Annexure B – D of the ownership code.  These are the annexures that cover BBOS, ESOPs and Trusts.  There are a number of problems with this approach

• All amendments to a trust deed including the replacement of trustees needs to be lodged with the Master of the High Court’s office
• The Master’s office is in a shambles it could take more than a year to get the updated Letter of Authority
• Annexures B (BBOS) and C (ESOPs) do not refer to Trustees and Trust Deeds. They specifically refer to Fiduciaries and a Constitution of the programmes.
• Annexure D refers directly to Trusts.

Studocu.com observes the following

While all trustees are fiduciaries, not all fiduciaries are trustees. Trustees specifically refer to individuals or entities managing assets in a trust, while fiduciaries have a broader scope and can include other roles where a duty of loyalty and care is required.

This is further corroborated by the 2008 Verification Manual that requires verification agents to interview trustees or “equivalent representative of scheme”.

It makes sense to have two documents when it comes to BBOS or ESOPs.  The first is the Trust Deed.  The requirements for the trust deed are far simpler than those of the BBOS.  In fact there is no racial requirement for Trustees at all.  This document should be broadly drafted to accommodate BEE requirements as well as the standard essentialia of a trust deed.  What it should do as well is refer to the Constitution of the Broad-based Ownership Scheme or ESOP.

A Constitution is a far more fluid and adaptable document.  It does not need to go to the master’s court and also does not have to be unnecessarily complex.  One of the requirements is that the Constitution must be made available to beneficiaries in a language that they are familiar with. 

Contact us for a  free consultation

Anyone who has a trust and have gone through a verification knows how complicated it is.  It can substantially simplified with a constitution.  Please contact us to discuss to understand what a BBOS or ESOP Constitution should look like and how to go about drafting this document.

Rudolf Rautenbach	Paul Janisch
083 759 0374	083 227 1375
[email protected]	[email protected]

SANRAL's tired argument. They lost a court case and clutch

From Moneyweb

The High Court in Gqeberha granted H&I Construction an interdict stopping Sanral from proceeding with the adjudication and award of two specific tenders in accordance with the amended tender scoring system as advertised by Sanral on 19 May 2023 in an addendum to its tender document.

Judge Nyameko Gqamana said in the High Court in Gqeberha accepted that Sanral is empowered in terms of the Preferential Procurement Policy Framework Act (PPPFA) to determine its own preferential policies and has a discretion to make its own policy choices regarding the specific goals it wishes to pursue.

The judge said the transformation agenda by Sanral to ensure broader black participation is commendable, a step in the right direction, and long overdue – but the policy has to be fair, lawful and rational.

“What troubles me more is that the changes to the scoring system [were] introduced without consultation,” said Judge Gqamana.

SMEC SA said the new scoring system renders the Broad-based Black Economic Empowerment Act (B-BBEE) a nullity and compliance with the PPPFA is undermined because compliance now only amounts to a fraction of the points.

H&I Construction along with nine other construction companies argued that their BEE programme (which cost more than a little bit of money) amounted to nothing.

I love the response from Themba Mhambi the chairman of SANRAL (clueless I would say)

That the court action by the construction companies will not deter Sanral from pursuing real transformation of the sector.

Followed by

Mhambi stressed that it is time for black South Africans – Africans, Indians and Coloureds – who had previously been excluded from benefitting from massive infrastructure projects to benefit alongside the well-established industry players.

“Therefore, don’t believe all the lies that are told that we want to kill these construction companies.

“We don’t want to do that. We want to support them. We want to strengthen them to get more business but there is one condition. That condition is that they must understand that South Africa belongs to all who live in it, black and white,” he said.

Mhambi stressed that those people who have in the past been excluded from benefitting from road construction, bridge building, pavements, manufacturing of guard rails, the production of asphalt must now benefit as well.

He said that is the condition – and that the condition does not come from anywhere other than the Constitution of South Africa.

“When these millionaire and billionaire companies say to us ‘we are going to take you to court Sanral because you are depriving us of the millions and billions that we are making alone’ I understand what they are saying, because you can’t be a millionaire or billionaire by sharing” he said.

This is noise, I use that term a lot.  They tried to pull a move that wasn’t supported by the constitution and legislation.  And when they get kicked down then they argue transformation. It’s a tired move.

It’s time to update the number of Verification Agencies - 85

Interestingly this is quite a popular post on this blog.  There are 85 VAs operating in the country – excluding suspended and withdrawn ones.

 

 

 

 

 

 

 

 

 

And here’s the breakdown per city

 

 

 

 

 

 

 

 

 

The data used here is based on how the VAs describe the city/suburb where they operate from.  I did bundle Durba and Durban North together.  I don’t know KZN very well, but there are three VAs in Durban North.

 

 

 

 

 

 

Once Empowered 1 hour course - 27 September

I have been posting more business on this blog.  We are going to host a series of 1 hour courses on a variety of subjects.  This one is unique because it took me two days to figure out how it works.  I've summarised it into one hour.

What constitutes ownership for ICASA licences - option work

This is interesting.  There are draft regulations that state that individual licensees need to be a level 4 and have 30% ownership. I was contacted by Sakeliga who have told me that they are preparing litigation against these regulations.  This works for me.  We've seen the issue with Starlink in South Africa.  ICASA (read the government) would rather prevent people in the farflung  reaches of South Africa from accessing a fast and reliable network because they insist on a ridiculous ownership requirement.  It's the undoing of this government.  If you want to support the litigation then make contact Tian Alberts at Sakeliga.

However litigation takes a while and compliance may be the interim solution. 

The draft regulations were published in March 2021.  The regulations remain in draft format but in our experience the final gazetted regulations often look very similar to the draft.

There are two absolute requirements for individual licenses that need to be achieved between 36 and 48 months depending on the license or size of the applicant.  The licensee needs to be a level 4 with 30% equity held by black people.  The truth is that no company can achieve a level 4 unless they have a portion of black ownership.   If this requirement needs to take effect in the future then it’s best to comply with the 30% at the outset and work on the BEE levels over time.

What is black equity?
The definition states that each Individual Licensee must have a minimum of 30% of its ownership equity held by Black People.  Equity is further defined as the instrument by which a person holds rights of ownership in an entity.   Regulation 4(1) states that this equity must be derived through the Flow-Through Principle

The regulations are clear that any instrument of ownership will constitute ownership if verified by an accredited verification agency.  The ICT BEE codes consider a wide range of instruments - trusts, private equity, non-profit companies. warrants and options.  Most equity instruments will trigger a tax event and are quite dependent on the black shareholder meeting their repayment plans if they are indebted. 

Options are a compelling method of ownership compliance because if the option holder behaves as a shareholder whilst holding the option then the ownership is deemed to exist.  There is no Capital Gains Tax (CGT) until the option matures and most importantly the option holder is able to amass the necessary capital to purchase the shares through dividends that flow at the outset.
 
If you are looking at an ownership structure to comply with the ICASA regulations and would like to look at options please contact us and we’d happily set up a consultation with you at no charge.

If you would like to know more about this email or learn about our comprehensive solution, please contact us on [email protected]

Our second BEE compliance course. BEE COMPLIANCE MADE EXTREMELY COST EFFECTIVE and SIMPLE

The first course went extremely well.  We've started preparing it for our Udemy channel.  The response was fantastic.  There's obviously a need for this, so we are offering a second one next month .  Too often you see courses where the resulting advice costs a fortune and the service provider smiles because they have instilled the fear of goodness knows what in you and you NEED to use THEM because they are great.

Maybe they aren't.  Maybe it shouldn't cost that much.  I'll give you an example

Large Enterprises - Skills Development. Total points  - 20 (plus 5 bonus points)  - (PRIORITY)
Description		Weighting points	Compliance Target
	Skills development expenditure on any programme specified in the Learning Programme Matrix for black people as a percentage of the leviable amount
Skills development expenditure on learning programmes specified in the Learning Programmes Matrix for black people as a percentage of leviable amount (EAP)		8	6%
Skills development expenditure on learning programmes specified in the Learning Programmes Matrix for black people with disabilities as a percentage of leviable amount (EAP)		4	0.3%
	Learnerships, Apprenticeships and Internships
Number of black people participating in Learnerships, Apprenticeships and Internships as a percentage of number of employees (EAP)		4	2.5%
Number of black unemployed people participating in training specified in the learning programme matrix as a percentage of number of employees (EAP)		4	2.5%
	Bonus points
Number of black people absorbed by the Measured and Industry Entity at the end of the learnership programme (EAP)		5	100%

This is from the ICT code.  We know that the deluded people that wrote this decided that everything should be EAP.  Also these nonheads decided that you need to get the 40% subminimum in both sections - spend and learnerships.  Otherwise you drop a level. In other words you need 4.8 points for spend and 3.2 points for learnerships.

This is what I recommend.  We have a company with 49 employees (gifted to us by the new Employment Equity regulations).  This means they need 1.25 interns and 1.25 unemployed interns.   You take 4 people - all unemployed because your black staff are sick and tired of being put on learnerships because they are black and learnerships  take up too much time.  The racial makeup is 2 African Male, 2 African female.  This will get you about 7.5 points for learnerships.  If you are good and you speak to my friend Anton Visser he'll give you disabled people. 

Let's say you do this right at the end of your year.  Then you would donate an amount of money to St Vincent's School for disabled points.  The school is great, they do amazing work and they will apportion your contribution between the various race groups, because the ICT code insists on disabled people being subject to the EAP (do you see how this government has taken us for complete fools).

But you are still in the region of 0.6 points short to meet the subminimum.  Now you use internal training only African males and females.  This where it gets clever.  You can only count 15% of the total target to internal training, but you only need about 8%.  Subminimum reached and you've got 12.33 points.  Cost you a fraction of what the idiotic drafters want you to spend.

Now if you use our internal internships then it'll cost you even less.

This is what I talk about in these course. Wait until you see what I can do with ownership and enterprise and supplier development.  Don't forget - use SED for team building. 

 

 

 

 

 

 

 

 

 

SANLAM BEE report. And they are surprised by their conclusions

And the headline reads

'Transformation not as advanced as BEE scorecards suggest' – Sanlam report

The report says that

After analysing all the data and interviewing people working in these companies, the researchers concluded that "transformation is not as advanced as the scorecards suggest".

Why is this not a surprise?  The article concludes with

Masilela said it's time South Africans questioned why transformation promised by the Broad-based Black Economic Empowerment (BBBEE) remains elusive 20 years after the law was introduced to address inequalities in SA. He, however, doesn't blame BBBEE policy but rather corruption, racism, and the psyche and attitude of decision-makers.

The failure has everything to do with BEE policy.  There was never a transformation agenda in the policy.  It is a punitive model.  It goes beyond a tax.  Business cannot fix what the government has broken.  If the education system is broken then you can't hire people.  If you don't make it easy to fire people then you won't hire them.  I've noticed with some of the YES projects that we've run that certain people would rather do nothing and get paid R350 to do it than work for R4500.  This is not a slight on the people in this country - this is the environment that they have grown up in.  If everyone around you is unemployed going back a few generations then how will you know what work is?

BEE has failed and will continue failing because government (anc government I need to stress) has not been an equal partner in the process.  Of course it's about compliance.  An additional thing to consider is the fact that BEE was only designed for a booming economy, now that the anc has dragged us into the shit BEE cannot function.  We have that awful bolshie bod to thank for this.