The rumours about deadlines have been rife in the last six months. Today's Business Report (BEE codes ready for approval) suggests that the new codes will be here sooner than later. We can expect simpler codes, but the principles will remain the same. As far as I can gather these principles are:
- The stimulation of local industry. The preferential procurement and enterprise development codes strongly emphasised this.
- Skills development. I have heard that the organisational transformation index is going to be removed or placed elsewhere on the scorecard. I couldn't agree more, these are easy points to get but why waste 6 points on the skills development scorecard for this. Skills development is critical to ASGISA and JIPSA and therefore should not be diluted.
- Greater black management representation.
- BEE is an inclusive process. The scorecard allows every entity within South Africa to develop a BBBEE profile and get behind the process.
- It is part of SA’s growth strategy. This means sustaining existing, and generating new, economic activity. Comes back to ASGISA and JIPSA
- It should be implemented within the context of sound business principles. The most important principle behind BEE.
I don't expect a dramatic change in some of the targets. We must see a change in the definition of preferential procurement and changes in the targets for enterprise development and CSI. The current enterprise development target is between 3.3 and 5% of EBITDA (earnings before interest, tax, depreciation and amortisation). Telkom's EBITDA for 2005 was R17.5 billion, in order for them to earn the full ten points on the enterprise development scorecard they would have to invest or spend between R600 and 900 million. I can't see that happening in a hurry.
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