I tend to use the blog as a repository for ideas for future articles or my next book. This post is the beginning of an idea that I have that will turn into something bigger in the future. And today's topic is
Where do BEE and the PPPFA connect and how can I bitch about the procurement practices of certain parastatals?
I suppose the first question to ask is - who is bound by the BBBEE Act. The codes tell us on page 9 (paragraph 3) that (the hyperlinks below are for the same document)
3.1 The following entities are measurable under the Codes;
3.1.1 all public entities listed in schedule 2 or schedule 3 (Parts A and C) of the Public Finance Management Act;
3.1.2 any public entity listed in schedule 3 (Parts B and D) which are trading entities which undertake any business with any organ of state, public entity or any other Enterprise;
Schedule 1 of the PFMA is therefore expressly excluded. Entities that make up schedule 1 are constitutional institutions and include the IEC, the public protector and the municipal demarcation board.
Schedule 2 are the major public entities. There are 18 in total and they include ESKOM,DENEL, DBSA, Telkom Transnet and the snukered SABC. I was therefore correct in my February posting that Eskom's antiquated ESKADAAT 6 must be brought into line with broad-based BEE.
Now onto the PPPFA
I posted something on the PPPFA and ESKOM and Telkom last month. In that post I concluded that Telkom and ESKOM practice somewhat unconstitutionally because of their procurement practices. In fact this sentiment is shared by the AHI who argue in a paper that ESKOM's exclusionary procurement policies are in fact unconstitutional. But they aren't bound by PPPFA and hence can create any preferential procurement policy they want. What I find strange is that both ESKOM and Telkom have their own rules and Transnet opts for broad-based BEE. Why is Transnet operating in the now and those two not?
And now to the bitching
This article in Business Report states "Telkom is threatening not to renew the contracts of multinational suppliers that are reluctant to meet its 30 percent black equity requirements". The article is not very well written and seems to veer off its opening paragraph and talk about BEE credentials and broad-based BEE. In fact it doesn't really conclude too much at all - but it has opened up a little bit of a debate within my mind.
It pisses me off that a company who has a monopoly and hence I am forced to use them for my fixed line communications, has made insinuations that it will never do business with me.
This would sway me to move away from them as soon as Neotel is able to offer me a fixed line telephony and internet service. And I will.
If this is true then why the hell do the big multinationals take this from Telkom and other similar institutions
Think about it - say Telkom insisted that Microsoft do a BEE deal or they lose Telkom's business. If I was the CEO of Microsoft South Africa I would say "no BEE deal and we will no longer supply you with software and support". Can you imagine the havoc this would cause - almost every desktop (and a whole bunch of servers) within Telkom would have to be migrated to another package like Shuttleworth's Ubuntu Linux. Besides the cost of this migration, the loss in working hours whilst people learned to run the package would be enormous. Productivity would drop substantially. And then you have to consider the support that Telkom would need to run on a daily basis.
There is little doubt the Microsoft has great broad-based BEE credentials, I read somewhere that they are well placed to apply for equity equivalents because of what they've been doing for years. And this alone should demonstrate their commitment to South Africa and BEE. The article suggests that this is not enough for Telkom.
I think the time has come for companies to start standing up to these bullying tactics and calling Telkom and ESKOM's hand. They must learn that this is an economy we all contribute to it in some shape and form. Almost every company in South Africa will play by any rule that government has created, BEE included. However each company's contribution will be measured by what they are capable of. We should not be penalised for who owns us.
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