Theo Garrun is probably one of the most influential people in the HR/employment world. For those of you who don't know him - he's the editor of (amongst other things) the Star Workplace. I have been very lucky to have him publish a few of my articles. This is the latest one - feel free to syndicate and distribute it, all I want is a byline and a bottle of Fókól (ask Theo or any one of my clients about Fókól).
February marks the third anniversary of the Department of Trade and Industry's (DTI) broad-based black economic empowerment (B-BBEE) codes of good practice being gazetted. I doubt the DTI could ever have imagined that their document could have permeated the economy in the way it has - it's now almost impossible to go about business without being asked for a BEE scorecard.
There was strong evidence in 2009 that BEE was going to become more of a business reality. I'll discuss a few instances.
- BEE verification agencies were finally accredited
It's a myth that the DTI accredits verification agencies. Accreditation is done by the South African National Accreditation System (Sanas). This process is costly and intensive and, as a result, only a handful of agencies have been accredited. To make things more complicated, from February 1 only these agencies and those who have applied for accreditation may issue BEE certificates.
There are two serious ramifications to this regulation:
i) Self-assessments will not be accepted. The codes of good practice do not outlaw self-assessments, so legally they should be accepted. However you will be hard-pressed to find either a corporate or verification agency that will accept one.
ii) It's estimated that somewhere between 40 and 70 verification agencies will be available to provide BEE certificates to the 500,000 odd companies who turn over more than R5-million.
This is going to cause severe bottlenecks as each agency is going to have to do about 6 500 verifications a year (somewhere in the region of 30 per day). It is doubtful that these agencies will be able to cater for the demand; one of the most prominent agencies has done 2 000 verifications in the past five years.
- State tendering might use BEE scorecards
Two standards seem to apply in the commercial world. There is the private sector that insists on BEE scorecards, and the public sector that doesn't. Government tendering regulations are prescribed by the Preferential Procurement Policy Framework Act (PPPFA) that does not measure preference points using a BEE scorecard.
This is likely to change because last year the National Treasury published a draft document that contemplated using BEE scorecards in the allocation of preferential points.
This document is controversial and is unlikely to make it through in its current guise. However, this is a positive move for those companies doing business with the government (both local and multinationals) and we can expect BEE scorecards to be the measurement of empowerment across the economy.
- Each industry has an average BEE score - BEE is almost a competitive advantage
This came as quite a surprise; I firmly believed that any score would be acceptable. Certain companies, notably Sasol and Telkom, are setting BEE score thresholds that must be met in order to bid for certain tenders.
The more generic the tender (eg stationery) the higher the required BEE score. This is a clear indication that there are enough players in that sector that have those kinds of BEE scores. It follows that in order to remain competitive each company must be aware of their competitors' BEE score and must ensure that they stay within that threshold in order to continue operating.
Black economic empowerment is more of a business reality than it has ever been before.The debate about BEE must now move from the antiquated ideological justification for it, to how best to deal with it and to make it work to your advantage.
# Paul Janisch is a director of Caird, a broad-based BEE compliance consultancy. Contact him at 083 227 1375 or email
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