Paul Janisch

Let’s say you’re Tsogo Sun and you need a level 2 under the revised codes – maybe you should start exiting the gambling game

The first thing you need to understand is how many points you need to be a level 2 under the revised codes. Id est

Contribution Level	2007 Codes	2013 Codes	Recognition level
Level One	≥ 100 points	≥ 100 points	135%
Level Two	≥ 85 points but < 100 points	≥ 95 points but < 100 points	125%
Level Three	≥ 75 points but < 85 points	≥ 90 points but < 95 points	110%
Level Four	≥ 65 points but < 75 points	≥ 80 points but < 90 points	100%
Level Five	≥ 55 points but < 65 points	≥ 75 points but < 80 points	80%
Level Six	≥ 45 points but < 55 points	≥ 70 points but < 75 points	60%
Level Seven	≥ 40 points but < 45 points	≥ 55 points but < 70 points	50%
Level Eight	≥ 30 points but < 40 points	≥ 40 points but < 55 points	10%
Non-Compliant Contributor	< 30 points	< 40 points	0%

Gaming companies need to achieve a level 2 BEE score in order to retain their gambling licence. The scenario below is a speculative maximum score that Tsogo Sun might hope for under the revised codes. The score is probably too generous. It will take quite a few years for them to get to a level 2.

2007 Codes			2013 Codes
Element	Weighting (excluding bonus points)	Tsogo Sun 2013 score	Element	Actual points as per each code (excluding bonus points)	Possible Tsogo Sun score
Ownership	20	23	Ownership (priority element)	25	25
Management	10	4.44	Management control	19	5.3
Employment Equity	15	10.91	Skills development (priority element)	20	10
Skills development	15	13.45	Enterprise and Supplier Development (priority element)	40	19.5
Preferential procurement	20	18.38	Socio-economic development	5	5
Enterprise Development	15	15
Socio-economic development	5	5
TOTAL	100	90.18 (level 2)		109	64.8
					Level 7, but Preferential Procurement subminimum has not been met, demoted to a level 8

They've been demoted to a level 8 under procurement because it's going to take years for their suppliers to get to an acceptable score under the revised codes.  The submminimum under the revised codes is not going to be reached in a hurry.

Subdivision	Total Points	Required subminimum
Preferential Procurement	25	10
Supplier Development	10	4
Enterprise Development	5	2
TOTAL	40	16

Their only hope is to allocate 40% of their spend to 50% black owned businesses (many of which need to be black women owned). I don't think this will happen. Even if they do they are not going to get to a level 2. What then becomes of their gaming licence? It's managed by a DTI company – I think it's under an absolute threat. It's not likely that the clerk or board that considers the longevity of such a licence will understand why Tsogo has not hit its level 2 under the revised codes.

As a matter of interest there is a large group who have expressed a desire to support our action against the minister. I'll keep you posted.

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Complete scorecard (and the occasional cynical quip) for 36928

My guide to fixing B-BBEE - get rid of Rob Davies and the dti

The new codes allow all but the biggest companies to score themselves on pain of penalties for misrepresenting their scores, but Deputy Minister says that he intends to take this function in-house at the DTI. This is another bad idea: the DTI certainly does not remotely have the capability to monitor BEE compliance across the whole economy.

via www.dailymaverick.co.za

Across the whole economy! The dti couldn't issue a BEE certificate to the restaurant that operates on the ground floor at the dti campus.

Nkandla back to haunt Zuma, with no end in sight of his troubles

In political discourses throughout the nation it seems common cause that Zuma’s controversial leadership and his repeated failure to take responsibility have become so entrenched that it can no longer change. Instead, it will continue to infect the style of governance, strengthen the paradigm of corruption and unaccountability that has befallen South Africa, and further inform the worsening local and international perceptions of the kind of country South Africa has become under the Zuma administration.

via www.theintelligencebulletin.co.za

Employment Equity Amendment Act and fines (effective 1 Aug 2014)

Perhaps you have trawled the internet for the updated act and the fines.  What you will find is the original act and then another document showing the amendments.  Here are the consolidated sections that could attract a fine, you can print it but you can't copy from it.  If you like and use it please send me an email saying thank you.

If you don't then I'm sure you are silently grateful.

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Black is black - I want my black back

DTI taking over verification, over my section 22

The news that the DTI planned to bring verifications in house was sent to me yesterday.  I immediately phoned Gerhardus Burger (who is no longer at IRBA) and we had a little chuckle.  The problem I had yesterday was that I didn't know who actually said that they would can verification agencies.  Lo and behold BDLive reported the following this morning

THE government will take control of the black economic empowerment (BEE) verification process to drive the creation of 100 "black industrialists" over the next three years.

Verification agencies will be downgraded to become "empowerment advisers" so that the private sector does not issue verification certificates to itself, the Department of Trade and Industry said on Thursday.

The department is aiming to address frustrations over the perceived slow pace of black economic empowerment (BEE), especially business ownership, and to correct empowerment policies seen to benefit "the few" and spur "rent-seeking".

The department would stimulate the creation of "black billionaires and millionaires" across all sectors of the economy, Deputy Trade and Industry Minister Mzwandile Masina told the first Black Industrialists’ Stakeholder Engagement forum at the Industrial Development Corporation’s (IDC’s) offices in Sandton on Thursday.

The department’s director-general Lionel October told the forum that BEE verification had become a "fly-by-night" business. The department was establishing a Broad-based BEE Commission to speed up empowerment processes in line with "instructions received from the executive".

Mr Masina, former national convener of the African National Congress Youth League, said BEE verification agencies undermined the government’s development goals.

It would seem that both Lionel and Masina said it.  That's one for the books.   If you read the whole article then you'll see that this is just political posturing - my experience of Lionel is that he probably believes what he says, but this Masina-vent is talking not as a minister but as an ANC propagandist, and if you consider that he comes from the youth league then sense, logic and forethought are completely irrelevant.  Viz

Mr Masina criticised the Treasury for being out of step with the process of empowerment. "National Treasury is not in the space of transformation but in the space of the public purse — this needs to change. We will continue to pursue National Treasury and the government to make sure transformation takes place," he said.

Black industrialists had to do business with the rest of Africa, and take part in the entire productive value chain, Mr Masina said. "We want set asides for black people — we see it in a lot of countries, why not South Africa?"

Here is the deputy minister criticising Treasury who control the PPPFA.  We assume that Nene is not going to budge on the PPPFA just as Pravin didn't, the DTI would know this.  So now they are purporting to be champions of elite black industrialists.  I think he was talking to an audience that wanted to hear what he had to say.  Good DTI bad Treasury

Let us assume that they actually go ahead and do this, forcing about 300 verification agencies to become "empowerment advisers" and not "fly by night" operators (with a substantial reduction in jobs).  They would need to justify this in terms of section 22 of our Constitution (that the government rarely consults when it legislates).

Every citizen has the right to choose their trade, occupation or profession freely.  The practice of a trade, occupation or profession may be regulated by law.

What Masina is actually doing is arbitrarily denying a few thousand people the right to work in a profession/occupation they have chosen.  I am almost sure that you cannot terminate this with the stroke of a pen.  I am even more convinced that if they do then there will be a legal challenge.

The second part of my scenario suggests that they succeed under section 22 and go ahead with the DeTrImental Verification Agency.  This is what we know we can expect.

• Sheer incompetence.  I'd love to say that it's beyond anything you can imagine, but the DTI continuously plumbs depths of incompetence so we can definitely imagine it
• Under staffing (coupled with incompetence)
• Yearlong backlogs.  Maybe that's too short.  Think CIPC which is adequately staffed
• More incompetence
• Longer backlogs
• Very few certificates being issued
• Rampant corruption
• Even more incompetence
• Incompetent corruption
• More backlogs

Eventually business is going to have to continue without BEE certificates because they just can't be issued.

I don't think we should take Masina's comments seriously.  It would however be nice if he could speak as minister and not as an ANC cadre, but that is wishful thinking.

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Revised codes to accelerate BEE implementation - Davies

ANCYL shies away from Masina insult

Who's going to end up paying for this - why we are of course

Some security features an excessive encroachment - Zuma | News24

President Jacob Zuma said some security features at Nkandla encroached on his enjoyment of his home in a response to the Speaker of Parliament.

via www.news24.com

He's a liar. A reprehensible, useless, pathetic liar.

Nuwe SEB-kodes stel strawwe vereistes | Rapport

Die hersiene kodes van goeie praktyk vir breë swartbemagtiging (BSEB) wat op 30 April 2015 in werking tree, gaan ’n ernstige impak hê op ondernemings wat kontraktueel daartoe verbind is om ’n sekere SEB-vlak te hê om ’n lisensie, ’n openbare-private-vennootskap of ’n konsessie te behou.

Paul Janisch, ’n BSEB-konsultant van Caird, sê die meeste maatskappye se SEB-vlakke gaan aansienlik daal. 
Die dobbelbedryf is ’n tipiese geval. Dobbelmaatskappye het hulle by die Nasionale Dobbelraad daartoe verbind om SEB-vlak 2 te bereik volgens die generiese kodes vir groot maatskappye. Tans is 85 punte nodig hiervoor, maar onder die hersiene kodes sal dié maatskappye ’n puntetelling van 95 moet hê. 

Volgens Janisch is die vereistes om dié telling te bereik, ’n oormatige las. As die maatskappye nie aan die voorgeskrewe vlak voldoen nie, kan hulle beboet word of hul lisensie verloor.

Die hersiene kodes is beslis nie sakevriendelik nie, sê Janisch, en boonop is hulle ongelooflik vaag en straf.

Maatskappye wat tans op vlak 2 is, sal moeilik enigiets na aan vlak 7 onder die hersiene kodes bereik. 
“Dit sal vir maatskappye wat nie in swart besit is nie byna onmoontlik wees om mee te ding met maatskappye in swart besit, sê Janisch.

Maatskappye in swart besit kan heel waarskynlik die meeste regeringskontrakte inpalm.

Maatskappye wat veral bekommerd moet wees, is dié soos in die dobbelbedryf wie se behoud van hul lisensies afhang van hul SEB-vlakke.

Janisch meen sulke kontraktuele slaggate kan in die toekoms uitbrei na ander vorme van private-openbare-vennootskappe en regeringstoegewings, soos vir die toekenning van dranklisensies.

Die enigste manier waarop maatskappye die kode se minimum puntetelling kan bereik, is as hulle verskaffers ook aan die hersiene kodes gemeet is, en dit gaan jare neem, sê Janisch.

Boonop sal die meeste kernverskaffers se telling ook met ’n paar vlakke daal.

via www.rapport.co.za

More on Tsogo Sun in the next post

You might be thinking that this relates to the revised BEE codes

Is there method in this madness? It is easy to see that the policies proposed are unconstitutional, ill-advised, impractical and in many cases simply impossible to implement. But why are they on the books in the first place? Why is the ruling party apparently set on enacting them? Why the railroading of objections and the riding roughshod over the protests of rural people themselves, white and black? What’s happened to our democratic policy process?

via www.dailymaverick.co.za

You'd be wrong, this paragraph talks about the "sheaf of controversial new legislation and proposals by the Minister of Land Reform and Rural Development" .  

Does this ring a bell when you look at any new piece of legislation

what distinguishes Gugile Nkwinti (and, arguably Jacob Zuma) from their predecessors. While previous ministers of Land Affairs have at times been very unclear about how to exercise the pro-poor mandate of their department, Nkwinti has abandoned the rural poor in favour of the elite.

It should.  The revised codes are there to serve the elite (African race) and them only.  

This is a feature of Zuma's government.  Retardation of growth, political opportunism and complete lack of competence and thought.  It's my contention that they don't care about what they pass, what they do know is that a small percentage of what they pass will be challenged in the Constitutional Court.

Devoid of braincells more like.  But this isn't funny, it impacts seriously on us.  Not just the wealthy, everyone. And they don't give a fuck. 

Why the hell do we? 

Could Abil's failure be the beginning of the new era of economic empowerment?

Until now, economic inequality has been dealt with at the highest level through Black Economic Empowerment equity participation and at the lowest by microlending. Neither is a sustainable model. You can’t borrow money at a 10% interest rate to buy shares with a 3% dividend yield unless you’re in a sustained bull market.

via www.bdlive.co.za

Mark Barnes suggests that 

The collapse of African Bank Investments (Abil) is an overdue wake-up call. It may just herald, at last, the beginning of real economic transformation. It has arrived not a moment too soon. If we learn from it, and fix it, we may just avoid the revolution that is otherwise coming.

The seriousness of the crisis is summarised here.

ABIL has about 2.5-million credit customers at various stages of precarious indebtedness in its total advances book of about R60bn. Let’s assume these people must be employed to get a loan but that they support at least three others who aren’t. Add that to the 10-million or so unemployed and you have a whole bunch of our population who are relying on social grants and the continuation of unsecured lending. They’re relying on Abil as a continuing source of funding. If Abil stops lending, it’ll be a matter of weeks before millions cannot buy bread.

That’s not a financial crisis, that’s a revolution. So, what must be done?

I can’t think of a solution that doesn’t require a complete rewrite of the role of government. Inequality simply won’t balance itself without intervention. The rich are not about to gratuitously pass their wealth to the poor — it doesn’t even happen in the movies. It will have to happen structurally, by law. 

It's likely Barnes wrote this before the news came that the Reserve Bank had put Abil under curatorship.

On the subject of legislated social intervention, Dirk de Vos wrote a comprehensive piece on the Employment Equity Act in the Daily Maverick today.  It's a very good piece and must be read in its entirety.  I could easily post the whole story into this blog but I won't, I'll put in the most significant pieces

Even the most aggressive proponent of affirmative action recognises that skills are important. So, while the government may promote randomly at the SABC, doctors and pilots work their way up on the basis of proven qualifications and skills. The lack of skills is generally cited as the biggest hurdle to the so called Transformation Project. To be sure, skills development or skills transfer is an important part of the EEA and all companies who employ people are subject to a skills levy. A good part of the Broad-Based Black Economic Empowerment Act is about skills development and skills transfer.

What about progress through the ranks and the question of experience and skills? Perhaps the problem with the EEA and its regulations is that the obligation to achieve targets, whatever they are, is not what stymies progress. It is the approach of those with the skills, often white employees employed on the basis of their skills or qualifications. 

What happens in a firm subject to Employment Equity rules? It is not hard to work this out – one can be sure that not many white employees see their everyday work lives in the context of the greater transformation project. Their own skills, particularly if they are critical to the company’s business, become the difference between a secure salary and being pushed out in favour of an employee from a designated group. One can be confident that the white employee, notwithstanding instructions from management who are keen not to be fined, will not easily share his/her skills or even make it easy for the black employee. Seen in this way, the problem is not the firm but the existing employees within the firm – their interests are wide apart. Even if the policy is applied rationally as our courts require – the words of the Labour Court in the Naidoo case about a “spectre of perverse race and gender rivalry” producing “in consequence confrontation and alienation” gets played out in our workplaces on a daily basis. As the salary premium for experienced and skilled black management grows, the elevator to produce these individuals is not working. The resign-one’s-position-to-be-contracted-back strategy, as an independent consultant, to perform the same tasks, does little to improve the situation.

To my mind the only successful way of making this work is where business and government start trusting each other.  I think government needs to repeal many of their draconian labour and empowerment related laws as a gesture.  If business fails to respond to this overture, then government was right, business is racist.  I don't think that this would be the case though.

 

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Measurement of ownership - when?

Marcus: Abil placed under curatorship

CEEC (Zambia) is looking for Loan Management Software

TENDER NO.CEEC/ORD/02/2014: SUPPLY, CUSTOMISATION AND COMMISSIONING OF LOAN MANAGEMENT SOFTWARE

1. The Citizens Economic Empowerment Commission (CEEC) is a body corporate established under the Citizens Economic Empowerment Act Number 9 of 2006. The purpose of the Commission is to facilitate the economic empowerment of targeted citizens by improving and institutionalizing their access, ownership, management, control and exploitation of national economic resources.

2. The Citizen Economic Empowerment Fund (herein after referred to as The Empowerment Fund) is contained in PART IV of the CEE Act No. 9 of 2006. The Empowerment Fund (as amended through Act No. 43 of 2010) is vested in the Commission and shall be managed and administered by the Commission, either by itself, or with such financial institutions and fund managers as the Commission may appoint for purposes of the Fund. The purpose of the Empowerment Fund is to support the development of broad based economic empowerment programmes through the provision of financial assistance in the form of interest bearing loans to targeted citizens, citizen empowered and citizen owned companies.

The Commission presently has a loan book of 3,000 clients that is anticipated to grow to 15,000 over the next 5 years .

3. The Commission now wishes to acquire Loan Management Software for efficient portofolio analysis and reporting.

4. Loan Management Software already in use in the Zambia Financial Market will be preferred, such as:

• T24
• Smart Scripts
• Radix
• PROOF
• Etc

5. The system will be installed at CEEC Head Office in Lusaka as well as at each of the Commission’s provincial offices in Kabwe, Ndola, Solwezi, Mongu, Choma, Lusaka , Chipata ,Chinsali, Kasama and Mansa.

7. The system should be intergrated across all ten districts. The
the vendor will provide all licensing, operations and maintenance
documentation for the system, including warranty.

8. The Vendor will provide after sales and annual maintenance support for
the system.
9. The Bidding Document is posted on the CEEC Website: www.ceec.org.zm
10. Bids clearly labeled “TENDER FOR THE SUPPLY OF LOAN
MANAGEMENT SOFTWARE” Must be deposited in the Tender Box located at
the Reception Area at the Address Below not later than 14:30 hours on 29th
August, 2014.Late bids will not be accepted.

The Director General
Attention: Procurement Officer
Citizens Economic Empowerment Commission
Empowerment House, Plot #6457 Los Angeles Boulevard
Long acres

For further information, please contact the Procurement Officer
Tel:260211257205/256020/0978779395

via www.ceec.org.zm

The telephone number looks very wrong. The CEEC's number is +26 0211 252 150