Workers’ day blues

Let's say it's the 1^st of May and the revised BEE codes (aka Rob's folly, unfortunately not his worst move as head of the iDioTIc, in fact nowhere near his worst move) have now become operational. What do you do? The chances are you aren't at work because it's another public holiday that the country doesn't need. Perhaps you aren't at work because the ANC forgot to invest in the racist power network last century. That however is another story.

You wait until the 4^th and then consider your options. You are probably hoping that your BEE scorecard that you renewed on the 30^th of April will last you until April 2016. You may be right, but consider the following

1. BEE scorecards under the 2007 codes don't talk to the revised codes. You'll need to get an additional "empowering supplier" document that you can attach to your current BEE scorecard. This will probably satisfy the larger corporates BUT
2. the hopelessly clueless parastatals like Eskom, especially Eskom, are likely to insist on scorecards under the revised codes. Why? Simply because the equally inept DTI have gone on road shows and told them that the codes become effective on May the 1^st. That the DTI themselves have no idea as to when the first scorecards will be issued is irrelevant, Eskom as the shining light (oops I forgot that you cannot use the word light in context of Eskom) of empowerment and how it should never have been implemented in the first place are going to want to curry favour with our dramatically incompetent government and show them that they are at the forefront of "radical economic transformation".
3. If the parastatals don't do that,  they could translate the BEE score on the certificate so that it talks to the revised levels contained within Rob's folly
4. The larger corporates will go for the current certificates along with an empowering supplier certificate

And then there's practical side to this (more numbered points)

1. 51% plus black owned businesses who turnover less than R50m only need to sign an affidavit confirming ownership and turnover. What Rob forgot to mention is that those whose turnover is between R10m and R50m will need an empowering supplier certificate – more on this below
2. Standards of verification will have to drop even though the quantity that needs to verified has increased substantially. But the market is now used to relatively stable costs for verification and won't tolerate any great increases. Also the number of verification agencies is now close to 350, this means that if your favourite VA wants to charge you a lot of money there is someone out there that will do it for the standard prices. If there is more to verify and the prices don't change then standards will drop. I expect every company that actually goes through a verification will just be made an empowering supplier whether they can prove it or not
3. Fronting will become less sophisticated and more patent. In excess of 50% of total procurement will need to come from 51%black owned/30% black women owned suppliers. The supplier that can deliver this will get the business (subject to other issues like pricing, competence etc). We'll see a lot of these companies springing up. These companies no longer need independent verification so their affidavit will do.  This means it is of no concern who they hire, how they train them, what causes and businesses they support nor who they buy from.

I think the 51% etc companies need to be discussed in more detail.

1. They are not going to escape the cost of verification. Rob's folly makes it clear that the affidavit does not include a statement of empowering supplier compliance so this has to come from a third party because it's not going to come from the iDioTIc. I would imagine that verification agencies might charge 51% etc black owned QSE's and larger similar prices as a full verification for an empowering supplier certificate
2. There is no incentive for these businesses to ever get a BEE certificate when their blackness contributes more than 50% of the points available for procurement. The company needing the scorecard will meet their procurement sub-minimum under these circumstances.
3. If they don't need or plainly refuse to get a BEE scorecard they can buy from whoever and sell it on – this does add to the cost of doing business in this country but everyone wins.

And so the small emerging business trying to get off the ground won't get a look in because the large corporates are now getting their BEE points from the fronters. And the likes of Zungu make more money for jam.  So much for Rob's deluded idea of creating black industrialists, actually they don't stand a snowball's chance anyway because Eskom can't produce enough electricity to run the firepool pump at Nkandla. 

This is not equitable. It's a joke, Rob is a joke and the real joke is that he doesn't know he's a joke.

We can do something about this. I've raised about 75% of the money I need to interdict these codes. If you would like to see a more equitable South Africa please contact me and make a small contribution and then we can work on the larger constitutional challenge.

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