Or something along those lines. I love how so many of our politicians including Mmusi are pastors. Even Manyi preaches his brand of racism at some church somewhere. But that's not the point of this post. Rob Davies really pushed the boat out when he tried to justify his little paragraph about limiting the shape of ownership in South Africa. Initially he attempted to smooth the waters (another biblical reference) by saying that it was not retrospective. Alas his calming words did nothing to feed the 5000 frenzy (oops, another biblical reference) of putting BEE deals on hold. He has withdrawn that little paragraph and so we wait. We know that the influential and very government-focussed Black Business Council is pushing for narrow-based ownership because their members are best prepared for it. It doesn't take the wisdom of Solomon (is that another!!!) to figure out why this works. You can sell 51% of your company to a black investor for 30 pieces of silver (my recollection of Judas' commission for Jesus' betrayal is a little foggy) but there are very few black investors with the cash or desire to pay for shares. You could do some sort of vendor financing deal but then you won't be recognised as being 51% black owned because the shares need to be paid off. So it's free shares all round - and a controlling interest too!
What happens in a state procurement scenario? I've written already that these codes are not about private sector procurement (courtesy of Loane Sharp). These codes are designed to give black owned businesses a 10 to 20 point advantage over anyone else when it comes to state tenders. It's as really simple concept. You create a scorecard that is both too expensive and operationally impossible to implement, you add in negative marking, raise the entry level to 40 points and throw in a lot of corporate apathy which means that these codes will never be challenged. Even those companies with the best intentions will never get to any competitive score. You waltz in there with your level one and you can charge 11-25% more. Take a look at the table below.
|
BEE level |
80/20 |
90/10 |
|
1 |
20 |
10 |
|
2 |
18 |
9 |
|
3 |
16 |
8 |
|
4 |
12 |
5 |
|
5 |
8 |
4 |
|
6 |
6 |
3 |
|
7 |
4 |
2 |
|
8 |
2 |
1 |
|
Non-compliant |
0 |
0 |
- See more at: http://bbbee.typepad.com/paul_janisch/2011/06/the-pppfa-regulations.html#sthash.Z1pKyU23.dpuf
But wait there is a failsafe system built into this. If you are 51-100% black owned then you HAVE TO IMPLEMENT BEE when you go over R50m. Like hell. Do you really think that any black business worth its salt is going to bother responding to tenders with companies that turn over more than R50m. I wouldn't.
The ultimate message here is that black owned companies are never going to bother with BEE scorecards and other nation-building mundane activities.
This is where section 217 of the constitution comes into play. Id est section 217 (1)
"(1) When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost effective.
The highlighted words are my emphasis. Promoting people on the basis of race whist forcing those that need to compete with them to take responsibility for all empowerment activities, knowing full well that they cannot compete is not fair. When black owned businesses clean up in state tendering unfairly and inequitably there will be a court challenge. All we have to do is wait for the challenge because it will come.
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