Paul Janisch

NPO Foundation Workshop Thursday 24 October 2024

The non-profit sector performs a vital role in the day to life of almost every mammal, fish, fowl or plant on this planet.  However it lives in a very precarious state, it needs donations to survive.  My colleague Rudolf Rautenbach along with his friend John Watson are a running a series of workshops on this sector.  Specifically with a view to looking at sustainability.  I am hoping that Schalk Cilliers of the ATKV can be part of this because the ATKV story is vital listening.   Not only is the ATKV a non-profit company, but its been in a tax paying position for years.  This has to the long term goal.

Register here

 

1-day Foundation Workshop with 5 experts

 

Has black economic empowerment run out of steam?

It might be more apt to say it has run out of road.  It’s obviously very topical because News24 invited five opinions on the subject.  Two of them (Gabriel Crause and Moletsi Mbeki) argue that it delivers nothing.  Duma Gqubule delivered his predictable diatribe about how much of the JSE is owned by black people.  His argument is repetitive and tiring.  He never looks beyond the determined shareholding of the various companies listed on the JSE.  I would imagine, and I think this is confirmed by his opinion piece, that his source of information is based on a sample of annual reports and BEE certificates.  This is a very poor method to actually determine any type of ownership.  He conveniently forgets about mandated investments like unit trusts and pension funds.  He also has not looked at the actual shareholders, in fairness this is a daunting task and cannot be done with any form of accuracy.  But if you are going to cast 5.8% aspersions then you need to make it absolutely clear how you came to this conclusion.  It’s flawed. I do, however agree with his conclusion that “we must rewrite the empowerment rules and bring an end to the voodoo system of accounting for black ownership.”  I never thought I would ever agree with him, I think he’s a bit of a hazbeen.

Predictably the black management forum concludes with “Instead of calling for the end of B-BBEE, the BBC advocates for the acceleration of its implementation in order to ensure that the majority play a meaningful role in the economy to safeguard our democracy.”  They also note that black people own 5% of the economy.  That is patently wrong and is probably only drawn from the same stats that Duma conjured up.

I think the most meaningful article was written by Lumkile Mondi.   In this article Professor Mondi puts forward a case that goes along the lines of “black man you are on your own”.  Instead of laying the blame in the usual places he distributes it between the economy and government policies.  I have to quote him

Nimrod Zalk in his doctoral thesis, titled "Things we lost in the FIRE [Finance, Insurance and Real Estate]", shows how the false promises by white business conglomerates to the Mandela government of black economic participation destroyed the industrial base of South Africa as they exited South Africa and how preferential procurement of HDSAs incentivised imports to the detriment of white-owned South African businesses destroying industrial capacity base and employment for many black workers.

It is the economic policy choices of the ANC and B-BBEE implementation that destroyed commuter rail services, road infrastructure, electricity supply, schools, libraries and many livelihoods as the economic growth slumped, employment collapsed, and poverty deepened.

The Covid-19 pandemic added to the misery. It is not surprising that many did not turn up at the polls on 29 May and those who voted supported other parties, resulting in the ANC losing its overwhelming majority in Parliament.

It was vote of no confidence on the policies of the ANC and their implementation. A vote for something new for a better life for all.

The whole article must be read.  It’s balanced and doesn’t throw stones unnecessarily.

This blog is full of discussions about how the implementation of BEE was left to those businesses that didn’t have enough ownership to not be compliant.  By setting the QSE threshold at R50m turnover in most codes they excluded a large number of black owned businesses from participating in the whole BEE process, something that the BEE strategy actively discourages.  This exclusion provided the leeway that some black-owned businesses needed to catapult themselves into the awarding of state contracts.  All it took was an affidavit and recently created company and off you went (in spite of the BEE codes wanting a bigger certificate for larger contracts).  We are however not alone.  There was a famous Covid PPE case in the UK which was a carbon copy of what our connected people are capable of doing.

PPE Medpro was one of the private companies awarded valuable contracts having been referred through this High Priority Lane by Baroness Michelle Mone. PPE Medpro was set up on (registered) 12 May 2020. It was awarded its first contract, worth £81 million, a month later on 12 June to supply 210 million face masks. The Department awarded a second contract a couple of weeks later on 26 June, worth £122 million for sterile surgical gowns.

The first codes were published in 2007, our good friend Rob Davies gave the initial codes no time to work and went about creating the new ones.  He knew that these revised codes were designed to allow black-owned businesses the necessary latitude to go about gaining government business almost exclusively.  His intention was to punish everybody else by setting targets and requirements that have now taken on the dimensions of an additional ANC tax.  Unfortunately for our bolshie, the clever lawyers in Bloem figured out a way to get around the ownership requirement using the modified flow through principle.  This was then closed off and was replaced by another type of ownership structure developed by the Pretoria Afrikaners.

Why have these get-arounds been so popular?  Simple, the cost of compliance is so high that companies will do anything to get those costs down.  For those whose turnover is over R50m, including black wholly-owned businesses, the problems (read costs) multiply.  Compliance is expensive.  No wonder skills development schemes started developing using tax breaks like the Employee Tax Incentive break.  It’s simply because companies could now comply and get a decent score.

I’m going to use a Duma-approved sensational figure.  The FirstRand Group’s staff cost during the 2023/4 year was R32,515,000,000.00 (I think this is R32bn).  If they want the 4 points you get for training unemployed people then that will cost them about R480m).  Where is the logic here?

I think our government should start having frank conversations with companies in South Africa.  Those companies that need to implement a full scorecard.  They should ask them whether this process is working.  Everyone of the large companies will say “We believe in transformation, we are proud of our BEE performance.”  They won’t tell you what they really think.  BEE compliance costs a fortune, whole departments have to be created to monitor and implement it.  It has created an industry.  Yes, it’s created employment, but it’s a major grudge purchase.  I have saved my clients amounts in the hundreds of millions of Rands over the last 20 years and they reluctantly pay me my meager fee.

Nothing – other than Duma going through your annual report and BEE reports concluding that you are untransformed.  His analyses have been quoted by anc politicians for years.  Because it’s a smoke screen.  It hides the fact that this government has stripped the country bare.  And on top of this they are an unequal partner in this process.  They have destroyed the education system.  You can’t employ people that the government has systematically neglected over the last 30 years.  And let’s not forget that the BEE codes are a legal requirement for government entities and departments.

Yes – BEE has failed and will continue to do so.  It’s a useful scapegoat for the government.  They won’t get rid of it and if they make it more stringent then I’ll figure out other ways to comply. 

Skills Development support for motorcycle delivery riders - press release for immediate release

The mushrooming motorcycle delivery business has changed our lives for the better. We are used to having people deliver almost everything that can be ordered online directly to our homes. As a consequence of this convenience the number of riders increases consistently with these motorcycles filling up our roads. The truth is that the barrier to entry in this industry is very low. There are no such requirements like a Professional driving permit (PrDP). All that is needed is a license and a serviceable motorbike. Nicknames like Kamikaze don’t do the brands that these motorcyclists represent any favour.
Without the formal training that public transport workers receive we cannot expect these riders to know all the aspects of their daily business activities. For instance, the might not understand the importance of customer service and time management as well as the management of their finances and how these tie into the maintenance of their motorcycles.
Recognising that these motorcyclists have embarked on a career of customer service in the guise of the delivery of goods, RISE BUSINESS CONTINUITY developed a programme that guides delivery drivers through all the aspects of their business. This goes from customer service to managing technology, basic motorcycle maintenance as well as basic business skills.
“The delivery service people are a vital part of our business and home lives.” Says RISE DIRECTOR Rudolf Rautenbach, “their industry is dynamic but the basics will always remain the same.” The RISE DELIVERY INTERNSHIP PROGRAMME aims to professionalise the industry. The course is delivered over a 12 month period in a series of videos that can be accessed at any time. Each month a new video is posted on our application. Once the programme is finished the rider will be given a certificate of completion.
“The programme is not specifically for the riders, although they benefit from it directly, it also has a distinct benefit for the retailer.” Says Rautenbach. “The motorcyclists are brand ambassadors, even if their vehicles are not branded by the retailer. If the rider’s bike is in a shabby state or they are rude to the customers this has a bearing on that brand.” To encourage the retailer’s support the retailer co-signs the final certificate.
“In some cases we’ve seen the retailer offer incentives for completion of the programme in the form of shopping or airtime vouchers.” Rautenbach observes. “It’s all about building a professional riding community.”
The gig economy has just arisen and it’s not had the time or the impetus to develop itself and look to become more professional. We feel that we are helping this process.”

Issued by RISE BUSINESS CONTINUITY. Mr Rautenbach can be contacted on 082 320 4067 or [email protected]

The curriculum is here. It's a first.  An online course that is sponsored by the company the rider rides for.  It doesn't cost much a month.  The key is that the rider gets a certificate that comes from RISE BUSINESS CONTINUITY and the sponsor.  If the sponsor wants BEE points for this, they will be added in at no charge.

 

 

 

What Neanderthals can tell us about graphite - introducing neanDNA (TM)

For those who don't know, the correct pronunciation is neanderTALL. 

Two articles have come to light.  The first one was written by Gabriel Crouse and was published in the Daily Maverick.  In the article Mr Crouse argues (not incorrectly) that the proposed 20,000 ill-qualified labour inspectors who will inspect, amongst other things, compliance with the Employment Equity Act.

Historical race inspectors?

[W]hat will these 20,000 people be asked to do? If a company says that its managers are all black, and an inspector comes along, by what standard will they check if that is true?

Comparing this to the apartheid method of race determination, Crause adds

“How will the inspectors know whether someone is telling the truth about their race?”

The answer is, they will not. There is no workable legal standard. The notion that any department can simply say “whatever your apartheid classification was, or would have been, that is what it is for us, too”, does not work, because in the apartheid system it was legally possible to reclassify – and thousands upon thousands of people did so.

I, ON THE OTHER HAND, HAVE A SOLUTION

Recent studies have found that homo sapiens did not wipe out Neanderthals, they in fact mated with them.   Scientists say that the genomes of most modern humans contain up to 4% Neanderthal DNA.  The same article notes

However, Neanderthals haven’t vanished completely. There could be one sitting in your chair right now, reading this article. Well, sort of. Many modern humans have some admixture of Neanderthal DNA, an indication that Homo sapiens and Homo neanderthalensis knew one another, also in the Biblical sense.

Neanderthal DNA is estimated to account for an average of 1% to 4% of the genomes of modern humans with ancestry outside sub-Saharan Africa. The share of Neanderthal DNA is highest among East Asians, intermediate among Europeans, and lowest in Southeast Asians.

Their genetic heritage is much smaller in sub-Saharan Africa: from none to 0.3%, depending on whom you ask. This indicates that the DNA exchange between both human species most likely occurred outside Africa, though there is some evidence of minimal remigration back into Africa: Ethiopians and other peoples in the Horn of Africa have around 1% Neanderthal-derived DNA.

If we follow this logic, then all African (most African) people in South Africa lack Neanderthal DNA.  To qualify this - most African people from Mali to the Cape Point have little or no Neanderthal DNA.

LAUNCHING neanDNA(TM) TEST KIT

This groundbreaking race inspection tool will assist all race inspectors to determine who is African and not African.  It comes in a portable backpack and all you need is a swab of saliva.  Put it into the test tube and you will detect the imposters within five minutes.

DISCLAIMER

The neanDNA Test kit will not be able to tell you whether the person is South African by birth.

Hurry - order yours today before the South African government depletes our stock of 20,004 kits.

 

 

There’s talk of fightback against Tau with his legal sector BEE code - Moneyweb article

This is a better version of my last post.  Moneyweb published it.  The word in the hallowed legal chambers is that it's getting a lot of attention.  The whole article is below because Moneyweb has a paywall.  It's a good news publication - please read it.

There’s talk of fightback against Tau with his legal sector BEE code

This could be the last time we are taken for fools (and litigation will show the extent to which the government bulldozes legislation through).

By Paul Janisch 2 Oct 2024  04:05 

‘Taunting the legal sector’ and ‘cocking a snook at business organisations like Busa’ – Minister of Trade, Industry and Competition Parks Tau. Image: GCIS

BeyondWords

There has been very little black economic empowerment (BEE) activity from the Department of Trade, Industry and Competition (dtic) since Rob Davies vacated his post as minister of the then Department of Trade and Industry in 2019. To most of us this was a case of no news is good news.

The good news came to an end when current minister Parks Tau gazetted the legal sector code in September.

Normally this is an unremarkable event; most of the time these codes are received, absorbed and implemented.

This time things are hopefully a little different. There is a backstory behind this code and its gazetting. The Draft Legal Sector Code closed for comments in March 2021.

The code lay dormant until just before the May 2024 elections.

The story goes that John Jeffery, then deputy minister of justice and constitutional development, asked the Big Five law firms whether they would litigate if the draft code was gazetted. This was answered in the affirmative. Jeffery consequently didn’t pull a National Health Insurance (NHI) on the legal sector.

It’s not clear why the Big Five law firms objected to the code, but I am willing to wager a small amount of money that it wasn’t about the transformation of the sector.

Gazetted

Tau has now gone ahead and gazetted the code, which is binding on all entities that operate in the legal sector. It’s very likely all legal firms will need to use this code for their next BEE certificate, so there’ll be no lead-in time for acclimatisation.

This is a very typical ANC stunt, specifically when it comes to empowerment legislation.

The ANC knows that empowerment is a very emotional concept and that it can push through codes and policies because those who have to implement them are unlikely to complain.

But just because the legislation deals with empowerment and transformation doesn’t mean it’s right. Those of us who derive a living from BEE advice know how badly thought-out almost every single BEE code is.

Bursaries for black students 

Davies left South Africa with a requirement for the provision of bursaries for black students at tertiary institutions. It’s obvious that he was trying to solve a ‘fees must fall’ problem.

But he set the targets too high, offered too few points, and didn’t get the South African Revenue Service (Sars) to provide some sort of tax break for compliance. As a result, these points are largely ignored because of the sheer expense of compliance.

I suspect something similar is at play with the Legal Code.

Wordplay

Tau’s press release states:

“This administration has committed itself to accelerating transformation, guided by the preamble of the Constitution of the Republic of South Africa which emphasises the need to correct the injustices of the past. This is captured in the statement of intent of the Government of National Unity (GNU) [author’s emphasis],” Tau said.

This is a smoke screen. He is suggesting that there is an endorsement from the GNU, tacit or express. This is not true.

The DA is not particularly impressed with BEE legislation and would quite happily change it for something more effective. No, this gazetting is the old ANC at play.

Simply put, it’s a shot across the legal fraternity’s bow.

And the legal fraternity cannot ignore it …

I offer a few reasons why a legal challenge would benefit our economy:

1. If John Jeffery asked the Big Five whether they would litigate, then the justice department must be aware of the issues that have been submitted. It is simply daring the legal sector to make the next move. By not reacting we become the pawns the ANC government has always treated us as.
2. Part of the litigation will show whether the dtic and the justice department paid any heed to the comments they received. It’s a known fact that this government (GNU or otherwise) does not pay much attention to comments on legislation. Litigation will show the extent to which the government bulldozes legislation through.
3. The BEE codes are designed to benefit those who least need the benefit. This is an article in itself. Litigation may show that the legal sector codes are exactly the same, where we have certain silks being briefed for cases that they have no intention of winning.
4. Not only is Tau taunting the legal sector, he’s also cocking a snook at business organisations like Business Unity South Africa (Busa) and Business Leadership South Africa (BLSA). Every week both organisations publish articles about the importance of business-friendly legislation and adherence to the rule of law.
5. There is a history of court cases that have been fought in the name of transformation. The B-BBEE Commission has found itself in court on a few occasions because its findings have been devoid of fact. On each occasion the court has found against it. Similarly, the South African National Accreditation System (Sanas) was taken to court by SERR Synergy, and didn’t bother to defend the action. Litigation is nothing new here.
6. Perhaps the most important reason why this code needs to be taken to court is because South African jurisprudence will benefit. Empowerment legislation, like every other piece of legislation in the country, is subject to the Constitution. Thus far there has been a fear to litigate because of the potential negative consequences that such litigation might invite. If anything, South African law needs certainty.

Empowerment-related legislation is a sort of sacred cow. We all suffer as a result.

I have scoured the deepest recesses of the internet to find a copy of the code. Nothing has appeared yet. Perhaps the minister is waiting for the legal papers before he decides to share the code with us.

We’ve been taken for fools for many years. This could be the last time.