Paul Janisch

MBA dissertation questionnaire - BEE related, please submit a response, we all stand to benefit especially the government

This is for my good friend Fiona Khan's MBA dissertation.  It focuses on multi-nationals (who now appear to have a real problem with empowerment compliance - it's not only them). 

It's a simple multiple choice questionnaire and won't take longer than five minutes.  Please consider completing it.  I'll make sure that Fiona shares the results with me

Dear Colleague:
 
As part of my research project, you are invited to voluntarily partake in a questionnaire that is aimed at exploring the impact of the B-BBEE Transformation Policy on Foreign Multinational Companies operating in South Africa and how can these Transformation Policies translate into strategic performance benefits for the Foreign Multinational Companies operating locally.
 
You have been approached to participate in this research questionnaire based on the sampling criteria which is targeted at managers, employees and industry experts who have had direct or indirect exposure to B-BBBE within Foreign Multinational Companies.
 
Responses will remain anonymous and confidential; respondents will not be identified by name or organisation. No identifying data shall be included in the final report and all data collected during the process shall be kept securely and destroyed after completion of the project. The project has been subject to ethical review in accordance with the procedures specified by the Henley Business School (University of Reading) Research Ethics Committee and has been given a favourable ethical opinion for conduct.
 
By completing and returning the questionnaire it will be understood that you are age 18 years or over and that you give consent for your responses to be used for the purposes of this research project.
 
Should you wish to participate in this survey, kindly click on the link below to access the questionnaire

Kindly note that the deadline for submission is the 6th December 2020.
 
As this is an open survey kindly forward to your colleagues and networks who you believe could add value to this research.
 
Please contact me, should you have and questions or require any further info on this.
 
Many thanks for your support.
 
Kind Regards,
Fiona khan

 

New beginnings and new strategies. I'm moving in a different direction

This is repost of a blog post that is seven years old.  It was weird because I had a meeting with my other shareholders on Monday morning and we discussed our future strategy (see you don't need to say - going forward).   Our business model is going to go in the direction of providing compelling BEE solutions across the BEE codes and elements for other BEE consultants.  We don't want to stay in the consulting game for ever and are going to start assisting consultants become consultants.  I think we're going to take it further than that - I have 16 years of experience in this business, that's about 16 years less than Louis McLaren.  I know how this stuff works, I have good relationships with the right kinds of verification agencies - and interestingly enough I know a lot of consultants.  I want to create new consultants.  I'm not interested in shoving my methodology down anyone's throat, but I know a lot of tricks, and I know what works and what doesn't work.

We would like to strike a partnership with a software company to provide the tools to make this process easier.  Out of the blue I got a phone call from Bruce Rowe of Mpowered we're going to look at his software solutions and see how we can plug it into our solutions.  I also got an email from Sheldon Booth from Flipped Human Solutions, who's also a BEE consultant.  Steadily I'm building up a database of people that we talk to.  I'll write a lot more about this in the coming weeks, as we start getting the strategy together.  The products are there and we've had a lot  of success with them - and our consultants and resellers are making very decent money out these solutions.

This post below is somewhat like a service level agreement.  I never found anyone who wanted me to sell their products that would live up to this wishlist.  I'll make sure that we do.

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Chris Daffy came to see me the other day. He's been running a business that is doing very well and I wanted to know more about it. Chris owns a sales channel development company. He will take your product and match up the correct people/companies to sell it for you. 

Chris explained that there needs to be a proper commitment shown from both parties in order for this to succeed. All too often the company that has the product views this "channel" as a cheap way of getting their product/service (grandmother) to the market and they pay little or no attention to the person selling the product. The chances of this succeeding under these circumstances are round about zero (perhaps lower).

He's right – I have been courted by three different software vendors in the last three weeks, and all of them have wonderful products. They see me as a useful conduit to get their products out to the market. But they have no idea as to how to do this. What they do know is that hiring a sales team is an expensive operation. And so I have been sent 80 page reseller contracts that I have not read beyond the third page and have frankly forgotten what it is they are selling. They could of course make use of Chris Daffy but if they don't then they might want to look at the following pointers (which are specifically BEE-related)

1. BEE is a GRUDGE purchase

   If a client negotiates every cent they spend with me then why would they want to spend 10-20 times more than that on a software package? The answer is that they won't. And no amount of BEE sexiness is going to justify that expense. Which brings me onto the next point

2. These products are being used by corporates in South Africa – so there is a market

   Help me sell this product by producing a proper value proposition. What are the cost benefits to the client? For example if your software package can save the company from hiring 4 other people then spell it out. Back it up with the necessary documentation.

3. Don't stop there. Create a proper support structure

   I am a consultant who tries to SAVE my clients money in their BEE programme. If I am going to sell this programme/product I will need proper collateral, preferably with something that I might attach my brand to. The collateral must be up-to-date and must be written in a way that I am able to understand and sell. Yes I come from an IT background but that was a long time ago, I don't want to have to explain whether the SQL orange will frequent often with the VB Glaswegian warehousing. On top of this make sure that there is someone who can come out with me to meet the clients to discuss the finer details – don't leave me floundering, because I won't sell it.

4. The sexiness of the product is not enough to get me to sell it

   The chances are that as excited as I am when I leave your demo this excitement will fade very quickly as I get on with my core business. Don't send me a pdf'd presentation and reseller contract and think that I'll do anything with either. I won't. In fact all that shows is that you don't know what you are doing and that you view me as a cheap conduit to get your product to market.

   What you need to do is invest some time in getting me up to speed. This will require training, on-site visits and anything else that might keep my interest piqued.

5. Understand why I may want to sell it

   I consult, in other words, I sell time. There is a limit to what I can earn. I'm also a specialist in certain things that might not be attractive to other types of companies. I'm interested in broadening the types of companies  that I can consult to. A sexy product might get me into those companies. On top of this it opens up a different type of revenue stream that might work for me for a few years. It also moves my profile out of the "elevator capital" sphere and into a business that someone might want to buy in the future.

   I once met some idiot who thought that I could sell his company's products but part of the deal was that I followed his consulting methodology. He's probably still an idiot but I wouldn't know because I didn't see him again after the first meeting.

6. You are going to have to do some marketing

   Think about those products that use very effective channels, like insurance companies. They spend a fortune on branding and marketing so that when that painful broker calls you up he doesn't need to sell the Liberty brand – he just needs to sell himself. I am not going to expend time and effort getting your brand and name out to my clients unless you are willing to throw an equal amount or more in promoting your own brand.

   Years ago I worked for a software company that sold Microsoft products. They would present products at Microsoft sponsored events for a variety of corporates. Why not arrange a nice breakfast where I get to talk about BEE related stuff and your product. We all win – it's just that you have to pay a little money to organise this thing.

7. The chances are we are going to compete in the marketplace

   That's fair enough, a little ridiculous but fair enough. If this is the case then I want some advantage over you, like a preferential rate that allows me to discount or something. I also want some method of letting you know that I am talking to a certain company so that you don't go in there and destroy my chances.

8. Make it financially worth my while

   I cost a fraction of a full time sales person. I will foot many of the costs that you would subsidise your permanent staff, things like travel, printing, telephone etc. The commission structures must be very attractive and clear. I don't want myself selling something and discovering that actually you don't pay commission on this or that. Also make it clear when and how you pay commission and what is expected from me to earn commission on renewals.

9. Have a lead programme

   Because you are doing the marketing it's likely that companies will phone in and want to know more. An equitable lead referral system would help all of us. If I find out that you are taking all the leads then I believe our relationship will come to a rapid end.

10. Why not set up a mutual referral system

    I'll be talking to my clients about you, so why don't you tell your clients about me. If you pay me a commission to sell your stuff then I'll pay you a commission to sell mine.

I believe that these are the most basic requirements for a channel programme. If you have this in place I believe we can talk, if you don't then call Chris – or I'll help you set it up for a fee.

This could be the most significant article written this year - trunceformaysheeyin be damned

The Daily Maverick is becoming the most valuable source of fine journalism in this country.  There is nothing that comes close to it.  By the way they are looking for financial support, if you are so inclined you can read more about this here.

Back to the Maverick.  Dirk de Vos wrote a fantastic article over the weekend.  I'm not a Marxist fan nor that familiar with his theories, but I do know that that inept commie bolshie bob is a massive officianado.  de Vos sets up his argument thus

In general, socialists continue to favour top-down direct interventions by the state preferably supported by “evidence based” research. When decision-making follows a process of identifying a problem with the objective of solving it by reviewing evidence and evaluating options, what we mostly get instead is some predetermined solution with evidence selected to favour the pre-selected solution. That type of policy making process is faulty because we cannot know the full ambit of what the problem is all about or that a whole number of factors will change once the policy is known. Goodhart’s Law shows the dynamics at play: Individuals who are aware of a system of rewards and punishments will optimise their actions within this system to achieve their own best outcome.

In other words policy makers come up with a solution to a problem without spending much time figuring out whether they actually know how to solve that problem. de Vos turns his attention to black economic empowerment and its raison d'etre

A good example of a failing policy is Broad-Based Black Empowerment (BEE) legislation and its regulations. The problem of lack of participation of black people in the formal economy and racial inequality is the problem to solve.

And in one sentence he sums up the fuck up that is best described as bob's folly

What we get is a a complex scheme of BEE regulation and arcane rules.

 He could stop there, the points is made, but he's far too an analytical journalist.

The only interesting thing about BEE regulation is about they reveal about what the drafters of the rules think private firms work. Well, they don’t work in the way the BEE codes suggest they do. They work in all sorts of different ways. Still, the BEE regulations provide a system of rewards and punishments. They are also thoroughly gamed: they get manipulated by a range of actors from failing white-owned companies, specialist BEE advisers (I'm one you know - in the business of making white people look black) , funders, crony capitalists and those with a talent for manipulating state procurement budgets.

I think he must have been reading this blog.   All this bullshit about voting rights and board meetings and the like - these are done by large companies.  Since when does the average smallish to large business actually sit down and conduct a board meeting?   bolshie bob obviously knows the answer.  I once heard that idiot being interviewed on the radio and telling all those who care to hear his deluded voice that he will insist that CEOs start getting involved in the operations of small black businesses.  Huh? - what would a CEO or even a high end employee be able to tell a small business about running their business.  It was Anglo, in their submission of comments on the revised codes who asked the very pertinent question.  What do we know about running a supplier's business? We are miners - we mine shit and then send it off.  But we could start working on companies upstream - we could advise them on the best ways to manage the raw materials we produce.  No! says bolshie bob.  It's all about suppliers. What fucking drivel.  Back to de Vos

Sadly, the response to the unsatisfactory outcome is to swap out some of the original rules, sub-rules and sub-sub rules with a whole raft of new rules that are equally misguided and arguably worse because they are combined with additional rules addressing issues of enforcement.

And so we bring in the awesome awdoz and SANAS.  SANAS is so concerned about process and paperwork that if has failed to take into account that all companies are doing is producing documentation to support stuff.  The actual benefit that is being derived is not measured.  de Vos absolutely hits it here.

Black empowerment won’t be advanced by better enforcement of BEE regulations. The whole scheme of BEE is wrong-headed.

And he correctly concludes with

Of course, the original problem, namely the exclusion of the black majority and inequality has not gone away and, in some respects, the original problem has got worse.

I can only hope that Cyril is reading this.  I have lamented often on this blog as to why have they made the codes so difficult to understand and even harder to measure.  I think I know one of the underlying reasons and this has to do with lobby groups like the broke black business council - who are now returning to BUSA (apparently Cyril wants business to speak with one voice).  I suspect that these lobby groups are attempting to use apartheid-style policy making where you make a certain class of people adhere to "arcane" rules and exempt others - thereby making it easier for that exempt class to gain access to the lucrative government business (a broke government I need to stress).  It's all in the name of trunceformaysheeyin.  

Solidarity and the Constitution - BEE's big test starts today

There is a court case being heard by the Constitutional Court today.  

The Constitutional Court is on Thursday expected to hear a case brought by trade union Solidarity and the South African Restructuring and Insolvency Practitioners' Association (Saripa) challenging the constitutionality of BEE and affirmative action. The court case relates to the abolition of the Department of Justice's appointment policy insofar as liquidators are concerned, according to a statement issued by both Solidarity and Saripa

I have mixed views on this.  If the ConCourt finds that BEE is not constitutional then I am without a job.  But I recognise that this kind of challenge is very overdue.  I have written about BEE and the constitution before and I am quite sure that there are strong arguments that the policy itself is not constitutional. It seems very obvious to me that the drafters knew that as well - that's why they state in the codes that these codes are mandatory for all organs of state and public entities (paragraph 3 of  statement 000).  It then spreads its reach saying that if you want to produce a scorecard because you do business with those entities or entities that do business with those state entities then this is the way to go.

In effect this clause makes the process voluntary.  However I think the problem isn't so much that the policy exists - the problem lies in the unreasonability of the codes and the way they are being foisted upon us.  SOE's are extraordinarily arbitrary when it comes to what they want.  We know that there has been major looting in the name of BEE.  dud miyeni (perhaps deadduck miyeni would be a better name) was more than happy to steal from SAA in the name of transformation, Eskom did the same with trillian and the atpugs.

I don't think that the country would survive without the policy but the policy will not survive with these codes and the idiots at the dti who write them.

 

Breakfast BEE sessions, a sort of report back even though they aren’t finished yet

Five out of the seven planned sessions are over. They are small and focussed. David Kalmin knows his clients and I know mine. The initial purpose of these sessions was to let our respective clients know that we are on top of what's coming. I think the difference between our sessions and most other commercial ones are that we have solutions and answers and we can express those within two hours. It's possible to go over two hours but I think we'd lose the listener.

The sessions are broken up into two sections

1. The first hour or so is my introduction to the codes. Most often when people bore you with their six hour sessions is that they go into the most laborious detail about this principle and that fronting and this code and that code and, and, and, ad finitum. My starting point is the grounding principles of the codes, any code for that matter. If you cannot link your interpretation to those principles, then you are never going to beat any allegation of fronting and most importantly you're not going to convince your empowerdexadrine that your interpretation is sound. There is no one interpretation and no correct interpretation. Everything is up in the air and it's not that hard. Some of things I cover are
   1. Verification. How can a scorecard be issued under the new codes when the market is used to old codes pricing
   2. Management/control and the dreaded EAP. It is what it is. I won't go into the ridiculous complexity of these calculations. They take me an afternoon to do anyway. But I will tell you about the Prison's case and regional EAP
   3. Skills Development. 6% is a massive target and is made more onerous when you consider the EAP. We know that category F and G training is a no go – but does this mean that all inhouse training can only contribute 15% to the target. No.
   4. And then there are ABET interns. The codes have no issue with that.
   5. Procurement can be solved by incorporating supplier development into your procurement plan. This is not a small mom and pop store, but a proper, legitimate business.
   6. And what about Peter Green. I have managed to sneak in a Peter Green story into skills development.
   7. Often the presentation is changed to talk to those companies that I know so well
   8. All of this is couched in my somewhat unique presentation style.
2. David covers ownership and the modified flow through principle and tax efficient options.

There has been a large demand for inhouse sessions. We'll cover everything you need to know in two hours, give or take half an hour. If you think this could be beneficial for your company contact me and I'll come and deliver it at your offices for a fraction of the price of sending your staff on one of those rather drawn out courses that are being offered.

The pic shows David delivering a different view on ownership

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.

 

Related articles

Measurement of ownership - when?

Marcus: Abil placed under curatorship

What’s wrong with this picture? And we thought the BMF were on the road back to credibility

There should be consequences for companies who do not comply with black economic empowerment, the Black Management Forum said on Wednesday. "These companies should be published in a public register and have meaningful fines imposed on them," the forum's managing director Nicholas Maweni said in a statement. (to parliament)

There we were hoping that once the arch racist Jimmy Manyi had left the BMF that they would start making sense again – and possibly picking up the pieces of their shattered reputation and begin contributing constructively to business issues. Alas – this is not to be. Not only is this a most ridiculous statement but it lacks any form of legal basis. It's been said before and so I'll say it again.

BEE is a voluntary process. It's never been anything other than that. The BEE Strategy document, which predates the BEE Act didn't go so far as to suggest that the process must be made compulsory. Paragraph 3.4.2 says

Black Economic Empowerment is an inclusive process. The process of BEE is an inclusive one, and all enterprises operating within South Africa CAN, AND INDEED SHOULD, participate in this process. This strategy will be implemented throughout all sectors of the economy and is not limited only to those enterprises that derive income from government procurement or those where the sector is regulated by government.

You'll notice that there is no imperative here. Words like compelled, required or must do indicate a certain element of having to do things. (By the way – that strategy document is still a very good document and contains a number of principles and ideas that have somehow lost their way in the last 10 years)

Things are a little different in the 2007 dti codes of good practice where public entities and state-owned entities are compelled to be measured under the codes. (Code Series 000, Statement 000)

3.     Application of the Codes

3.1     The following entities are measurable under the Codes:

3.1.1     all public entities listed in schedule 2 or schedule 3 (Parts A and C) of the Public Finance Management Act:

3.1.2     any public entity listed in schedule 3 (Parts B and D) which are trading entities which undertake any business with any organ of state, public entity or any other Enterprise, and

3.1.3    any enterprise that undertakes any business with any organ of state or public entities;

Paragraph 3.1.3 simply states that if you want to do business (or economic activity as Rob likes to call it) with organs of state or public entities then you are measurable under the codes. It's paragraph 3.1.4 that emphasises the voluntariness of BEE to the private sector that doesn't do business with the state etc.

3.1.4    any other enterprise that undertakes any business, whether direct or Indirect, with any entity that is subject to measurement under paragraph 3.1.1 to 3.1.3 and WHICH IS SEEKING TO establish its own B-BBEE compliance.

Even Rob who thinks he knows what he is doing (although the evidence is overwhelming that he doesn't) didn't change this paragraph that much to force companies to comply with BEE. In fact Rob left paragraph 3.1.4 unchanged in his revised BEE codes. Perhaps Rob understands that compulsory compliance would not pass constitutional muster (I wrote a long piece on BEE and the constitution here).

We can therefore ignore this reactionary submission and hope that one day the BMF starts earning respect at some stage – this is not the way to go about it.

Daily Maverick - BEE: You cannot reform it so scrap it

1. BEE perpetuates racial discrimination. Racial discrimination was wrong during Apartheid times. It continues to be wrong in post-Apartheid times. The Population Registration Act was abolished when Apartheid ended, with good reason. Without it, what basis is there for identifying South Africans as belonging to one of the four (only four!) racial groups?

2. BEE is monumentally expensive. It diverts money away from productive uses – e.g. education or investment in infrastructure – and to the creation of departments, inspectorates and accreditation agencies that contribute nothing to the economy.

3. BEE deters local and foreign investment. Not only because it is onerous and costly, but also because it is complex, opaque and subject to change without notice. It is a drag on the economy that contributes to unemployment and low growth.

4. BEE is unjust. It excludes the vast majority of the population from its supposed benefits, and instead creates a society of insiders and cronies.

5. BEE covers up problems. It creates the illusion that we are creating a more integrated economy and society, when what we are really doing is perpetuating a society split in two – between well-educated haves and poorly-educated have-nots.

6. BEE does not work because it diverts attention from the real problem: collapsing education. If as much attention were focused on education as on BEE, South Africa would be on a much better footing.

7. BEE is immoral. It gives the poor, who are mostly black, the illusion that the government is doing something to improve their lot, and it allows whites to think they are buying social peace at a reasonable price. Both are mistaken.

via www.dailymaverick.co.za

Good arguments.  The problem with this line of reasoning is that the government will see it as a predominantly white argument that attempts to entrench their hegemony.   I can't see that they'll scrap BEE and I don't think that the government specifically needs to officially scrap it.  If they continue on their current transformation agenda the policy will die a very natural death because it is impossible to implement.  We are seeing the fruits of this in the mining sector and we will certainly see this happening if Rob and DTI get their codes gazetted.

B-BBEE Target Compliancy Increases - not as soon as Ms Kerr surmises

From 9th February 2012 compliance targets for Employment Equity and Preferential Procurement significantly increase.

Employment Equity and Preferential Procurement elements of both the qualifying small enterprises (i.e. enterprises with a turnover of between R5 and R35 million per annum as per the generic scorecard) and generic enterprises (i.e. enterprises with a turnover of over R35 million per annum) will be affected.

“This means that if your business is not already meeting and exceeding the increased targets, your organisation will lose points in these elements. This will result in a decreased BEE Rating for next year, which could have a significant impact on your bottom line,” explains Siyakha Consulting’s executive director Dionne Kerr.

“When looking at the increased targets, you need to know if you are putting the necessary interventions in place to ensure that you remain at your existing rating level, or to improve your score on these elements,” she adds.

via www.themarketingsite.com

NOW HERE IS AN EXPERT.  What she doesn't know about arithmetic she certainly knows about BEE.  I, however disagree with her.

 

When do the new targets kick in?

I was pleasantly surprised when I was asked to post something of an informative nature, something that doesn't allow me to opine in my typically cynical fashion. And so with no prejudice in my brain I write.

There are two elements that have increased targets for the years 6-10 viz

Employment Equity. Total points – 18 (including 3 bonus points)
Description	Weighting points	Interim Target (Years 0-5)	Compliance Target (Years 6-10)
Black disabled employees as a percentage of ALL employees using the ARFG	2	2%	3%
Black employees in senior management as a percentage of all such employees using the ARFG	5	43%	60%
Black employees in middle management as a percentage of all such employees using the ARFG	4	63%	75%
Black employees in junior management as a percentage of all such employees using the ARFG	4	68%	80%
Bonus Point for meeting or exceeding the Economically Active Population (EAP) targets in each category above	3

 

Preferential Procurement. Total points – 20
Description	Weighting points	Interim Target (Years 0-5)	Compliance Target (Years 6-10)
B-BBEE procurement spend from all suppliers based on the B-BBEE procurement recognition levels as a percentage of total measured procurement spend	12	50%	70%
B-BBEE procurement spend from all Qualifying Small Enterprises (QSEs) or from Exempted Micro-Enterprises (EMEs) based on the applicable B-BBEE procurement recognition levels as a percentage of total measured procurement spend	3	10%	15%
B-BBEE procurement spend from any of the following suppliers as a percentage of total measured procurement spend: suppliers that are 50% black owned (3 out of 5 points); or suppliers that are 30 % black women owned (2 out of 5 points)	5	15%	20%

 

There is no clear indication from the codes as to when the sixth year occurs. The only hint as to time in the codes comes from paragraph 13 of Code 000, Statement 000

13 2 The Minister will review the Codes following the end of the tenth year following the commencement date of this statement, despite the aforementioned, annual reviews will take place to monitor the implementation of B-BBEE throughout the economy.

It follows then that this review will be conducted on the 10^th of February, 2017.

The targets therefore measure the performance within the period that the codes contemplate. This table should explain it

Period	Year number
Feb 9, 2007 – Feb 8, 2008	0-1
Feb 9, 2008 – Feb 8, 2009	2
Feb 9, 2009 – Feb 8, 2010	3
Feb 9, 2010 – Feb 8, 2011	4
Feb 9, 2011 – Feb 8, 2012	5
Feb 9, 2012 – Feb 8, 2013	6
Feb 9, 2013 – Feb 8, 2014	7
Feb 9, 2014 – Feb 8, 2015	8
Feb 9, 2015 – Feb 8, 2016	9
Feb 9, 2016 – Feb 8, 2017	10

You'll see that the targets are very clearly split into two with the words "years 0-5" and "years 6-10".  The specific mention of 0, in the years "0 - 5" means that you are measuring from February 9, 2007.  Logic would then dictate that the period "6 - 10" must start from February 9, 2012.   I think that Vuyo "Aristotle" Jack (and Kyle Harris) would agree with me. Their agreement is actually by accident because their proof reader didn't pick up that the sentence below is actually in the wrong element

Measured entities must realise that unless they increase the measured spend from the beginning of the sixth year of measurement, their score will decrease significantly.

Page 263 (under the Employment Equity element) – Broad-based BEE, the Complete Guide

I'm willing to stake my reputation for tolerance here that the sixth year that Jack and Harris refer to is the sixth year of the codes.

What about the verification period?

I doubt that there is anyone that will disagree that this interpretation is incorrect. However the world of BEE is never that clear. The big issue here is the verification period. Everyone knows that all you have to do is measure a 12 month period. Does this mean that if you measure from 1 July, 2011 to 30 June, you should measure your EE and procurement targets in two phases; 1 July to Feb, 8 and then from Feb, 9 to 30 June? It might be measurable but I wouldn't know how to allocate a score on this, you'd have to use some sort of average system.

That can't be it. I put it to you that if your measurement period ends beyond half way through year six then you must use the enhanced targets. In other words if you are rated on the period from September, 2011 to the end of August 2012 then you must be measured using the new targets. Everything before that must be measured using the 0-5 year targets.

Thanks for asking for this post – now distribute it freely and invite me to present at your next conference for a nominal fee.