Paul Janisch

A reader responds to a writing reader

This is in response to the "A reader writes - SANASking too much" post of October 30.

This is most disturbing. 
Section 22 of the Constitution allows every citizen the right to choose their own trade, profession or occupation. While this section permits the regulation of trades, professions or occupations by law, read with section 36, a limitation on who can ply a trade, profession or occupation must be in terms of a 1) law of general application and 2) justifiable in an open and democratic society based on dignity, equality and freedom, and 3) taking into account all relevant factors. 
So, simple truth is, let's see if DTI has the balls to pass an Act of parliament to give effect to this. If they don't, somebody is going to make them look stupid...
Hey, we can call it Nationalisation.... 

SANationalisation perhaps.  No that's weak (is this a metaphor?).  But he's correct - this is a very apparent violation of section 22, if it is correct.  Once again I await comments from SANAS and the DTI.

 

DTI have updated their training website

Might have been that I was a little hasty in my post yesterday.  I checked the website and they've updated the content under "BBBEE Management development programme at NQF level 7".  The rest is still somewhat opaque.

It's a start - now will someone please register on this course and let me know what it's like.

DTI's new B-BBEE (off) course

There was much fanfare with Rob telling the whole world that

The Department of Trade and Industry (the dti) in partnership with UNISA and WITS have developed a standardised national Broad-Based Black Economic Empowerment (B-BBEE) Management Development Programme (MDP). The program gives impetus to institutionalisation of B-BBEE within the economic system and to professionalise the current B-BBEE Industry.

Being a Wits graduate, I naturally asked no questions about this at the time.  I happened to be on the DTI's website the other day and saw the notice on the front page.  The hyperlink takes you to an impressive PDF document (with one minor typo).  This same notice tells us that the "B-BBEE Management Development Programme (MDP) is a short certificate programme" and will take registrations from the 1st of September, 2011 (that was 4 days ago).  To register you can go to: bbbee.traininggateway.co.za.  

And what exactly to you get when you go to bbbee.traininggateway.co.za?er..................not much.  An impressive front page and great contact page.  But as far as the course itself is concerned, when you go to the short courses link well all you get is 

And when you go to the bursaries link you get

Say you wanted to know more about this programme, well then you'd click on the Need to know more link (well that's what I did).  This is even more incomplete than the other stuff - just a lot of ad valorem, ip adsum, major excretum words.

You can register with them but it takes you nowhere

Welcome Paul! Home  |  Survey complete!  |  My status  |  My profile  |  Contact us

EFT details

Our EFT banking details are listed below: Amount: TBC Reference: 77062525188082 (details have been changed to protect the detractor) Recipient: TBC Bank: TBC Account no.: TBC Type: TBC Branch: TBC Branch code: TBC Once you have completed the payment, please forward proof payment to accounts@traininggateway.co.za

The training gateway How it works? Why? Support Help desk FAQs Courses What's available Coming soon Security / legal Privacy policy Security policy

All content copyright the dti Powered by InvestZoo

I'm not going to ask you to forgive my cynicism because by now you'd expect it.  But this is so typical of the DTI - lots of big words and fokol else.  Why do you play into my hands Rob, can't you just prove me wrong for once!!!!

And when is this thing going to go live?  The industry really needs it.  I'll be the first to endorse it when it comes up - tell you what, let me be the guinea pig on the course.

 

 

The DTI's big stick

Do we need to be concerned about what Rob and the souls are the DTI are sprouting from their mouths,  especially when it comes to enterprise development?

The first thing I paid attention to was Rob muttering  "companies would have to be actively involved in fostering small businesses" in April this year.  I thought this was the stupidest idea ever (amidst all the competition for stupid ideas), and I have not changed my opinion on this.  However it has now found a close competitor.  

This quote is attributed to Sipho Zikode who is the deputy director-general for empowerment and enterprise development at the DTI.  He mentioned this at the launch of the NEF's ED plan (which we need to approach with a great deal of caution).

Zikode gave warning at the launch that there were proposals to increase the requirements of the scorecard. He aimed his warning specifically at so-called qualifying small enterprises.  We have found that some of these companies quote things they were going to do anyway as part of their empowerment efforts and claim that as a credit for participation in the transformation of the economy"

And then threatened us with 

"That is why there is a proposal now that all seven elements will have to apply (to these companies too)."

Let's go back to the first paragraph, it's quite clear that he is referring to enterprise development (he was after all speaking at an ED launch).  Is he saying that ED should be extraneous to your business - like Rob is suggesting.  In other words if you do do something that benefits both your business and the ED beneficiary but it is linked to your business you can't claim the points.  That's how I read this. 

This is quite simply ludicrous.  And again it demonstrates how little the DTI understands both capitalism and how BEE might grow the economy.  Which of course should not come a surprise considering that Rob is a serious player in the SACP.

But then who are we as the people who actually pay the taxes that fund the tenderpreneurs and other scam artists to tell the DTI how to go about BEE et al.  What the fuck, we'll try anyway even though we know that we will be continuously threatened with more onerous policies, taxes and other types of blackmail, for so-called "lack of transformation".  Never once has the DTI actually recognised the BEE strides that the private sector has made in the last four years - it's always another threat and another law.   What the DTI should do is claim (undeserved) credit for what has been done - maybe that's the converse approach.

And so, as a result of a clear lack of understanding, the DTI is going to make compliance even more onerous.  The upshot will be that scores will drop dramatically.  If this should happen I will go on a single person crusade to educate the larger corporates that they cannot expect such great scores under procurement because the DTI have now made it twice as difficult to comply with a concept that they barely understand. 

 

A BEE regulator for us - maybe, is there a vacant position

The dti is getting proactive, well at least they are proactively saying that they are going to be proactive.  A regulator is going to be introduced to "curtail some forms of fronting".   And this is at the behest of ABVA.  Now that I have paraphrased this article I'm going to cut to the chase.

Chris van Wyk, ABVA's chairman, says that the codes are too vague and as a result "fronting" might occur.  Then Sidwell Medupe states that this is wrong and throws in a PW Botha-ism

 “The dti would like to state categorically that the above-mentioned statement is factually incorrect. In fact our minister has previously alluded to the fact that the verification industry is partly responsible for this scourge.”

The point is made, even though it makes light of Chris' original statement.  But what is the dti going to do about it?  They are responsible for all aspects of BEE.  They provide us with the Act, the Codes, the Charters and............................SILENCE.  That's right, when it comes to the crunch the dti remains silent.  This ridiculous mess with Keith Levenstein and charters is but one example.  Where was the dti when the industry needed them?  Out to lunch I think.  

It's no real surprise that the dti has only ever focused on fronting, labeling it a scourge and vile practice and other euphemisms, because fronting is safe.  You don't have to even understand fronting as well as Levenstein to talk about it.  But we in the know regard the dti's silence on the vagueness of their codes (Chris van Wyk reckons there are about 102 mistakes - he can't have read the codes beyond page 40 then) as a problem.  Consequently we cannot be surprised that the BEE industry (if I may call it that) has had to resort to self-regulation.  In fact the last place you want to go for clarity or advice is the dti.  ABVA must be congratulated for actually managing the industry as well as it has over the last few years, excluding those years when they were completely ABVAcant.

The time has come for the dti to take control, drop the fronting front and show some real leadership.  My sources tell me that Nomonde is doing a great job fighting all sorts of political battles to get stuff done.  Our patience is wearing thin, tell us where we can help (without mentioning fronting) and we'll get involved.

And now a little ditty for the dti (for those who don't know, Sid Vicious played bass about as well as the dti understands BEE, it's not him playing on the track)

 

 

Encumbered wealth

Solidarity published a study that found

Black ownership on the JSE was at 23,8% in 2008, compared to the nearly 5% in 1993. Further, Solidarity expected that ownership would increase to as much as 34% by 2012.

The DTI weren't happy with this finding (predictably, neither was the largely irrelevant BMF). 

DTI BEE director Nomonde Mesatywa said that the it appeared that the survey only focused on measuring indirect ownership through pension funds, medical schemes and insurance polices.

In addition, she said that unlike the finding of Solidarity, government had agreed on a 40% benchmark in terms of measuring indirect ownership.

"In relation to the Solidarity findings of 23,8% it is still far below the 40% mark.

"Further, the actual direct ownership in the JSE listed companies is still encumbered, therefore it is premature to suggest that the implementation of BEE has contributed more to the development and promotion of a black middleclass than is recognised," she commented.

It's not a bad statement, in fact I recommend you read it anyway because it shows the Nomonde is no slouch when it comes to understanding broad-based BEE. In fact, well Nomonde this was a very well balanced view and very nice to read.

It's this of encumbered wealth that worries me – everyone I know (except for my wealthy banker mate) has encumbered wealth. My house is encumbered, my car is encumbered, the amplifier I bought last month is encumbered. It takes encumberment to generate wealth. And this is the fatal flaw in the DTI's empowerment plan. This flaw is made up of two components

1. Wealth is only accumulated when the encumberment has passed. True but the fact that this person has access to these assets and allows them to sell them at a profit even if they are encumbered means that they will generate some cash (as per Mzi).
2. Empowerment is measured in terms of black representation and not value created by black people. This representation is so stupid. They should allow people to get in, make money and get out. It is getting so ridiculous now that the JSE is going to set up a separate board for these shares.

 

2009 BEE awards

I was looking through my predictions for 2009 and have to (humbly) confess that the Nostradamus way is not my calling.

• The FSC is probably going nowhere
• A bunch of charters made section 9 gazetting
• BEE scorecards have become necessary tools in doing business but are not a competitive advantage. It seems that each industry has a certain standard and if you don't meet that standard then you are at a disadvantage
• Treasury actually published updated regulations for the PPPFA and they included scorecards
• Verification agencies were accredited and before the elections too
• Can't say whether Empowerdex lost their market share to NERA – but they do seem to have lost the empowerdex.com domain

Now onto to 2009. It was one hell of a year for BEE as a policy. This is what I think were the most significant events

• Accreditation of verification agencies

I never thought this would happen. But it did and it looks as though a few more will make the cut too. I've prepared a spreadsheet that explains how much work verification agencies have on their hands in the next few years. I was fiddling around on a VERY FAMOUS verification agency's website and they proclaimed that to date they had done about 2000 certificates since they started. I have news for you VERY FAMOUS verification agency, you are going to have to do about 6,494 (I like to keep my speculative figures precise) next year. This is about 26 per day. If you'd like to check my figures - please do.

As a little postscript I have been very hard on the old VAs (but not hard enough on ABVAngelis) – I have just completed a list of procedures for a VA hoping to get through SANAS. This is a lot of work and a very expensive process. I expect I'll be doing a lot more of that next year.

• Rob Davies taking over the trade and industry ministry

This was a weird one. It seemed that Rob wasn't that interested in BEE and that he inherited a mess from Mandisi. I stand by what I have said about Rob, I think he's pushing for compliance over transformation, hoping that compliance will lead to transformation.

• Section 9 Charters

There were a bunch. Some gazetted by Mandisi and others by Rob.

• New PPPFA regulations

A bold move, even if they are in draft form. I'm not going to speculate as to when the final document gets published.

• NABC starts making a noise

The National Association of BEE Consultants. This is a total waste of time. As much as I dislike ABVA, at least they are organised. The NABC has no common agenda and lacks unified leadership. I cannot see how they are going to add any value to anything ever (oops there I go wearing my Nostradamus hat again)

• BEE advisory council

Good move Zumachine Gun. Let's see what they do in 2010.

• Expected demise of the FSC

The FSC seems to be dead in the water (on this subject the drafter of the new FSC annual report pinched almost everyone of my ideas from last year – don't they say imitation is the greatest form of flattery. It would have been nice to see a document that stuck to the actual tender requirements).

Good luck for 2010 – I am hoping to fulfil the Charlie Christian mantra throughout the year with each client (it is said that Charlie would play guitar if he got all three, but he was known to settle for two out of three)

1. Learn something new
2. Get paid
3. Have fun

And on the subject of fun – can anyone spell AC/DC.

Feel free to add your highlights in the comments section.

Zuma appoints members of BBBEE Advisory Council

I just got a call from Mzwandile Jacks telling me about the BEE Advisory Council that's just been announced.  This is what it looks like

1. Minister of Trade and Industry, Rob Davies.
2. Minister of Labour, Membathisi Mdladlana
3. Minister of Economic Development, Ebrahim Patel
4. Minister of Women, Children and Persons with Disabilities. Noluthando Mayende-Sibiya.
5. Professor Mohammed I. Jahed, professor of macro-economic policy, economics and public finance at the Wits University Graduate School of Public and Development Management.
6. Prof Eltie Links, a professor extraordinaire at University of Stellenbosch Business School
7. Wendy Lucas-Bull, a businesswoman and the founder of Peotona Group Holdings
8. Andile Lungisa, Chairperson of the National Youth Development Agency
9.  Sebenzile Matsebula, an independent consultant and former Director in the Office on the Status of Disabled Persons in the Presidency
10. Jerry Vilakazi, chief executive officer of Business Unity South Africa
11. Dumisani Mthalane, a member of the National Working Committee of the South African National Civics Organisation
12. Ellen Tshabalala, a business and management consultant with expertise in small, medium and micro-sized enterprises development, banking and marketing.
13. Adv Matshego Ramagaga, Vice-President of Black Lawyers Association
14. Tsakani Matshazi, President of the Association of Black Accountants and Vice-President of the Confederation of Black Business Organisations
15. Sidumo Dlamini, President of the Congress of South African Trade Unions
16. Sandile Zungu, businessman with extensive experience having served in various companies at a senior level including NAIL and Denel.
17. Don Mkhwanazi, a former president of the Black Management Forum
18. Dr Claudia Manning, businesswoman
19. Chantyl Mulder, senior executive for transformation and growth at the SA Institute of Chartered Accountants, who has served as facilitator of the BEE Charter process amongst other work on economic transformation.

It's the required 19 people with the exeception of the President who is required in terms of section 6(a) of the BEE Act.  I wonder if this will have an impact on the legitimacy of the council.

I would have liked to see more business representation.

Rob's our man - got his work cut out for him

With the Zumocracy (hopefully not a zoomocracy) comes a new cabinet and new minister of trade and industry.  A notice from the Presidency's website contains the list of new ministers and their deputies.  The one we BEE-types are most concerned about is the new minister and his deputies.  And here they are

Minister of Trade and Industry Rob Davies
Deputy Minister of Trade and Industry (1) Thandi Tobias
Deputy Minister of Trade and Industry (2) Maria Ntuli

Rob my man - you have a hell of a job on your hands.  I am only aware of the mess that is BEE, but I am almost willing to bet that the rest of the department is in a similar state.   I was sent an SMS on Thursday informing me that the outgoing (and apparently pissed-off) minister had gazetted the construction sector charter under section 9.  The sender remarked that said (now ex) minister was trying to push a series of things through to make his successor's life a misery.

We do know that he is going to receive a series of challenges to Mphalwa's proclamations.  Ivan van der Merwe of the NABC has taken ABVA and the DTI to the competition commission over Notice 354 of 2009.  And he is completely correct.  If there ever was any discussion as to whom this notice applies, the dti's website makes it very clear that it applies to everyone.  And I quote

as from 1 August 2009 certificates issued by VAs that are accredited and those that are not yet accredited but have received a valid pre-assessment letter from SANAS will be acceptable in the market

This must be stopped - it has no legal standing or substance and smacks of arbitrariness.

And if Rob thought that was all he was facing - he'd do well to read the opinion on the verification manual and interpretive guide prepared by Kevin Lester and Safiyya Patel of Edward Nathan Sonnenbergs. I have posted it without their permission, although Kevin did tell me that the DTI were aware of it.

It has been a while hasn't it

The title is courtesy of Hendrix at the Isle of Wight.  And the time has come to update the blog - to those new subscribers sorry for the delay.

The dti has been very busy recently.  They've published two new documents. 

The draft Tourism Sector Code: First Charter to be gazzeted (sic) under Section 9 of the B-BBEE Act

I rather like this one.  It is very similar to the codes but has a certain tourism angle that does not detract from the codes.  It does need a little modification to include section 21 companies (the ATKV are clients of mine and they would like to use it).
BUT
And there always is a but.  They have decided that only level 3 contributors may qualify for government work.  A noble thought that won't fly.  You see by reserving expenditure for a certain class of supplier you are implementing a set-aside policy.  And we all know that set-asides have been outlawed and yet they continue to make these pronouncements.

Is there something we should know here?  The only way that the government is going to meet its own B-BBEE procurement targets is by making use of set-asides.  I know jungle jim wants set-asides to be used, in fact I believe he has gone so far to suggest that government should get rid of the PPPFA and pay a premium to black suppliers.  Some people listen to him - I don't, but I miss him when he isn't shooting his mouth off.
What I mean here is, are set-asides going to become part of government procurement and is this charter a hint of what's to come?

You have until 20 August (this year - you must always ask the dti which year when they tell you something will be published by a certain month) to submit your comments to this address. Tell them Caird sent you.

the B-BBEE Verification Manual, 18 July 2008

I happened upon this by accident although I see that the press have picked up on it.  There are conflicting opinions about this guideline. It is decidedly thorough, I would suggest that it is too thorough.  And yes it will probably identify fronting and other shenanigans that we South African businesses are wont to get up to.  But it is going to wreak havoc with the verification industry - the level of verification is akin to an audit and it will be unviable for a verification agency to charge their low-end fees.  If followed to the letter it will push up the cost of verification beyond tolerable levels (as if they were tolerable at the moment).

It will only be the large corporates that can afford to pay audit-type prices for this - but will they?  Will verification be scuppered altogether as an unnecessary expense?

ABVA thinks this thing is great.  Roger - it's not often that I side with you lot, but this manual is going to have a detrimental effect on your industry.  Get them to sort it out - we know that verification is a necessary evil but only when it's commercially viable.

And then

We're not going to get accredited agencies by August (this year), SANAS has postponed the announcement again and they don't say why.  Roger, whilst you are discussing this with the dti, talk to them about the bloody manual.