Paul Janisch

Transformation or a smokescreen - the BEE codes are more of the latter

This is a post that I have been wanting to write for a long time.  I eventually wrote it as an article for Moneyweb, who published it on Friday and syndicated it to the Citizen (now I'm really famous).  I have been mulling this over for a long time.  Why is it that these BEE codes are more focused on driving a change of ownership than the broad-based emphasis they purport to advocate?  It's patently obvious that everything broad-based is a falsehood.  I found the answer in bolshie bob's Youth Employment Service practice note, specifically paragraph 1.13

1.13 EMEs and at least 51% Black Owned or more QSEs that participate within the Y.E.S Initiative will be verified against the Qualifying Small Enterprise Scorecard and the B-BBEE Certificate will be issued by an Accredited SANAS B-BBEE Verification Agency. This is also applicable to Sector Codes of Good Practice utilising the respective QSE Scorecard.

Here is the article.  It was cleaned up a bit by a MoneyWeb editor. You'll notice that I haven't referred to bolshie bob or the awesome awdoz.  Their real names are Rob Davies and Zodwa Ntuli (uppercase is an exception on this blog)

There is a very interesting clause in the practice note for the Youth Employment Service (YES) document that appears to defy any form of logic. 

The YES programme is now linked to the black economic empowerment (BEE) scorecard and promises to promote companies up to two levels if they employ unemployed black youth for a period of 12 months.

The clause states that exempted micro enterprises (EMEs) or 51% black-owned qualifying small enterprises (QSEs) that wish to claim this benefit need to get measured on the full scorecard before they can benefit from the YES promotion.

For the uninitiated, an EME turns over less than R10 million per year and a QSE between R10 million and R50 million. EMEs with less than 51% black ownership are level 4 BEE contributors, 51%+ black-owned EMEs are automatically level 2, and 100% black-owned businesses are level 1 – which is the top of the BEE pile. The same levels apply to 51% black-owned and 100% black-owned QSEs. All other QSEs need to go through the rigorous, onerous and expensive process of implementing a BEE scorecard and taking the level that this process delivers.

It must be stressed that the process is costly, complicated and unlikely to deliver great results if your company has little (10% or less) or no black ownership. In my experience, a level 8 (which is the entry level to the scorecard) is pretty much what most companies would have to settle for without black ownership.

Why?

This begs the question – why would an exempt micro enterprise that is automatically a level 4 go through a verification to get to a level 7 or 8 and then embark on the YES programme to be promoted to a level 5 when they are already a level 4?

Similarly, why would a 51% black-owned QSE want to get verified in the hope that they come up with a level 3 and then go through the YES process to get to a level 1, when they are automatically a level 2?

And why would a 100% black-owned company even bother with YES?

Herein lies the conundrum. Minister of trade and industry Rob Davies has been forced to exclude smaller businesses from his YES programme even though they are the most likely employers of black youth under the YES programme.

The only logical reason he has done this is because a level 4 can get to a level 2 within a year just by employing a number of people that the business might actually need. But then this would pose a threat to black-owned level 2 and 1 businesses when it comes to state procurement.

There is a five and six preference point advantage, depending on the value of the tender, between a level 4 and a level 2 under the 2017 Preferential Procurement Policy Frameworks Act (PPPFA) regulations. This perceived threat to smaller black-owned businesses has to be mitigated against by discouraging lesser owned competitors from reaching their own BEE levels through any programme that promises a promotion of a couple of levels.

The minister himself has tacitly confirmed the onerous nature of the revised BEE scorecard by publishing a proposition that all 51%+ black-owned companies should all be promoted to level 2 irrespective of their turnover. I have a 100% black-owned client that is over the R50 million turnover threshold that could not get better than a level 5 when we took them through the whole BEE scorecard. This company would have truly appreciated the instant promotion that would have come at a fraction of the cost and hassle.

Dubious motive

These developments have me questioning the motive behind the revised BEE codes.

The department of trade and industry (dti) crowed that these codes were more broad-based than ever, stating that they will touch more of the people who need this empowerment than its predecessor.

But if this is the case then surely all companies, irrespective of ownership levels, should be involved in the process? The more companies that hire black people, train them and buy from black-owned businesses and support the black poor, the greater the impact on the economy and society in general.

Yet 51% black-owned companies that turn over less than R50 million don’t have to contribute to any of this because they aren’t measured on it.

I think the reasons behind this are simple, and I must confess that I have been unduly influenced by Institute of Race Relations CEO Dr Frans Cronje’s arguments about the national democratic revolution.

Cronje argues that the National Democratic Revolution (NDR) led by the ANC strives to rid South Africa of all the vestiges of its colonial past. Part of this process would see 51% of the entire economy in black hands. The reward for those companies reaching 51% would be that they may never have to implement a BEE scorecard at all. Everyone would be a level two or higher. And the need to support black-owned businesses and charities would disappear because all businesses would be black-owned.

Punitive

To someone like Davies, a member of the South African Communist Party, this is the purest and cleanest form of transformation.

But it is a very lofty ideal that is unlikely to be achieved in a free market economy. Those companies that do not wish to adhere to this ownership target will be forced to implement the complex BEE scorecard.

This is simply a punitive alternative. Its punitiveness is enhanced when you consider that the targets for elements like skills development, procurement and enterprise/supplier development are not only complex but extremely costly. It attempts to force smaller businesses to get to the 51% black ownership level in the quickest possible way. This pressure has resulted in many smaller white-owned businesses moving to 51% ownership through elaborate empowerment schemes that irritate BEE Commissioner Zodwa Ntuli because she is powerless to curtail them.

Once this concept is understood it becomes quite clear that the codes are less concerned about broad-based transformation and more concerned about giving black-owned businesses a massive competitive advantage over their lesser owned competitors, specifically in procurement that is subject to the PPPFA. To ensure that this advantage is maintained Davies has set up a series of codes that render it almost impossible to meet those levels when a company has to implement the BEE scorecard.

The exception that should be the rule

What is interesting though is that there is one sector code that is never expected to achieve 51% black ownership – the Financial Sector BEE Code (FSC).

This is because of listed shareholding and the requirement of the Banks Act that any shareholder with more than a 15% stake in a bank must meet certain liquidity requirements in the event that the bank requires the shareholder to bail it out.

The FSC is the only BEE code that focuses on the transformation of the entire sector by encouraging those companies to embark a wide range of initiatives that reach the largest amount of people.

I would argue that it is truly a broad-based code.

As for the other codes – they are a smokescreen and if they actually achieve any form of transformation in the future it will be an unintended consequence.

The transformation of South Africa will not come about as a result of those codes. Corporate South Africa needs to prepare to shoulder the blame from this fallout as it has for the government’s failures in the last two decades.

 

 

The Construction Code - el revisedo

Here it is. Took a while to find it, the dti haven't put it or the revised FSC up on their page yet.

Apparently the new FSC has been gazetted

And there I was thinking that this awesome government would have kept it under wraps so as not to tip the economy over.  As abagig says - "transformaysheein uber alles".

This is going to be a nasty document - specifically under skills.  I have a blog post that I want to write about possible anti-competitive behaviour from the larger listed entities (banks, insurance companies etc).  My story won't be empirical but I find it interesting that you can put these targets under skills development. This is not about skills spend on external people, this is about internal skills development at different levels of management.  The only reason why those large companies would have agreed to this is because they can achieve the targets.  If anyone can send me an EEA4 from one of those organisations I can write a story to that effect.  I can assure you the institution in question won't be mentioned. 

Description			Points	Target
2.1	Senior management		2
	2.1.1	Skills development expenditure on learning programmes specified in the learning programme matrix for black senior and executive managers as a percentage of the leviable amount applicable to this level	1	2.00%
	2.1.2	Skills development expenditure on learning programmes specified in the learning programme matrix for black women senior and executive managers as a percentage of the leviable amount applicable to this level	0.5	1.00%
	2.1.3	Skills development expenditure on learning programmes specified in the learning programme matrix for African senior and executive managers as a percentage of the leviable amount applicable to this level	0.5	EAP%
2.2	Middle management		2
	2.2.1	Skills development expenditure on learning programmes specified in the learning programme matrix for black middle managers as a percentage of the leviable amount applicable to this level	1	3.00%
	2.2.2	Skills development expenditure on learning programmes specified in the learning programme matrix for black women middle managers as a percentage of the leviable amount applicable to this level	0.5	1.50%
	2.2.3	Skills development expenditure on learning programmes specified in the learning programme matrix for African middle managers as a percentage of the leviable amount applicable to this level	0.5	EAP%
2.3	Junior management		3
	2.3.1	Skills development expenditure on learning programmes specified in the learning programme matrix for black junior managers as a percentage of leviable amount applicable to this level	1	5.00%
	2.3.2	Skills development expenditure on learning programmes specified in the learning programme matrix for black women junior managers as a percentage of the leviable amount applicable to this level	1	2.50%
	2.3.3	Skills development expenditure on learning programmes specified in the learning programme matrix for African junior managers as a percentage of the leviable amount applicable to this level	1	EAP%
2.4	Non-management staff		4
	2.4.1	Skills development expenditure on learning programmes specified in the learning programme matrix for black non-management staff as a percentage of the leviable amount applicable to this level	2	8.00%
	2.4.2	Skills development expenditure on learning programmes specified in the learning programme matrix for black women non-management staff as a percentage of the leviable amount applicable to this level	1	4.00%
	2.4.3	Skills development expenditure on learning programmes specified in the learning programme matrix for African non-management staff as a percentage of the leviable amount applicable to this level	1	EAP%
2.5		Skills development expenditure on learning programmes specified in the learning programme matrix for black unemployed people as a percentage of the leviable amount	4	1.5%
2.6		Skills development expenditure on learning programmes specified in the learning programme matrix for black people with disabilities as a percentage of the leviable amount	1	0.30%
2.7		Number of black people, (employed or unemployed) participating in learnerships, apprenticeships, internships or Category B, C or D programmes as a percentage of total employees	4	5.00%
		Total	20
2.8		Bonus Points: Number of previously unemployed black people Absorbed by the measured entity/industry at the end of the learnerships, apprenticeships, internships, or Category B, C or D programmes.	3	100%

 

 

 

 

 

abagig the orator and budget speech deliverer

Not the most eloquent of people.  But I listened to it and I thought it was well delivered. He seems to have balanced zuma's pilfery well with a country that hates him.  But this is not a platform to comment on gigaba's speech (and yes he will remain in lowercase because he is in fact a zuma/gupta patsy).  However he did speak (just like Johnny Rotten would) about the transformaysheein of the financial sector.  He says he and bolshie bob are in favour of the latest draft of the FSC and that some NEDLAC meeting will happen net year to align this with the joke that are bob's revised codes.  And I quote

Honourable Speaker, we also need a transformative financial sector – a sector that is not only transformed, but is transformative to the economy. The Standing Committee on Finance has done excellent work over the past few months holding hearings on all aspects of financial sector transformation. There is consensus that more can be done in transforming the sector. Their draft report carefully balances the competing interests of the nation as a whole, foreign investors, borrowers, lenders and ordinary South Africans.

This report will assist in preparing for the Financial Sector Summit that we hope will be convened early next year, so that we can take stronger steps in developing appropriate targets for the Financial Sector Charter which accelerate broader transformation.

In the interim, Minister Davies and I support the latest version of the financial sector charter all stakeholders have developed in the last two years, to comply with the latest BEE codes. The development of Sector codes is an integral and strategic vehicle to advance transformation in the economy at sectoral level. Sector codes provide sector stakeholders an opportunity to develop a common vision for the growth and transformation of their sector.

The new financial sector code, supported by all stakeholders, sees transformation as being about not only ownership, but also skills development, targets for empowerment finance, access to credit, management control, and the provision of services to previously underserved areas.

I don't know which draft that is - but this one has been doing the rounds for the last couple of years.  If asked - I have no idea where and how I got it. It's a Word document - that makes for great editing.

Let's see where this takes us 

Related articles

Draft PPPFA regulation disgust (discussed and cussed)

Has Treasury been captured by the black business lobby?

They call them QSFIs in FSC speak and use the old codes, awdozn't that sound nice

It's a strange business this BEE business, we all keep our little schlenters to ourselves and leave the rest of the world in the dark.  I can assure you dear reader that there are a number of schlenters that I have devised and still use - in spite of SANAS' best intentions to close them off.  However, like Makhosi Khoza (note the uppercase and you really should watch her interview on SABC this morning, it's at the end of this post) I cannot keep silent when it comes to qualifying small enterprises under the FSC - more accurately Qualifying Small Financial Institutions (QSFIs).  A debate has been raging since bolshie bob published his revised codes as to what scorecard you use.  

Perhaps we should see the Financial Sector Code in historical context before I launch forth.  The current FSC (gazette number 35914) was gazetted in November 2012.  This was during the period that bolshie (the terrible) put his revised codes out for comment.  I believe that bolshie's intention was to distract the financial institutions from commenting on the revised codes (not that he would have read them anyway) by giving them their own code.  That has to be the reason because why would you gazette a code that is so similar to the codes that you are going to replace?  It's a distraction.  They were obviously in a hurry because they forgot to gazette a QSE code.  bob sent out a notice a year later that QSFI's should 

 in the interim utilize the Qualifying Small Enterprise scorecard of the Generic Codes of Good Practice for the purpose of measurement of their B-BBEE status.

This notice was a month after the gazetting of the revised codes, but we were still in the interim phase of their application.  In addition bob had still not bothered to publish the revised QSE codes (those were published about 18 months later).  This notice therefore has to apply to 29617.

The FSC is now almost five years old and for some reason there is still doubt as to what code you should use for QSFIs.  This was in spite of the fact that 

1. The FSC code refers to the old codes for clarity in certain places
2. The criteria for being a QSFI are based on turnover between R5m and R35m and designated investments less than R50m
3. When the QSFI code was ultimately gazetted then QSFI's could select 5 out of the 8 elements for compliance - a strong feature of the old QSE codes.
4. The EME threshold is below R5m
5. The score was measured on the old levels - with an 8 being between 30 and 40 points

There is just a complete disconnect between the FSC and the revised QSE codes.  Firstly the turnover threshold is between R10m and R50m.  Does a QSFI have a choice when they go over R35m to go QSE or FSC generic (I know what I would choose).  What about EMEs (exempt micro enterprises) do they make use of the R10m threshold even though their code says that R5m is the threshold.  There's a schlenter for you, a lot of FSC EMEs use that threshold, in fact even black-owned QSEs make use of the R50m break. If I am evaluating a client I tend to let those certificates go through - as I'm sure most people do.

Still the debate raged on.  This morning my good friends up the road got hold of SANAS who told them to speak to the FSC Council who apparently told them that the revised codes were the ones to use. I got on the phone and spoke to my old friend Busi (who runs that joint).  She said that a policy decision was made a while ago - you must use the old (29617) codes for the QSE scorecard.  It's up on their website,   more specifically here. The relevant paragraph is number 4

The FSC Council has noted that the gazetted Code did not include the details of the QSFI scorecard. As the DTI Codes are being revised, which will mean that the FSC will need to be re-aligned to the revised DTI Codes, it has been agreed that the QSFI scorecard will not be issued at this stage.
All QSFI’s will be measured against the DTI QSE Codes (Code 800 – Code 807) until such time as the FSC has been revised.

For those who have forgotten - code 800 was the QSE code under the old codes.

That's put that to bed then, let's see how long it take awdoz to issue an explanatory note requiring all QSFIs to use the revised QSE code because her opinion is neither legal nor binding.

 A little bit on this interview below.  This is Makhosi telling the SABC viewing public how corrupt zuma and the anc are.  This is a mere six months after hlaudi was booted out.  That's progress I tell you

Watch gigaba go big - FSC content

Tougher implementation of transformation in the financial-services sector is on the cards if the recommendations of a draft report by Parliament’s finance and trade and industry committees are adopted.

The draft report emerged from public hearings during which a lot of anger and frustration was expressed about the slow pace of transformation in the sector.

It proposes that the targets in the Financial Sector Charter be made compulsory and possibly incorporated into regulations.

The final conclusions will feed into the financial sector summit planned by the National Economic Development and Labour Council for 2018.

So the Business Day tells us today (one of the few articles you can read for free).  Has the brigadier come back to haunt us again?  At face value this reeks of zwane, id est

“Corporates must achieve the targets in the financial sector charter and must be penalised if they fail to do so. Achieving the targets could be made a condition for the licensing of financial institutions,” the draft report says.

Let's look at this report rationally.  

1. It's a draft report.  Whilst it purports to have Treasury's support it has a long way to go.  It would require amendments to certain pieces of legislation that allocate banking licences.  I think it would take a long time to push this through, any amendment to banking legislation will cause a wide variety of people to start shivering in their threadbare takkies.
2. There is a court case pending that argues that the mining charter is  "vague, contradictory and "irrational provisions" are contrary to what the constitution requires for the principles of the rule of law." My understanding of the court case is that this charter should not be a condition for licence.  If this goes to the Constitutional Court, as it is likely to do, and is successful then it sets a precedent that you can't make empowerment requirements a condition of licence.

Is gigaba (still lower case because he has yet to show that he's not a gupta pony) playing a zwane game then?  I don't know - I read this morning in some article that he is politically ambitious and a fast learner which suggests that he isn't doing it.  I am quite sure that his smug grin knows that this type of gerrymandering will cause a lot of international and local discontent. If he wants to run the country at some stage, which I sincerely hope never happens, then he does need a banking system that isn't compromised.  Not that empowerment is compromising, but relaxing laws to bring in unqualified new entrants could result in the banking system collapsing.

At the very least gigaba has got the banks' ear

Banking Association SA MD Cas Coovadia said in an address to the Cape Town Press Club that the banking industry had decided to take a far more “robust” approach. Banks would be proactively seeking to achieve equity representation in senior and executive management as well as to ensure that they procured from small-and medium-owned enterprises.

One thing is absolutely clear though - the revised FSC is a long way away from gazetting.

Related articles

Has Treasury been captured by the black business lobby?

Trust – something we don’t have in the DTI (they don't trust us either)

Merriam Webster defines the word Trust as "belief that someone or something is reliable, good, honest, effective, etc." Do we have any reason to trust Bolshie Bob and his band of untrustworthy souls? (I frantically looked for an apt Commie Russian word for Bolshie's minions but I lack that communist thing). We don't. I don't need to think about this nor is it necessary to engage in any form of debate with my inner conscience. Bolshie Bob has taken Stephen Covey's second habit of highly effective people to heart when it comes to issuing legislation and codes of good practice. For the uninitiated the second habit is "start with the end in mind."

History has shown that Davies' draft BEE codes are in effect the final product. This is in spite of 555 submissions received. Logic states that a number of those would have been very well thought out and offered constructive comments on the impracticality of what he had proposed. These comments were largely ignored. The only difference was that you wouldn't drop two levels and they removed the SED code that spoke of 100% beneficiaries. They then published a document that makes for puke-inducing reading. The retching was made worse when the DTI removed the SED code from the draft and then published a final SED code that we had never seen before – in effect we were not asked to comment on that at all. I don't know why I bothered getting upset reading the final code, I should have been grief stricken at the draft phase. It's just that I didn't know that the draft was in fact the final code.

A few other have codes have come up for comment. I haven't looked at them for a couple of reasons. The first one is that they are built on a compromised document and secondly I know that they are going Covey here – all comments that address the impracticality will not be considered. In short it's simply a lack of trust. I would imagine that those companies subjected to these codes feel the same.

And here is the rub of this post. It was announced last night that Rob has published the revised FSC for comment. Comments close on May the 17^th. Again I have got a draft of the revised FSC code and have had it for about a year. I knew it was coming but I thought it would take a long time to get to comment phase. This is the big cheese. It took years to move from the first draft from 2003/4 to the one that we know now. And therein lies the problem.

Here is a bit of a timeline

1. Early October 2012 – draft revised codes come out. Comments close at the end of November
2. 26 November 2012 – Rob publishes the final FSC (ostensibly to discourage the financial sector from commenting on this new codes)
3. On or about 17 March 2016 – the draft FSC submitted for comment

If you haven't seen it yet, there is a problem. The current FSC was given 1228 days to succeed. Or 3 years, 4 months, 12 days. In reality it's less than that. The first scorecards under those codes would have started coming out 6-12 months later. In effect Bolshie Bob has given the transformation of the financial sector less than three years to succeed. That's not even a fighting chance. He quite simply doesn't trust the industry. He doesn't actually trust anything. If the head honcho doesn't trust anyone then his minions are going to display a similar tendency. Because he doesn't trust them he will drive his Stalinist agenda onto the unwilling pubic expecting them to comply.

By the same token we (being everyone that isn't part of the state) don't trust him. How do we know that he won't change his mind in three years' time and thrust something even more unfair on us? As it stands we don't believe that he will actually consider the comments on a new system because he hasn't bothered in the past.

In a democracy, which we purport to be, the lawmakers are there for the benefit of the public. It is up to them to develop a trusting relationship with us. In the case of transformation it is vital that we can trust that the decisions made on our behalf are in our best interests, because it is up to us to effect this strategy with our own money and resource. This trust must initially come from the lawmakers. The ANC-government, like their Nationalist predecessors, have not done so. The trust relationship has diminished to almost negative under Zuma.

This leaves us in a position where we have an obligation to submit comments and take part in the lawmaking process even though we know that our input will not be considered. You see Bolshie Bob has consistently shown that he legislates with the draft in mind.

Related articles

ANC transgresses key policy beliefs - Rob is a pawn because he's a nasty commie

BEE sector codes’ – your BEE options

A recent email from AQRate said the following

This is probably the question we are asked the most often. Will these Amended Codes and all Sector Codes really become effective on 1 May 2015. A well known BEE Consultancy recently advised that there would be a delay and this was refuted in the strongest of terms the following day by the Dti. We believe that the Dti will continue to pursue the 1 May 2015 implementation date. One of the solutions that have (sic) been suggested is that all current Sector Codes will be repealed before 1 May 2015 and that on this date everyone will use the Amended Codes of Good Practice until their particular sector code has been amended and gazetted.

The underlined section poses a wide number of issues.

1. Can the DTI summarily repeal current codes?
2. Is there a process that needs to be followed?
3. What are the ramifications of such an action?

I can't answer question one in any informed way. I would imagine they can't but will anyway. Which brings me onto the second question. I cannot see that a piece of legislation or secondary legislation can be arbitrarily repealed, there must be a standard procedure contained within our law. I don't know what that procedure is and I don't know how to ask DuckDuckGo how I go about this. Chris van Wyk suggested to me that the action of repealing a code must follow the standard process as prescribed in section 9 (5) of the act which is to put it out for comment for 60 days. 9(5) talks about "issuing, replacing or amending" a code. Chris posits that repealing is either an amendment or replacement.

Time has now run out for the sector codes to meet the 1 May deadline. If they published them all for comment tomorrow then the 60 day comment period would end in early May. They have to consider comments and hence cannot logically publish the final code the day after. The consideration period for the revised shambles was about a year. Let's say it takes them two months to consider the comments, we are looking at about July before the first code comes into effect. We know from the QSE codes et al that were published last year for comment that a sector code has no lead in period (which I certainly believe is unreasonable). July at the earliest.

There are two possible options that could happen.

1. The DTI summarily repeals all the codes and tells everyone (as per AQRate's email) that those companies must now follow the revised BEE codes

This would be procedurally wrong and legislatively unfair. We know that all codes issued under section 9(1) enjoy the same legal status. This means that those companies subject to an industry code have no reason to even consider or anticipate implementing the revised codes. They could persuasively argue (unfortunately only in a court of law) that they can't be expected to consider the revised codes in such a short period of time. Also I would encourage some form of litigation from charter councils or their constituents to query as to whether the DTI may do this.

2)    The DTI follows the prescribed process

As I wrote earlier I don't know what the prescribed process is but I'm willing to bet that you cannot summarily repeal a piece of legislation without at least putting it to some sort of public vote or similar.

My money is on the fact that there will be a 60 day comment period whether they publish codes for comment or repeal them. If this does happen then this what I recommend you do

RECOMMENDED ACTION IF YOU ARE SUBJECT TO A SECTOR CODE

Avoid the mad rush to get your old certificate issued before the revised codes come into effect on the 1^st of May. If your certificate expires during the comment period then you are OK – get a new one issued under the old code. However if you are somewhere in between then wait until the 60 comment period has passed and immediately renew your certificate under the old code. You might be able to drag it out by about a month but I wouldn't wait any longer, don't forget that when the new code comes into effect that's it – there's no lead in period.

Related articles

BEE timeline

Who stands to benefit from the revised BEE codes

Standard Bank compliance with Namibian Financial Sector Charter reaches 61 percent

The Namibian Financial Sector Charter was introduced by the Ministry of Finance in November 2008. The NFSC is a voluntarily adopted transformation charter, which constitutes a framework and establishes the principles upon which empowerment will be implemented in the financial services industry in Namibia. The objective of the charter is to facilitate the transformation of the Namibian financial sector and to bring about tangible benefits for Namibians. Standard Bank Namibia through the Namibian Bankers Association is a signatory to the charter. The bank is committed to achieving full compliance with the minimum targets for 2014 and 2019 as set out in the charter. “Standard Bank Namibia aims to achieve specific targets that are set for the following pillars of the charter: ownership and control; human resources development; preferential procurement and enterprise development; corporate social investment; empowerment financing; and lastly, access and affordability of products and services,” explained Advocate Sigrid Tjijorokisa, Group Company Secretary of Standard Bank. 

via www.newera.com.na

The Namibian FSC is a voluntary document and quite similar to the 2003 version of the South African FSC.  Unlike NEEEF it does have a procurement element but seems to be based on narrow principles.

Key principles are to be applied when calculating BBEE procurement expenditure. This will include each  financial institution categorising its suppliers, both current and potential, into the following:

• BBEE-owned companies
• BBEE women-empowering companies
• BBEE-empowered companies
• BBEE-influenced companies
• Designated groups

Procurement spend ramps up from 30% in 2014 to 60% in 2019.  No calculation formula is provided but it might be similar to the one we use in SA.  

Each financial institution has to conduct an independent investigation in respect of each of its suppliers to verify their BBEE status. BBEE suppliers should be registered with a rating agency recognised by the NFSC Council.

I'm aware of one or two rating agencies in Namibia but they seem to be part time there doesn't seem to be enough business to sustain them.   

I suspect the Standard Bank scorecard is measured without procurement.

Capital adequacy ratio explained. This is why we have direct and indirect ownership in the FSC

What really, is going to break the camel’s back as far as the banks are concerned, is the main issue of capital adequacy ratios or capital requirements.

Capital adequacy ratio is a measure of banks’ capital expressed as a percentage of a bank’s risk weighted exposure.

Also known as capital to risk weighted assets ratio (Crar), this risk is used to protect depositors and promote the stability and efficiency of financial systems around the world.

There are two types of capital that are measured: (i) Tier One Capital, which can absorb losses without a bank being required to cease trading. (ii) Tier Two Capital, which can absorb losses in the event of a winding-up and so provide a lesser degree of protection to depositors.

via www.moneyweb.co.za

This article relates to Zimbabwe's 51% bank indigenisation programme.