Paul Janisch

The sad demise of the needy and vulnerable (code content with a hint of genocide)

By now we've probably all read through the codes. If you're like me then you might concentrate on some codes whilst cursorily reading the others. I'm not much of a fan of ownership so I've not really read through that code, although I do find it extremely humorous that three pages have been devoted to black VCs and private equity companies and nothing new is devoted to the broad-based element, which is what Rob was driving in the beginning of this process. I got stuck with the ridiculousness of the skills development and ED codes and didn't read the SED code properly. It was therefore with much shock that someone pointed out to me that the socio-economic development code is limited to "facilitating income generating activities". This is a change from the current definition that states that a contribution must be with the aim of "facilitating sustainable access to the economy".

Five years ago we would not have worried about this narrow requirement because it's easy to argue that donating to a crèche is providing an opportunity for those children to gain sustainable access to the economy. Verification agencies allocated points under SED and were not too concerned about 75% beneficiary rule either. These days any verification agency undergoing their annual SANAS accreditation process knows that SANAS will give them non-conformances if a SED contribution does not fulfil the 75% beneficiary rule and as a result a disgusting practice has arisen where unscrupulous verification agencies are charging NPOs to conduct a beneficiary audit. (I will say that some don't charge for this service but we do know that EVS does). This brings up two points of concern.

1. SANAS (I don't know about IRBA) has become the de-facto race enforcer. Anecdotal evidence tells us that unskilled SANAS agents (whatever they call them) will make pronouncements on business and empowerment issues that are not supported by the codes, Udge's Bible (the verification manual) or any of the other official supporting documentation. In fact it seems that these people behave in a decidedly arbitrary fashion in the allocation of non-conformances. It's this lack of uniformity that strikes fear in verification agencies who do their best to follow the established norms only to be greeted with a subjective and unsubstantiated non-conformance pronouncement.
2. Genocide

Genocide you say. I'll explain.

Genocide defn ( gen·o·cide [jen-uh-sahyd]; noun - the deliberate and systematic extermination of a national, racial, political, or cultural group)

Anyone in the NPO, NGO, charitable etc. sector will tell you that government funding for the most vulnerable has all but dried up and that that is available is erratic and prone to corruption and theft. The Lottery is no better – it too appears to be sitting on mountains of cash that it won't distribute because of some ideological reason or other. When I questioned a very senior ANC person as to why the Department of Social Development was not forthcoming with money to NPOs his response was "are these white NPOs!". Trust me, this is one of the more level-headed ANC people.

The main source of funding comes from either overseas donors or socio-economic development contributions, with the former donating less or setting up local branches that will compete with the local ones for funds. We are now talking about NPOs that assist the MOST VULNERABLE PEOPLE in our society. These range from orphans to child-headed homes to AIDS sufferers, rape victims and the plain destitute (and this is just a small number of them). Almost every single one of these charities live from hand to mouth and are happy to provide a meal for their dependents on a day-to-day basis.  Because funding is so erratic they cannot guarantee that they'll be able to support their dependents on a weekly basis let alone channel money into "income generating activities."

Now we return to the SANAS accreditor (to flog this horse a little more). This person will issue non-conformances to verification agencies that award SED points to a company that contributed to anything other than "income generating activities". Logic dictates that any SANAS-accredited agency will not award the points for this because they might be closed down (just like EMEX was). It's long been known that BEE points were a wonderful by-product of a charitable donation. Most of these charities will not be able to attract donations under SED because corporates won't risk the BEE points. And times are tough, a 1% of NPAT contribution is pretty much all a corporate can afford these days. Similarly the 100% black beneficiaries requirement excludes large numbers of white people or anybody who does not fulfil the definition of black. Some charities look after white people who form less than 25% of their beneficiaries and conform to the current definition. Even if they do facilitate "income generating" activities" under the proposed codes they will not be able to provide any BEE points because the 100% black beneficiaries requirement is all or nothing. Do these types of causes then dump their white beneficiaries, to ensure their on-going funding?

Herein lies the potential genocide - to do this let's return to the definition. It could argued that AIDS orphans, rape victims etc. are a national group. White people are certainly a race group. The proposed SED code, if gazetted in its current form, would then be "deliberate and systemic". By ignoring this large group of destitute and vulnerable people (and it is HUGE – in excess of 50% of our population) and proposing such heartless and racist legislation, Rob Davies is advocating a form of genocide. In Rob's defence (and this is the first time that I have ever defended anything Rob has done or said as minister) I have my gravest doubts that this is his intention – it's just an unfortunate potential consequence of being advised by the wrong people.

And let's not forget that the five points that SED offers under the new scorecard won't make a dent in the remaining 35 points you need to get onto the scorecard – and even if you thought you got those points there is the negative marking which will take you in negative points territory. Hardly an incentive to contribute anything under SED really.

This is perhaps the most drastic consequence of a document that lacks logic, business-sense, constitutionality and basic empathy. The proposed codes must be prevented at all costs. Please submit your comments to the DTI and don't be nice either. I know that I will ask for Rob, the BEE Council and the BEE division of the DTI to resign immediately.

Comments can be sent to [email protected] or [email protected]

EMEX explains

EMEX must feel very strongly about my comments on their sustainability certificate because not only have they emailed me, but they have posted this explanation as a comment.

THE EMEX NPO SUSTAINABILITY CERTIFICATE -A JOINT VENTURE BETWEEN EMEX TRUST AND VODACOM

Dear Paul, with reference to previous correspondence herein kindly herewith some more information to the Emex NPO Sustainability Certificate.

Background: In 2009 the Vodacom Foundation embarked on a journey to develop a Non-Profit Organisation (NPO) accreditation measurement. Eight accreditation weighted elements were identified and operationally defined. As there was no known precedence in South Africa or elsewhere in the world and Vodacom could not be seen as both a player and a referee, Emex Trust, as an independent role player and SANAS accredited B-BBEE Verification Agency, was brought on board in 2010 to help concretise the NPO assessment process. This led to what is now known as the NPO Sustainability Certificate. The NPO Sustainability Certificate may be issued to any NPO subject to the verification process which more fully explained hereunder.

Is it a B-BBEE Certificate?

The NPO Sustainability Certificate is not a B-BBEE certificate and is not marketed as such. It is a certificate aimed at showing the sustainability status in a particular NPO based on the criteria set out below.

Elements Measured:

The following 8 (eight) elements are measured in terms of the NPO Sustainability Certificate:

1. Sustainability - This element measures the NPO's operational capacity and whether the NPO would be able to continue its activities in the future;
2. Experience - This element looks at the number of years the NPO has been in existence and measures the field and extent of knowledge the NPO has acquired over its years in existence;
3. Governance - This element measures in which way the NPO is effectively governed by a board of directors and/or trustees and/or a management committee;
4. Expertise - This element measures in which way the NPO's staff acquired specialised skills or knowledge, whether through professional training or through practical experience;
5. Credibility - This element measures the NPO's image, reputation, truthfulness and reliability by engaging the community(s) within which the NPO operates and obtaining testimony from such community(s);
6. Staff Compliment (sic) - This element measures the number of staff associated with the NPO and looks to provide assurance that the NPO has enough resources to accomplish the objectives of the project(s) it is engaged in;
7. Reach - This element looks at the geographical area in which the NPO operates and looks at the extent of the NPO's project(s)/activities in the different provinces of South Africa;
8. NPO Registration - This element measures whether or not the NPO followed the formal requirements to be registered as an NPO.

Regulation of the Emex NPO Sustainability Certificate:

The NPO Sustainability Certificate is not regulated by statute. It is a privately developed product - developed jointly between Emex Trust and Vodacom. As such Emex Trust and Vodacom entered into a joint venture agreement which regulates their relationship with respect to this product. The intellectual property behind this product is also held jointly by Emex Trust and Vodacom.

Conclusion:

This product was developed to assist any person or entity wishing to make contributions towards an NPO as to the viability of such an NPO.

I note this and to a large extent it's laudable – but it doesn't detract from the unnecessariness of this certificate. What purpose does it serve? And why should any NPO make use of it. Yes it tells a whole lot about a non-profit organisation but these entities exist to serve a cause/community or the like. Does this certificate then make a cause more worthy than any other?

I think there is a moral issue at play here – EMEX and its partner are effectively profiteering off NPOs who could be using the money to benefit their cause/community.

I tell you what I would like to see – Vodacom sponsoring each NPO in getting this certificate. Go on Vodacom,  I dare you.

EMEX responds

Dear Paul,

We have noted, with interest, the comments you have posted on your blog with respect to the Emex NPO Sustainability Certificate.

Emex is in the process of compiling detailed information, for your benefit, on the history and development behind the NPO Sustainability Certificate as well as its relevance within the South African market. This information will be send to you during the course of next week.

We trust that after reviewing this information you will be in a position to render an informed opinion on this product.

Kindly note that our rights herein are reserved.

We trust you find the above-mentioned in order and look forward to constructive discussion herein.

Kind regards

 

Corne Bester

Legal & Compliance Manager

Emex Trust

Tel:  012 663 1188

Fax: 086 600 5520

Website: www.emex.co.za

 Physical Address:

117 Corner of Jean Avenue and Lenchen North 

Futurum Office Park, Block H 

Centurion

Fair enough.  However, just as your rights are reserved therein (whatever that means), I still reserve the right to claim that this is a baseless revenue stream (like EmpowerDex in the early days).  I do however applaud the chutzpah that EMEX is demonstrating in issuing this certificate.

I'll publish the justification when I receive it.

 

Got to dig EMEX. Trust me, you really should try

A reader sent me this certificate. I'm not sure whether I can tell you his name but he is a BEE consultant from Cape Town. What this certificate is, is something that the EMEX Trust (love that name) is issuing to charities – or at least one charity. It's a two year certificate that measures a charity against "Sustainable Fundamental Guidelines revision 1.1".

Michael writes

It was sent to me by a charity to whom my client had donated money for SED points.

I googled "Sustainable Fundamental Guidelines revision 1.1" but couldn't come up with anything.

Presumably an Emex Trust creation!

Just to confirm this I too Googled "Sustainable Fundamental Guidelines revision 1.1" (with the quotes) and was greeted with this

 No results found for "Sustainable Fundamental Guidelines revision 1.1".

That was a very specific search, so I removed the revisions and searched for "Sustainable Fundamental Guidelines" (again with the quotes) and came up with this

 No results found for "Sustainable Fundamental Guidelines".

I think Michael might be right. But we can't leave it at that.

The "Sustainable Fundamental Guidelines revision 1.1" are based on the following

Elements	Weighting Points
Sustainability	39
Experience	20
Governance	30
Expertise	10
Staff Compliment	5
Reach (no of provinces serviced)	5
NPO Registration	30
TOTAL	144 + %Bonus points

And then you are scored as a percentage

Level 1	≥ 90%
Level 2	≥ 80% but less than 90%
Level 3	≥ 70% but less than 80%
Level 4	≥ 60% but less than 70%
Level 5	≥ 50% but less than 60%
Level 6	≥ 40% but less than 50%
Level 7	≥ 30% but less than 40%
Level 8	≥ 20% but less than 30%

It would be wrong not to take the piss out of this pisstake certificate (which is not a BEE certificate) so I will

1. Why such an arbitrary number – 144 points plus 5 bonus points. This make it 149.
2. How do you measure staff compliment. Do you go up to the receptionist and say "my you have such a wonderful telephone voice". Or do you measure how often the CEO or head honcho compliments the staff on something or other – and what is that something or other?
3. What exactly does this get the charity? If it's not a BEE certificate then what does it do. I think it's only use is that it states that the black beneficiaries make up more than 75% of the total beneficiaries.

That's the pisstake over.

I really think this is very clever. It's a complete waste of time but if you issue enough of these, corporates may start insisting on them. This is exactly what EmpowerDex did right at the beginning of the measurement of BEE, this was even before it was possible to measure BEE. As a result of this the name EmpowerDex is almost a generic word for a BEE certificate, just like Durex is a generic word for a FL (giving my age away here – email me if you don't know what that is".

Good luck EMEX. I trust that this is going to work for you. However, if you (the reader) are a charity – don't get duped by this, it really is a load of bullshit.

BTW - I have put "Sustainable Fundamental Guidelines" in my keywords.  Perhaps this post will be the first thing you find if you Google it.

Mark Peach and BEE sustainability

Mark Peach posted a comment a few days ago

Paul, give me your opinion on this please.

I have at the back of my mind something an ANC veteran once said to me: "don't always focus on what the Govet and the ANC says, look also at what they do without saying anything."

I think the Govt have already turned their back on BBBEE for two reasons: the position they have allowed themselves to be manoeuvred into by business is impossible to continue; and the sheer scale of the problems BBBEE was supposed to address was underestimated in the first place and it has become apparent that empowerment cannot achieve what it must.

In the last few months the Comprehensive Rural Development Programme, the Industrial Action Plan, and the Economic Development Medium Term strategy have all been released, all with the aim of creating jobs and giving birth to the green economy. In my view the objectives of BBBEE have now been included into these strategies making BBBEE largely redundant. Of course, no one will say that or even countenance the view, but it's what is happening that matters most, and Govt knows business has taken BBBEE as far as it wants, there is no energy beyond compliance, but SA needs more than this.

Having read each strategy, I am convinced that Govt has settled for a more focused goal - jobs - and believes when jobs happen, many of the other objectives of BBBEE will only then fall into place.

I think Mark's point is absolutely valid and I agree with him completely. Business has taken it as far as they want to – we are now in a position where BEE scores and ownership levels are going to geared towards compliance and sticking within an industry norm. I sensed that when Rob Davies took over as DTI boss he was more interested in compliance and not so much transformation. I think his thinking is that compliance will lead to transformation in the long term – and to a certain extent I think this will work.

In that light the empowerment agenda must be shifted toward the public sector. And to get that right you need to get PPPFA right. A recent TimesLIVE report tells us that it still is in limbo

There seems to be no rush in getting this act through. The draft act became available for comment in the Government Gazette on August 14 last year. Now, six months later, there doesn't seem to be much movement on the matter.

We asked the national Treasury a couple of questions regarding the new act. The tepid response was: "The new preferential procurement regulations have not been promulgated. Until the new regulations have been promulgated, the current regulations remain valid."

My natural cynic claims that it's not necessary for black people to take a stake in a private company – it seems that the new wealth will come out of tender rigging. No more Mzi'ing for the private sector - and this activity is above the law too.

So what then for us poor BEE consultants etc? The answer lies in sustainability. This is the new buzzword – and it is a global phenomenon, so when the kak hits the fan and you need to go and sweep streets in Sydney – you can at least do it sustainably. If you are into sustainability or want to know what's happening with it then you MUST read and subscribe to Mark's blog. He's a little slow on posts – but perhaps we can all encourage him to become a little more prolific.