| Creating BUSINESS sense out of BEE |
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| Written by Paul Janisch | ||
This sentiment has unfortunately been buried underneath
a cocktail of political wrangling, self-enrichment and entrenched
cynicism and fear. The jury is now out as to whether the system as
envisaged by South Africa’s trade and industry department has the
ability to deliver on any of its goals. With Namibia making strides in
its own policies it might be prudent to take a look at how the country
can refine the systems that South Africa has initiated.
Ensure that it can be implemented within the public sector B-BBEE is in fact unconstitutional, all the tenets fall horribly foul of South Africa’s constitution. It is for this reason that it is not law for the private sector in South Africa, it is a voluntary process. However the public sector and numerous other types of state-owned entities are bound by the legislation and by law have to implement six of the principles (ownership has been excluded from their scorecard). Due to numerous complications, both legal and administrative, the public sector has not been able to implement most of the elements other than employment equity. As a result the private sector is left to address the economic problems of South Africa with little help or understanding from the larger public sector. Incorporate a reward principle The only tangible reward that a company can receive from implementing B-BBEE is that they will be able to do business with other businesses in South Africa - a clear application of the stick principle. No clear statistics exist yet that shows that a company has done more business by implementing BEE, although some might argue that their exposure to state business has increased (the facts confirming this are somewhat dubious). There is little doubt that a BEE scorecard has become important in day-to-day business but it seems to be the presence of a scorecard that is important and not so much the score. However if proper incentives like a reduction in corporate tax are offered then we might see a greater uptake throughout the economy. The stick principle will force companies to comply whilst it is being policed, remove the stick and the whole process is likely to come to a halt. Build a structure that can weather the economic climate This is perhaps South African BEE’s greatest failing. The entire structure is dependent on a consistent financial investment in either training staff, spending money on enterprise development or donations to charities. Before the ripples of the sub prime crisis hit our shores, these targets were relatively easy to achieve because the economy was booming. We are now entering an economic slowdown and companies are cutting back on all expenditure. The upshot is that their BEE implementation falls down the priority list. There are other methods to improve a BEE score without spending money but these have not been incorporated into the scorecard. An example would be to assist companies improve their on-the-job training programmes and rewarding them with BEE points if they meet a certain standard. Ensure that there is a consistent message Even though broad-based BEE has been a part of the South African business landscape for the last four years and the codes of good practice gazetted 18 months ago, there are still differing interpretations throughout the economy. Requirements have been known vary from company to company making it difficult for the average business to find a single scorecard that fulfils the different requirement. Government procurement follows a different set of rules altogether. The responsibility has to lie with the trade and industry department ensuring that a single BEE message is sent out throughout the economy. It is also not good enough to embark on a once off campaign - this campaign should be ongoing and updated regularly. As a final word it is very important that the policy makers reiterate the underlying reasons behind this important policy. Both South Africa and Namibia were subject to a system that subjugated the majority of the population, implementing a successful BEE policy within the country will not only right the wrongs of the past but it was also become the tonic that ensures the continued economic and social survival of the country. |
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