dti 07-03-07
TRANSCRIPT
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UNDERSTANDING THE FINALISED BEE
CODES
A JSE & CIDA EMPOWERMENT FUND
CONFERENCE
07 MARCH 2007
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HOW B-BBEE RELATES TO THE
BROADER 2014 GOVERNMENT
VISION?
Government’s Vision (2014)• To have a restructured and adaptive economy
characterized by:
– Growth
– Employment and – Equity
The dti’s Objective
To contribute towards a higher level of economic growth so
as:
– to create employment; and
– reduce the levels of inequality
• The dti will seek to achieve this goal by among others
things acting as a catalyst for the transformation and
development of the economy
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• Since 1994 BEE has been a major thrust of all government
policies but there was no coherent strategy towards the
implementation of BEE
• The BEE commission released a report in 2000 which gave
the first attempt at broadly defining BEE
• The receipt of this report by government played a pivotal
role in the development by government of a strategy
towards the implementation of BEE
• In 2003 a strategy for Broad-Based Black EconomicEmpowerment (B-BBEE) was released
BACKGROUND: BEE STRATEGY
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• The dti’s BEE Strategy document was informed by a vision of
developing comprehensible, uniform and consistent strategy with
clear guidelines and targets
• In 2003 a strategy for Broad-Based Black Economic
Empowerment (B-BBEE) was released which defines B-BBEE as
– an integrated and coherent socio-economic process that
directly contributes to the economic transformation of South
Africa and brings about significant increases in the numbers of
black people that manage, own and control the country’s
economy, as well as significant decreases in income
inequalities.
– Thus the BEE process will include elements of human resource
development, employment equity, enterprise development,
preferential procurement, as well as investment, ownership and
control of enterprises and economic assets.
BACKGROUND: BEE STRATEGY
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The strategy laid the foundation for the B-BBEE Act
• Section 9 of the B-BBEE Act states that the Minister may by notice inthe Gazette issue codes of good practice on black economicempowerment that may include-
– the further interpretation and definition of broad-based black economicempowerment and the interpretation and definition of different categories of
black empowerment entities;
– qualification criteria for preferential purposes for procurement and other economicactivities
– indicators to measure broad-based black economic empowerment:
– the weighting to be attached to broad-based black economic empowerment
indicators
– guidelines for stakeholders in the relevant sectors of the economy to draw uptransformation charters for their sector; and any other matter necessary toachieve the objectives of this Act.
BACKGROUND: BEE ACT 53 OF 2003
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• Section 10 of the B-BBEE Act further gives the status of the codes
by stating that:
– Every Organ of State and Public Entity must take into account
and, as far as is reasonably possible, apply any relevant code of
good practice issued in terms of this Act in –
• Determining qualification criteria for the issuing of licenses, concessions or
other authorisations in terms of any law;
• Developing and implementing a preferential procurement policy;
• Determining qualification criteria for the sale of state-owned enterprises;
and
• Developing criteria for entering into partnerships with the private sector
BACKGROUND: BEE ACT 53 OF 2003
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TRANSFORMATION IMPERATIVES
• Government’s objective to overcome economic disparities
• To redress economic imbalances of the past – to achieve asustainable economic growth and development.
• Economic Transformation Strategy – values and principles of
equity enshrined in the Constitution
• Government’s vision:
South African’s Transformation : A strategy for broad-
based black economic empowerment: The county requires
an economy that can meet the needs of all its citizens – its
people and their enterprises- in a sustainable manner. Will
be possible if the economy builds on a full potential of allpersons and communities across the length and breath of
this country. Government’s objectives is to achieve this
vision of an adaptive economy characterized by growth,
employment, and equity by 2014
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TRANSFORMATION IMPERATIVES
CONT’
• Changing the complexion of business from largely whitedominance to one reflecting the demographic mix and
diversity of talent in SA
• B-BBEE will unlock the full potential of all South Africans
• B-BBEE Act ( Act 53 of 2003) is an essential tool in
transforming the South African economy.
• Government to use BEE as a tool for Economic Growth
Model for this country
• Economic transformation is a necessity, not an option, to
create stability and a growing economy
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ECONOMIC IMPLICATIONS OF
BROAD-BASED BEE
• Increase level of participation by black people in
mainstream economy
• Increase real market size in SA economy
• Increase income through resulting economic growth
• More economic participants will result in sustainable
economic growth and development
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POLICY OBJECTIVES OF BROAD-
BASED BEE
• Increase in the number of black people who haveownership and control of enterprises
• Increase in the number of black owned or black womenowned enterprises
• Increase in the number of black people in executive andsenior management of enterprises
• Accelerated and shared economic growth
• Increased income levels of black persons and areduction of income inequalities between and within racegroups.
• Increased inclusion of community and broad-basedenterprises, and co-operatives as the form of enterprises.
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POLICY OBJECTIVES OF BROAD-
BASED BEE, cont’
• Increase in employment and skilling of black people(Employment Equity and Skills Development)
• Increase in access to markets for black owned andcontrolled enterprises( Preferential Procurement)
• Increase in access to financial and non-financialassistance to black owned and controlledenterprises (Enterprise Development)
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POLICY INSTRUMENTS TO ACHIEVE
BEE
• Legislation
– Enabling framework for promotion of BEE
– Will enable issuing of the Codes
• Regulation
– Licences, concession, public private partnerships
• Sale of equity stake in SOE’s
• Preferential Procurement
– Government biggest buyer of goods and services
• Monitoring and Evaluation of BEE (Advisory Council)
• Partnerships and Charters
– Partnership with private sector
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The Poverty Barrier
The Skills Barrier
The Business Barrier
The Opportunity Barrier
Employment
Equity/Job creation
Corporate
Social Investment
Skills
Development &
Employment
Equity
Affirmative
Procurement
Ownership
And Management
Equitable Economic Opportunities
Enterprise
Development
Emerging blackmiddle class & Investors
Black
Entrepreneurs
Black workers and job-seekers
Black unemployed & rural poor
BROAD BASED BENEFICIARY BASE
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B-BBEE Framework
Broad-based BEE ActNo. 53 of 2003
Broad-based BEE
Strategy
Legislative EnablingFramework
Strategic
Framework
Codes of Good PracticeImplementation Framework
and Guidelines
Generic or
Sector-specific
BEE
Scorecards
Interpret
BEE
Definitions
& Principles
Set BEE
Indicators,
Weightings
and
Targets
Guidelines
to draw
up BEE
charters
Guidelinesto maintain
Institutional
Framework (BEE Council
/Accreditation
Agencies)
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ARRANGEMENT OF THE CODES
Code What is it?
000 Conceptual Framework of B-BBEE
100 Ownership
200 Management Control
300 Employment Equity
400 Skills Development
500 Preferential Procurement
600 Enterprise Development
700 Socio- Economic Development
General Principles and the Generic Scorecard
Measures effective ownership of enterprises byblack people
Measures effective control of enterprises by black
people
Measures the extent to which enterprises carry out
initiatives contributing to Enterprise Development
Measures the extent that enterprises buy goods and
services from BEE Compliant suppliers as well as
black owned entities
Measures initiatives intended to achieve equity in the
workplace
Measures the extent that employers carry out
initiatives designed to develop the competencies of
black employees
Measures the extent to which enterprises carry out
initiatives contributing to socio-economic
development 800 Qualifying Small Enterprises
Measures the extent to which enterprises carry out
contributions made by Qualifying Small Enterprises
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CODE 000 : GENERIC SCORECARD
Element WeightingCompliance
Targets
Ownership 20 points 25% +1
Management control 10 points (40% to 50%)
Employment Equity 15 points (43% to 80%)
Skills Development 15 points 3% of payroll
Preferential Procurement 20 points 70%
Enterprise Development 15 points 3% (NPAT)
Socio-Economic
Development5 points 1% (NPAT)
TOTAL 100 points
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BLACK ECONOMIC
EMPOWERMENT: AN ECONOMIC
GROWTH MODEL
• Boost and generate higher economic growth – 6%and beyond
• Transform and deracialise the South African
economy
• Bridging the divide between the first and secondeconomy
• Reduction of income inequality
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BLACK ECONOMIC
EMPOWERMENT: AN ECONOMIC
GROWTH MODEL, cont’
• Contribute towards the growth of smallenterprises and co-operatives
• Contribute towards the reduction of poverty
• Aims to accelerate the participation of blackpeople in the economy
• Contribute towards the consolidation of democracy
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• Process of consultation and drafting – Labour, business, Community Organisations, sector
councils, other key government departments
• Approval by Cabinet on 6th December 2006 of the Codes
• Approval by Cabinet on gazetting of FSC and Construction
Charter for information purposes
• Gazetting of Codes and Charters
THE JOURNEY THUS FAR
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• Cabinet gave the dti generic approval to gazette allsector transformation charters under section 12and 9 of the BEE Act
• The Sector Codes will add momentum ontransformation in South Africa.
• Sector Transformation Charters are instrumentsthat involve a partnership between government andprivate sector in promoting BEE.
• Alignment of transformation charters to be gazettedas Sector Codes of Good Practice will ensureconsistency in the application of measurement of B-BBEE across the economy
THE SECTOR TRANSFORMATION CHARTERS
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THE SECTOR TRANSFORMATION
CHARTERS, CONT;
• Sector Codes (s 9 of B-
BBEE Act)
• Gazetted as a Codes of
Good Practice
• Same legal status as the
Code of good practice,
legally binding on Organs
of the State and Public
Entities.
• Transformation Charter (s
12 of B-BBEE)
• Gazetted for information
purposes only (industry’s
commitment to
transformation)
• No legal status, not
legally binding on Organsof the State and Public
Entities.
THE SECTOR TRANSFORMATION
CHARTERS, CONT;
THE SECTOR TRANSFORMATION
CHARTERS, CONT;
THE SECTOR TRANSFORMATION
CHARTERS, CONT;
THE SECTOR TRANSFORMATION CHARTERS
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THE SECTOR TRANSFORMATION CHARTERS,
CONT;
Meet s12 requirements?
-Sufficiently consultative
-Advances BEE objectives
No
Yes
Not binding, can be expressed as a
document of intent(Government to use the Codes of
Good Practice when interacting with
the sector)
Apply to be Gazetted under s 12:
Binding on signatories to the charter, butnot on government or other sectors;
Gives credibility to the charter;
(Government to use the Codes of Good
Practice when interacting with the
sector)
Meet requirements for gazetting
as a Sector Code?
-No deviation from definitions
and principles
-Sufficiently comparable to the
codes, in terms of
-Elements
-Targets
-Weightings
- Justify any differences to the
codes
No
Yes
Apply to be Gazetted under s 9
Government to use the gazetted sector
Codes of Good Practice when
interacting with the sector.
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• Marketing and Communication of B-BBEE
• BEE Advisory Council
• Alignment of other legislations with B-BBEE Act
• Strategy on transformation of other sectors
– Retail and Manufacturing Sectors
• Review of B-BBEE Act
THE WAY FORWARD
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