BEE Partner, South Africa Economy Watch

About a decade and a half ago, Anthony Zwi and Antonio Jorge Cabral argued that we needed a new term – they suggested ‘high-risk situation’ – to describe the range of social, economic and political forces that place groups at particularly high risk of HIV infection (1991). They culled a number of features from a variety of settings in order to characterise these high-risk situations: impoverishment and disenfranchisement, rapid urbanisation, the anonymity of urban life, labour migration, Read the rest of this entry »

In a highly significant paper, Nicoli Nattrass uses regression analyses to show that today ’simply being a southern African country increases HIV prevalence massively and significantly’. HIV prevalence, she says, ‘is eighteen times higher for southern African countries’ than anywhere else with similar levels of poverty and inequality (n.d.; emphasis in original). This is all the more striking because throughout the 1980s, as South Africans were engaged in the final struggle against apartheid, Read the rest of this entry »

Qualifying socio-economic development contributions

Socio-economic development contributions consist of monetary or non-monetary contributions actually initiated and implemented in favour of beneficiaries by a measured entity with the specific objective of facilitating sustainable access to the economy for those beneficiaries.

The contributions may be monetary based or non-monetary, such as providing training or sacrificing their employees‘ time in favour of beneficiary groups, as opposed to incurring a direct expense. The contribution must be “actually initiated and implemented“, meaning it must be exercised and paid for. Future initiatives do not count. Read the rest of this entry »

Targets

As mentioned above, the target is calculated on the same basis as that of enterprise development. The calculation is not clearly articulated in the Codes and is a technical computation. To avoid repetition, the following constitutes a brief summary of what was communicated under enterprise development.

The target for socio-economic development is 1% of net profit after tax (NPAT). NPAT is easily manipulated through accounting entries, so the Codes use an anti-circumvention approach, outlined below. Read the rest of this entry »

The socio-economic development element is a request to business to play an active role in social upliftment. It is BEE‘S conduit for Black people living below the poverty line by providing a lifeline to people without any access to the mainstream economy. Socio-economic development may take a variety of forms, including rural development, contributions to traditionally non-economic activities such as the arts and medical facilities for the poor. Read the rest of this entry »

Much has happened in the BEE arena in the past weeks, as well as the country.

Where is BEE going?

Many people have asked me this question in the past two weeks. We do not see the B-BBEE act being rescinded when a new president takes office. We do see the codes of good practice being adjusted over time, but not immediately, and not significantly. We do see the codes eventually being reconciled with other transformation efforts, e.g. the PPPFA, the mining act etc, but we do not see that “BEE will go away”. I expect and hope that more emphasis will be placed on job creation, enterprise development and skills development. Read the rest of this entry »

BEE Qualifying Contributions

Sector-specific contributions

The benefit-factor matrix refers to sector-specific contributions, which are not addressed elsewhere in Statements 700 or 807. There is a definition referring to sector-specific programmes. Although it is not clear whether there is a link between the definition and the reference to sector-specific contributions above, it would appear logical to assume so.

The origin of sector-specific contributions is from previous draft statements. The objective is that sector codes will determine sector- specific socio-economic development contributions as guidance to industry from each sector. Read the rest of this entry »

BEE Benefit-Factor Matrix

Statement 700 provides Annexure 700A, which contains a benefit- factor matrix. The purpose of this matrix is to assign a benefit factor to the various types of contributions. Priority contributions will receive 100% recognition. Contributions that offer less substance are recognised at a lower benefit factor. Read the rest of this entry »

A crucial error in socio-economic development is not asking the communities what they need. One-sided decisions on contributions to beneficiaries are often counterproductive because the people may, for example, want a bridge over the stream to get to town more easily, whereas the company instead builds a school that the community cannot service with teachers. Read the rest of this entry »

High risk indicators

High risk indicators include the following:

• An enterprise claims that Black people are shareholders, executives or management, but the Black people are unaware or uncertain of their roles in the enterprise. If Black people are not given responsibility in keeping with their titles then there is unlikely to be any substance behind the claim.
• Black people who serve in executive management positions are paid significantly lower rates than the market standard. Unless all salaries in that enterprise are lower than market standards they are probably empty titles with no responsibility and further investigation will be conducted. Read the rest of this entry »

Tax law is dynamic. Any tax commentary could be outdated After the final Codes have been approved as law, time will reveal inconsistencies with the application of BEE and the Tax Act.

Private parties will probably make submissions to National Treasury on amending tax law to accommodate BEE. The point is that it is too early to give conclusive advice on BEE and tax. Further, the nature of tax advice varies according to the base of the company, making it a difficult topic to discuss conclusively in this format. Read the rest of this entry »