BEE Partner, South Africa Economy Watch

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.

Businesses that contribute directly to community development must consult with the intended beneficiaries before supplying them with benefits that may be inappropriate or unappreciated.

Accountability

The measured entity must hold the organisation through which it directs the socio-economic development accountable for that money. For instance, if a contribution is made to an HIV/Aids orphanage and the management of that orphanage uses 85% of the funds irresponsibly, leaving nothing to the benefit of the children, the contribution lacks substance.

The measured entity must follow up the investment to ensure that it meets the requirements needed for recognition on the BEE scorecard. If the verification agency discovers abuse of funds in this matter, it could determine that there is no substance behind the contribution because the beneficiaries are not receiving benefit and therefore not grant the points to the contributor.

BEE Grants

Socio-economic development and enterprise development are measured cumulatively. Some companies have approached this issue by giving a one-off, upfront grant to a charity, which then has to manage the money over the next few years. Generally, charities are not set up to invest and manage money. A one-off grant also creates high expectations, which are often not sustainable.

For BEE purposes it is more effective to issue a grant on a staggered- performance basis. The contributing business should provide the charity with an annual grant over a period of, say, five years and make it conditional on the achievement of preset objectives. The grant will now support the sustainability of the beneficiaries.

BEE Sustainability

Businesses are often fickle in determining which charity to support. They tend to move from one charity to the next as each one comes in vogue. This year, Nkosi Haven may have been the flavour of the month, last year it was NOAH, and the year before it was the Nelson Mandela Children’s Fund.

Supporting a “fashionable” charity may get the entity more recognition in the public eye, but charity-hopping does little to bring sustainable benefit to those people the contributor is supposedly trying to help.

It is more appropriate to identify a particular cause and then investigate charities that can implement that cause effectively. One should take a long-term view and support those charities for a sustained period, but with performance conditions attached. Short-term interventions rarely have long-term, lasting impact.

BEE Education

Education is important for businesses to develop an employee pipeline. A lot of businesses complain about not being able to source sufficient Black candidates to meet the targets of employment equity and Black management. Taking into account that BEE is a process, the solution to this dilemma would start with developing a pipeline to generate prospective employees.

The pipeline can start through socio-economic development in the form of bursaries for schoolchildren and students. A bursary on its own will not necessarily be effective. However, making a bursary conditional upon the learners or students doing holiday work for the company will expose them to the practical environment of their training.

Most Black people have never been exposed to different careers in an operational capacity. Holiday work provides an appropriate bridge. Black children living in former locations are rarely exposed to professions such as engineering, accounting, banking and sciences. Most of them would be familiar with running a spaza shop or a subsistence type of business.

A white child generally grows up in the environment he or she is likely to work in one day. For example, a child whose parent is a practising architect would be exposed to architectural plans, building sites and books on design.

Practical education is not available in all schools and environments. Assuming both children mentioned above want to become property developers, the white child has a significant head-start. Skills development of children becomes necessary to reduce the lack of exposure experienced by the Black child.

Smaller businesses are often in a position to bridge this divide by offering schoolchildren and students holiday work. Consider the relationship of a small business owner and his or her employees. The business owner often has an idea of the success and failures of employees‘ children. Where an employee’s child shows aptitude, provide that child with holiday work or a bursary to study further.

Holiday work helps develop loyalty to a company, particularly where the learners and students are exposed to participation in core activities.

The cost of developing these candidates does not form part of skills development because the candidates are not employees. For BEE purposes, costs in this regard are recognised under socio-economic development.

Possibly related posts: (automatically generated)
South African Practical BEE Socio-Economic Development

• Qualifying BEE Small Enterprises, Socio-Economic Development Standards Part 1
• Qualifying BEE Small Enterprises, Socio-Economic Development Standards part 3
• Black Economy, how to measure score for Company development
• Qualifying BEE Small Enterprises, Socio-Economic Development Standards part 2
• BEE Benefit Matrix and BEE Score Measure Calculation
• What is exactly Black Economic Empowerment?
• Ownership and BEE - Employee Ownership Master Course
• 'Black Advancement' label off the corporate language
• Typical BEE business Partners vs Businesses
• BEE Benefit Matrix and BEE Score Measure Calculation continue...