BEE Partner, South Africa Economy Watch

Becoming an empowered company is not good enough. Soon all your competitors will have achieved similar status. Your company will need to do better than that. Whoever has undertaken the transformation process in the best way will be the winners, not those who have merely transformed. The key lies in transforming your business to become black empowered while simultaneously creating a sustainable competitive advantage. Read the rest of this entry »

A common misperception of ownership is that it relates to economic return exclusively. When ownership is broken down it includes two primary rights. The one is economic return and the other is control, or influence, over decision making, which is exercised through voting rights. Read the rest of this entry »

The parties involved in the structuring of a deal vary according to the size of the deal. The professional fees for listed deals can reach as high as R10 million rand just for the opinion of the various parties involved in the structure. Put in context with the size of the deals, however, this is not as extreme as it appears. QSE deals will need fewer and leis expensive professionals and the costs will be reduced to a fraction this amount. Read the rest of this entry »

Welcome to 2009. We are very much looking forward to this coming year. We have many new projects planned, great ideas that are set to work extremely well and fantastic prospects for 2009.

In addition to all the exciting plans we have, we believe this year is going to be a very exciting BEE year with many aspects changing, not to mention all the political action.

BEE Implementation in 2009

• 2008 saw a big expansion in BEE certificates – this year will be different. It will no longer be good enough to have a certificate. Companies will need to get scorecards that have enough points to satisfy their customers.
• Verification of BEE status for companies will change substantially – hopefully verification agencies will be accredited, but more importantly proper preparation will be vital in order to get a good verification. The most effective way to do this is with EconoBEE V3.
• BEE Charters – we don’t like the idea of charters as we feel it gives some companies an excuse not to implement BEE because they are waiting for a charter. We suspect that the charters will continue to be delayed and will have lots of controversy when they are finally gazetted. Read the rest of this entry »

To understand the management control scorecard, the definition of top management needs deciphering. Although the Codes do not define the term, they do define “top manager” so one can assume that a top manager represents top management. A top manager is: Read the rest of this entry »

To understand the management control scorecard, the definition of top management needs deciphering. Although the Codes do not define the term, they do define “top manager” so one can assume that a top manager represents top management. A top manager is: Read the rest of this entry »

Split compliance targets

The employment equity scorecard splits the compliance targets between 0 to 5 years and 6 to 10 years. The Codes acknowledge that transformation is not going to be an overnight phenomenon and that businesses will take a while to establish Black people in relevant employment positions. They have provided moderate targets for the first five years in consideration of this. Overnight transformation strategies are unlikely to result in sustainable development.

The management indicator

The majority of points, 15, are allocated to this indicator. The management indicator is subject to the gender adjustor and full points will only be scored where 50% of the management targets for Black people are held by Black women. The targets are split. The target for 0 to 5 years is 40% of total management and the target for 6 to 10 years is 60% of total management positions that should be held by Black people. Read the rest of this entry »

Learning programmes

The indicator specifies skills development spent on learning programmes. What constitutes a learning programme? If the money is not spent on a learning programme as defined, the measured entity may not include the expense in measuring skills development contributions. Statement 401 defines a learning programme as, “any of the learning programme types described in the Learning Programme Matrix“.

The Learning Programme Matrix is provided as Annexure 400A of Statement 400. It provides a broad spectrum of training that it considers a learning programme. Any of the following may be included as measurable for QSE contributions to skills development: Read the rest of this entry »

Calculations of BEE Skills Development

The calculations of skills development spend includes expenditure on learning programmes and in-service training programmes. The following calculation assumes the indicator is subject to adjusted recognition for gender.

Measurement of the skills development spend indicator

The calculation of the adjusted recognition for gender is as follows:

A = B/C + C

A = the adjusted recognition for gender

B = the skills development spend on Black employees divided by the leviable amount

C = the skills development spend on Black women employees divided by the leviable amount Read the rest of this entry »

Targets

Achievement of the allocated points is based on the measured entity reaching the compliance targets. The compliance targets in this element are fairly ambitious because very few suppliers will have a decent BEE status level, particularly in the early stages of this policy. The Codes accounted for this by splitting the compliance targets from years 0 to 5 with a target of 40% and years 6 to 10 with a target of 50%. The QSE targets are substantially lower than those provided in the generic scorecard. Read the rest of this entry »

The Codes have introduced new concepts in enterprise development to encourage sustainable contributions.

Statement 600 provides a benefit-factor matrix that classifies the substance of contributions on their ability to enhance the financial and operational capacity of the beneficiary entity. The greater the substance of the contribution, the higher the recognition granted to that contribution. The benefit factor is the percentage recognition given to the actual amount of the contribution. Read the rest of this entry »

Interestingly, the sale of assets is not addressed in the enterprise development element. Strictly speaking, by selling a Black person an income-producing asset, an opportunity to produce an enterprise has been created.

A measured enterprise may recognise the sale of assets as enterprise development or ownership. No points will be awarded for enterprise development if the transaction has been recognised and scored in ownership, and vice versa. Read the rest of this entry »

The enterprise development scores are measured with this formula: A = B/C x D

A = the score for enterprise development carried forward to the generic scorecard

B = the value of all qualifying contributions from the date of inception of measurement or the date of this statement

C = the compliance target

D = the weighting points. Read the rest of this entry »

Deciding which entity to develop

In most instances, the business probably has most expertise in its own operational field. Ideally, the business should look to share this knowledge with Black business by contributing to an enterprise development beneficiary in the same field. In many circumstances, it makes no sense to share knowledge and operational capacity with a potential competitor. Before making a judgement on this comment, consider whether the beneficiary is actually a competitor or another business of similar nature servicing a different market. 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 »

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 »

It is common practice for your BBBEE rating to coincide with your financial year end. As your BBBEE rating is only valid for 1 year, this is the opportune time to seriously consider your BBBEE rating.As the leading empowerment consultancy in the industry we have the deepest experience in interpreting what qualifies, and what supporting evidence is needed, for your BBBEE scorecard. We have the knowledge to be able to provide you with the tools and information needed to build a comprehensive Pre-Audit pack for the rating process.

The Pre-Audit pack will help you to put together the qualifying data that will be needed for the auditing process. We will help you to understand what supporting evidence is needed for the rating agencies check list. By doing this you will understand what qualifies and what doesn’t qualify for rating. Read the rest of this entry »

Employee Ownership Master Course

Employee Ownership and ESOP’s (Employee Share Ownership Plans) are becoming a mainstay of BEE deals. We find that many different consistencies within an organisation are tasked with the design and implementation of an ESOP.

Course Outline

The Employee Ownership Master Course understands that all players need a basic understanding of the design and implications of the various design aspects of an ESOP.
This two-part employee ownership master course deals with the practical factors to consider in designing and implementing an employee ownership scheme. This course is essential for all individuals involved in the process, as it provides a best case understanding of the various disciplines. Read the rest of this entry »