It becomes necessary at this stage to point out that there is an ill-fated term that _occupied the short interval between Equal Opportunity and Affirmative Action, namely Managing Employee Diversity. It can be argued that had it not been for the dramatic announcements in Parliament by FW de Klerk on 2 February 1990, Managing Employee Diversity would have been the new term in vogue. Naturally, its origins can be traced back to the United States of America, more specifically an African- American management consultant by the name of Roosevelt Thomas Jnr who was arguing that this new term was more appropriate to the 1990s than the other terms `whose time had passed’. Managing Employee Diversity was to have the shortest shelf life in this arena.

Affirmative Action, the term of the post 2 February 1990 era, seems to be dying a slow death. It is now being substituted by the term ‘Empowerment,’ without the prefix ‘Black‘. A number of business and political leaders have indicated to me that a preference for this term emanates from the following considerations:

1. The prefix ‘Black‘ is seen to be too Africanist in its tone, thereby risking the alienation of Asian and coloured people who were also victims of past discrimination.
2. Furthermore, the prefix ‘Black‘ is seen to be excluding other categories of previously disadvantaged people like women of all colours, the disabled, the homosexual et cetera.

It is my contention that empowerment deals do not constitute affirmative action programmes and that the use of these terms as synonyms is likely to create a legacy that will come back to haunt the business and political leaders of this country.

Nevertheless it becomes important to acknowledge that the process of integrating blacks and other disadvantaged peoples into the economic mainstream of this country can broadly be divided into the following three levels. These three levels are beginning to be reflected, for instance, in tender document criteria that government departments or parastatals use in determining an organisation’s ‘empowerment‘ track record.

As alluded to earlier, the traditional South African view has been to concentrate on the recruitment and advancement of blacks and women up the ranks of an organisation, as well as their appointment, usually as non-executive directors at board level. The new view regards these initiatives as important parts but not all of what is now referred to as ‘empowerment‘.

A perception was beginning to develop in the corporate boardrooms that, despite the pomp and fanfare with which many of these black advancement programmes had been launched, results had been less than inspiring. There was certainly consensus amongst both advocates and detractors of black economic advancement that the results were poor, although there were sharp differences amongst the two groupings on the reasons behind this poor showing. For instance, the detractors would argue that there was now more than enough evidence that blacks do not have what it takes to become good managers, whilst advocates, on the other hand, were arguing that these programmes were being sabotaged by white middle management. Nonetheless, the failure with which the label ‘black advancement‘ was being associated virtually confined the term to the shelves.

Politically there were conflicting signals from the government on how it sought to deal with the question of black socio-political and economic empowerment. This confusion was clearly illustrated by the man who had been put in charge of this process, the Minister of Constitutional Affairs, Mr Chris Heunis. In 1986, when asked to explain what the National Party’s policy on black socio-political and economic empowerment was, this was his erudite response: The whole political concept of consociationalism is predicated on the existence of groups which should be entitled to a measure of segmental autonomy.”

Corporate South Africa’s obsession with the latest management jargon from the United States of America and Europe was to manifest itself once again. It must be recalled that in the United States and the United Kingdom, this was the era of Ronald Reagan and Margaret Thatcher respectively. Conservatism on issues around the advancement of corporate minorities in these countries was rife. A new ‘politically neutral’ term was then coined by the army of management gurus from these countries, Equal Opportunity. This approach was seen to be premised on the assumption that fairness exists when people from all backgrounds are given equal opportunity to succeed or fail in society, unlike the ‘reverse discrimination’ of affirmative action and black advancement. This thinking was to find a ready audience in South Africa and it became the rage of the eighties.

The BEE Act empowers the Minister of Trade and Industry to gazette sectorial charters that are developed by the private sector on an industry-by-industry basis. It allows each industry to explore how it can contribute to transformation, given the constraints and context of that particular industry. Although the Act allows some space for the private sector to drive the process, it also empowers the minister to issue codes of good practice that will form the basis of criteria for the granting of licenses and other authorisations. These codes are meant to react to the changing needs of the transformation process, and also to vary the pressure on the private sector depending on the progress and needs at any given moment. In basic terms, the Act provides the private sector with enough space and the measuring framework to effect transformation, but has the legal means to increase pressure if it does not deliver.

The First Code of Good Practice

The First Code of Good Practice is supported by a strategy document. This code serves two purposes:

To guide the thinking in the process of developing a sectorial transformation charter.

To guide all organs of state in awarding licenses, tenders and other authorisations.

The First Code would apply directly to you if your industry was not currently more precisely defined by a charter (if you are under an industry charter, the charter would have taken the code definitions into account during its evolution). These dimensions are: shareholding, control, skills development, employment equity, preferential procurement, enterprise development and a residual that is normally interpreted as corporate social investment.

Note that the base of the pyramid has the broadest impact on the business environment, laying the foundation for effective interventions in your supply chain (called indirect empowerment). That leads to initiatives that impact your employees. Lastly, your ownership initiatives seem to have limited impact, but, as we will see under employee share options, this is not necessarily the case.

The seven transformation dimensions have the following definitions:

Equity ownership (shareholding): Direct empowerment focuses on the percentage share of economic benefits.

Control: The right or ability to direct or otherwise control the majority of the votes attached to the shareholder’s issued shares; and the right or ability to appoint or remove directors holding a majority of voting rights at board meetings. It is measured as a percentage of black persons in executive management.

Skills development: The development of employees in a company. It is measured as the rand spent on skills development as a percentage of payroll.

Employment equity: To bring about an equitable representation of black persons in all occupations and at all levels of the organisation over a period of time. It is measured through a weighted employment equity analysis.

Preferential procurement: Procurement from black-owned and empowered enterprises as a proportion of total procurement.

Enterprise development: The development of the capacity of black companies (normally suppliers). It is measured by the total investment going to enterprises that are BEE compliant.

Residual (corporate social investment): Allows for flexibility by taking into account the specifics of your industry, but is normally interpreted as corporate social investment. It is generally measured as a percentage of after-tax profit spent annually on housing, transport, bursaries, health, etc.

The charters

The government has developed the First Code for companies to measure and report their efforts towards sustainable broad-based transformation. This framework will be more specifically translated into targets and measures for each industry (called charters), but until this process is completed, companies can use the First Code to measure and report their transformation process and set their own targets using the key dimensions in the code.

If your business falls under a charter, this replaces the code as guide to setting targets and reporting your transformation efforts. However, don’t sit back and wait for a charter to tell you what to do. You should be getting involved in the process of developing your transformation strategy and a charter for your industry in the interim.

Developing an `as-is’ transformation picture

In order to guide your strategic thinking, it is useful to get a very rough picture of your company’s current BEE status set against the key areas of transformation. Using the table below, estimate your company’s raw scoring in each of the areas.

While this is a very rigorous definition, it certainly does not roll easily off the tongue, so what’s it all about? If we don’t know what we are dealing with or where we are trying to go with it, we cannot start the journey. In our society, the stakeholders jostle with each other, as the view on what transformation is depends on who’s asking the question. Black business, white business, government and organised labour all have their own (but sometimes overlapping) definitions of transformation and what it is trying to achieve. It is the thrust and parry of this debate that forms the nature of BEE on an ongoing basis, but one thing we can be sure of is that BEE, in its essence, is in rapid evolution.

I would like to refer to BEE as transformation, as it means changing form, which is at the heart of the BEE issue. Business constantly needs to change form to be in symbiosis and harmony with its environment. Formally, BEE is a component of a broader transformation context, but referring to BEE as transformation ensures that BEE is not just a reshuffling of share certificates, but is aligned to and enables the transformation of our economy. What transformation is about is best understood by looking at the illustration below.

This funnel encapsulates the reduction process of transformation in business in South Africa today. At a national level, every South African wants the country to be a place in which all our children can reach their full potential. As an Irish poet once said, ‘Now that the battle for the plains has been won, the battle for the hills begins: Our political ‘miracle’ needs to be followed by a far greater economic miracle – ensuring that all South Africans are participating in the economy at all levels, in a way that creates value for all.

Whenever I ask people, ‘So, how are you contributing to the transformation of South Africa?’ I get blank stares! Somewhere between the tremendous wellspring of good intent and desire to create a truly great and representative South Africa and the actions of each individual, the wheels come off.

Can you imagine what would happen if every South African brought every ounce of their creative energy and capacity to bear to achieve this purpose? In an attempt to galvanise us into action, the government has developed some frameworks (enabling legislation) in which to engage with the private sector. This gives our companies a vocabulary to debate within industry sectors how they can reinvent themselves to create a stable business environment that they understand. Is it not the mandate of a great CEO to understand the moment we are in? To understand the forces that shape the behaviour of the customers and to lead the organisation towards using its resources to create sustainable value in that moment?

Do you know companies that are out of step with business in South Africa today? I come from a country that no longer exists, and in the next five years I will move into a country that is going to be radically different from the South Africa of today. Don’t let your company become a dinosaur!

Part of the process of bringing the resources of the company to bear involves ensuring that your employees are engaged creatively in this task, and so, in simple terms, the basic unit of empowerment is the individual, and the ethos of empowerment involves creating a context for the individual in which to reach their full potential.

The problem arising out of economic interest is that many businesses abused their BEE partners by stripping profits out of the entity before distributing returns. Earlier drafts of the Codes provided an anti- circumvention clause in the definition, which gave more specific guidance on what should be included in economic interest.

The current definition of economic interest was shortened in the interests of making the Codes easier to use. The problem is that in shortening it, the guidance given to users is incomplete, which may result in misinterpretation. The following is not in the Codes. However, it reveals the underlying intention of the Codes according to earlier, more comprehensive drafts.

Where a verification agency or customer identifies any of the following, the economic interest held by Black people will be calculated as a percentage of the economic interest had the circumventive strategy not existed. For example, the excessive salaries paid to non-Black people would be included as economic interest in the hands of the non-Black parties for the purposes of calculating the economic interest points.

BEE Partners’ Salaries

Salaries do not form part of economic interest. However, where a salary is paid that is not a reasonable reflection of the market value of the director or employee, the portion above market value should form part of economic interest. The problem intensifies when a person earns a salary based on celebrity status, which is difficult to measure in terms of a market standard. Verification agencies will review the reasonableness of a celebrity-related salary in terms of the benefit that person brings to the business.

In the small business environment, salaries are going to present a significent obstacle. Business owners often reduce their own salaries and extract a higher dividend for tax purposes. Alternatively, the salaries are reduced to ease the business’s cash flow.

The verification agency must apply a degree of discretion in determining the reasonableness of the remuneration package when considering what constitutes economic interest and what is a bona fide expense of the business.

Bonuses are also commonly used as a mechanism to strip profits. The verification agency will review the basis on which the bonus has been allocated. If a bonus is not based on a coherent, quantifiable, previously agreed upon methodology, such as a defined performance management system, it begins to resemble economic interest and invites further investigation.

Transfer pricing

Transfer pricing is another common mechanism for reducing economic interest paid by an entity to shareholders. Transfer pricing is where a business sells goods or services to a related business at a discount or premium on market value, to reallocate profits from one entity to another for the purpose of reducing the economic interest going to a certain shareholder.

For example, Mr A owns X CC and Y (Pty) Ltd. Mr A sells 25% of X CC to a BEE participant. In an attempt to reduce the profit share due to the BEE participant, Y (Pty) Ltd sells stock to X CC at an inflated amount above market value. X CC, holding a good BEE status level, secures the right to sell the stock to a government department. The profit distributed to the BEE participant is reduced and Mr A realises a higher profit through Y (Pty) Ltd.

Verification agencies are aware of businesses using transfer pricing to strip profits. The economic interest held by Black people will be calculated using a market-related price for the sale of goods from Y (Pty) Ltd to X CC. In addition to this, the practice may be reported as fronting.

Thin capitalisation

Thin capitalisation is similar to transfer pricing but the profits are stripped out of one business in favour of another by charging excessive interest rates. This practice will be dealt with in the same manner as transfer pricing.

Debt and preference shares

Debt in favour of a BEE party is not ownership and interest payments will not be measured as economic interest.

While senior debt in its primary form does not present a problem, the difference between debt and equity is often difficult to determine when preference shares, debentures and derivative instruments are used. The verification agency will look at the nature of the instrument to determine whether the distribution represents interest that is not measured as economic interest, or dividends that are measured as economic interest.

The characteristics of debt are:

• A fixed interest rate or fixed rate of return
• A fixed period of repayment
• Where the return is not dependent on the performance of the business.
• The characteristic of ownership is a return on investment based on the performance of the business.

Businesses choosing to structure ownership deals using preference shares or derivative instruments must fully understand the difference between debt and ownership, otherwise the verification agency will not credit them with the anticipated points.

The Codes do not imply that 25% of a business must be given away, which would be ludicrous. What BEE is saying is that businesses wishing to contract successfully with government and other downstream suppliers must bring in Black ownership. QSEs are slightly different because they may choose whether or not to include the ownership element, depending on their strategy.

Ownership should be used as a strategic business tool. When dealing directly with government, businesses with Black ownership are likely to find they win more contracts with government.

There are two important factors here. The first is that there is nothing about giving a business away. If the business has value, then it should be sold to a Black party. The existing business owner should realise value for the portion of the business forgone. The second point is that if including Black ownership will not bring benefit to the business, the QSE owner may choose to participate in four of the other elements instead.

Most Black people do not have access to finance to pay for the relevant share of the business. But there is no law against the original _owner financing the Black person’s entry into the business at market- related rates. This is known as vendor financing. There are complications with a company because the Companies Act prevents a company from helping a party to buy shares in it. A company may not provide finance to an outside party to buy shares in itself unless it can show that it will be liquid and solvent after concluding the deal. This does not apply to close corporations, only to companies.

The crux becomes the sale of an asset at an agreed amount between two willing parties. Remember that BEE strategies must be based on sound economic principles. Giving a shareholding away to someone who will not bring benefit to the business is not a sound business principle.

Contracting directly with government

A business contracting directly with government, regardless of what BEE says otherwise, will receive more contracts if it has Black ownership. Ignoring the ownership element exposes the business to the risk of reduced future cash inflow. If the business is a monopoly and the government department has no option, ignoring ownership becomes a calculated risk. Businesses operating in competitive sectors have little option but to partner with a Black person, as the proactive business is going to gain an advantage over the competition.

Contracting with the private sector

A business contracting with private companies who are merely looking for high preferential procurement recognition, does not have the imperative of choosing ownership participation. Businesses dealin_gwith the private sector should not negate the potential of Black ownership participation. The client’s requirements will drive the necessity while certain clients may insist on Black ownership.

A business contracting directly with the general public has the least motivation for selling equity to a Black partner. Children buying ice- cream from a corner store are not going to ask for a BEE verification certificate before handing over their cash.

Why would a business engage in ownership if its customers are indifferent?

Where customers do not require a business to choose the ownership contribution there are still valid reasons for participation. Selling ownership is based on simple business principles:

* Gaining access to new markets by combining businesses often presents synergistic qualities. Most white South African businesses focus on catering for the white South African market, which is one tenth of the South African market. Previously, the business logic was that the wealth is centred in the white population, making it a more attractive market.

Catering for the white market is an outdated approach in the current South African economy, and limits profitability. The Black middle class represents the growth sector.

Businesses looking to gain white market share have to win that client from a competitor. The Black market presents an open ocean of new opportunity where Black people with money are waiting for the market to cater to them.

What is creating this new market? Black economic empowerment. Who is going to be able to capitalise on this new market? People who understand it. Who understands the market? Black people. Businesses partnering with the right Black entrepreneur stand to gain access to three or four times their existing market.

BEE does not promote giving equity away to someone who is going to lie under a banana tree and get a monthly dividend cheque. It is about creating new opportunities for those who choose to participate. If BEE is a horse that can take business to a new market, Black ownership represents the reins controlling the horse.

Access to complementary skills is another business reason for selling equity. If a business lacks a certain skill then an opportunity may exist to bring in a Black shareholder who can provide the complementary skills to the business.

* The BEE deal represents a merger of businesses stimulating growth through synergy.

An example of a successful BEE deal is where a white person buys shares in a Black-owned business and contributes to the future success of that business. Instead of paying cash for the business, the white person trades a percentage of ownership in the white-owned business for a percentage of ownership in the Black-owned business.

Implications of the different types of partnerships

Black economic empowerment initiatives of recent years provide an interesting view of:

• the types of BEE partners taken on board
• the trends of partnerships that are concluded by companies
• the impact of the partnerships on the underlying operations of the business.

What are the implications for BEE presented by these different partnerships? The first is that there is no single solution that fits all. For a partnership to work, both parties must derive benefit. If either party feels there is no benefit, then the partnership or the entire business will fail.

Most businesses look for an empowerment partner who can bring new benefit to the business, such as access to political influence, increased finance, increased operational capacity, access to new markets or new product lines.

The objective is to establish a synergistic fit between business and partners. A business owner must understand the needs of the business before determining what kind of partner the business needs.

BEE partners can be categorised into three broad groups:

• influential partners
• operational partners
• broad-based groups.

Influential partners

The generation of Black people who were at their working age during the apartheid era were discouraged from entering the business arena. They channelled their energy into the political struggle. Both entrepreneurs and politicians are passionate people, one about their product and the other about their cause or ideology.

In politics, all their energy was used to change the environment. People with entrepreneurial characteristics had no outlet for those energies and were forced to expend that energy in politics until they achieved their goal and reverted back to adult movie business.

Through their struggle credentials and extensive network of contacts^,influential partners yield a considerable amount of political influence. The political influence offered is of great value to business and has the ability to generate substantial new business.

The term “gentlemen of BEE” refers to the elite Black businessmen. The gentlemen of BEE fall into this category of BEE partners.

From a QSE perspective, it is unlikely that one of the gentlemen of BEE will invest in a small business. However, the influential partner is available to QSEs in terms of influence in a more localised arena. A QSE wanting to contract with local government may find a partner with local influence capable of opening more doors than a Black person of national influence.

Using an example of a white property developer wanting to do a new township development, there are many local government issues that need to be dealt with.

Consider a Black person who has just left local politics to go into private business. The ex-politician is no longer in government and so there is no conflict of interest. However, he or she probably still has a relationship with influential people in the municipal departments who may grant approval for the project.

This relationship is not advocating preferential treatment or corruption. The ex-politician probably has the ability to fast-track the development because of insight into the system. Similar to the way that you pay your attorney for specialist knowledge of law, the ex-politician’s knowledge of the internal operations of local government has value. The authorisations are likely to go through in half the time, which in most property development scenarios is worth a lot of money to the developer.

Operational partners

Operational partners normally originate from a business background, having run their own businesses independently. In most instances they originate from the same sector as the business they merge with or buy into. These partners are classic entrepreneurs who have taken great risk in starting their own enterprises and have experienced the scars of running a business for themselves.

Operational partners have the capability of bringing new markets to Previously white-owned business. They also contribute sector expertise and active managerial or operational involvement.

The operational partner is unlikely to be a silent partner but an active participant in a business who brings value to the business. Depending on the attitude of the non-Black party, an operational partner may result in confrontation, which can be managed through taking on complementary skills rather than replicating them.

Operational partners are favourable in the QSE environment.

Broad-based partners

Broad-based BEE partners comprise broad-based structures such as development trusts, union funds and business association funds. They use investment management companies to effect BEE transaction_s. These types of structures have a wider base of beneficiaries who are not involved in the running of the funds. Employee share ownership schemes fall into this category as well. Examples of these broad-based structures include Kagiso Trust, Women Development Bank and Nafhold. They are essentially public benefit organisations.

Broad-based groups offer little operational benefit to a QSE apart from a stronger public image. However, consider an example of a local building materials supplier wanting to increase market share. The supplier initiates a BEE deal with a public benefit entity whose beneficiaries are the residents of a local Black township. The profits derived by that broad-based group are used to build parks, schools, facilities and even subsidised housing for the local community. The brand recognition and loyalty is likely to result in new clients from that community. The ownership structure becomes an elaborate marketing scheme to the benefit of everybody.

Broad-based partners include employee share schemes. Many QSEs tend to favour the use of employee share schemes as empowerment partners. The logic behind it is simple. The owners would rather include their employees than unknown people in their business. On top of this, a master-servant relationship exists between owner and employee, making it easier for the owner to retain unchallenged control of the business. The business owner must consider the benefit to the business of incorporating an employee share scheme ownership strategy. The obvious advantage is that ownership participation encourages productivity and profitability. Beyond this, the benefit to the business of employee ownership schemes is questionable.

I do not want to undermine broad-based groups and employee ownership schemes. Correctly implemented they both have the ability to grow a business. However, in most circumstances, they are abused and offer limited benefit to both the business owner and the BEE party. From a business perspective, it may be favourable to split the ownership between broad-based ownership and an operational partner, giving the business the best of both worlds.

Both broad-based groups and employee share schemes are complicated structures to set up. Businesses should take advice from someone who has had extensive experience in successfully structuring these schemes.

Structuring

In many scenarios a combination of the above partners is used. Combinations are not as prominent in the QSE sector, but they should still be considered. White business owners have a tendency to dilute the benefits allocated to operational and influential partners because they have the ability to challenge the original owner. Where insufficient financial reward is available, these partners are unlikely to add any real value to the business.

The level of involvement in the underlying business varies between the different partners. The operational BEE partner is more intimately involved in the operation as opposed to the level of involvement that is seen from the broad-based BEE partners and the influential BEE partners. Both the entity and the empowerment partner need to consider whether they would like to engage in active involvement or not before a deal is established.

Arguably the most desirable partner would be an operational partner who has derived political influence through business achievements. An insightful understanding of the business operation used in conjunction with political influence is a powerful tool in business. Partnership with a Black woman operational partner who has political influence offers the highest reward in terms of BEE points.

• Start-ups (BCG uses the term “Question mark”.)
• Stars
• Cash cows
• Dogs.

Start-ups are new ventures with no track record. Start-ups usually require capital investment and do not produce any cash benefits for the owners. A start-up can evolve to a star or a dog. They are high-risk entities making them difficult to value and will find it hard to obtain empowerment partners.

Young white people leaving school or university will increasingly need to be self-employed. This implies an increase in start-up businesses. They need to get together with Black friends from school or university who have not been snapped up by business and create a new venture. There will always be Black people whose entrepreneurial drive exceeds the will to join big business.

A star is a young business with a track record indicative of strong growth. Stars generally reinvest all available cash flow and often still require capital contributions from investors. A star is a high growth cycle business. Operational partners are best suited to stars. These younger entrepreneurial companies tend to require partners who will actively participate in the day-to-day strategy and running of the business while growing the business organically.

High-growth businesses also need influential partners with political clout. The politically connected partner will take a smaller stake in something that has growth potential. Their interest in this would be providing for future generations.

A cash cow is a well-established business with a track record of consistently generating cash flow for the owners. It has reached a plateau and prints money for its owners. The main concern of the established company is to maintain its existing business and competitive edge rather than aggressively increasing the business. Most established businesses prefer partners who will not necessarily change the way they run but are capable of delivering high-level strategic advice on political and economic trends.

Wherever you go in the world, in modern times more so than ever, politics and business are intimately connected. Any high-level business needs political credibility.

It becomes a natural progression for cash cow businesses to seek alliances with partners who have political credibility, people who understand the current policy and the objectives of current policy. To sustain the position of a cash cow the business needs to be aligned with the direction of policy. In the QSE environment, political clout is more likely to be at local or provincial government levels.

Cash cows also want to reward people for participating in the creation and maintenance of the business. They will reward people for their loyalty and create incentives for employees in retention strategies. Most cash cows include employee ownership schemes in a portion of their ownership strategy.

A dog is a business that is on its way out for various reasons and is not something anyone would want to inherit. Degenerating businesses are often dressed up by the owners and sold to a more gullible empowerment partner. If a dog is unable to source empowerment partners, the most effective means of becoming empowered is through the use of employee benefit schemes or broad-based ownership schemes.

The source of partners is dictated by:

• the type of partner required
• the value chain
• the industry or sector of interest.

Take an example from property development. An operational partner would be someone who currently works as a site manager of a relevant-sized construction operation. This person has the experience, but his or her growth has probably been limited to a certain level in the past. A strategic partner in property development may be someone with a history in the town planning department of local government.

The value chain

The best place to find a partner would be to examine contacts in the value chain of business operations. Start with the closest Black person whose interests are aligned to the needs of the adult movie business.

Employees are normally the closest. While ownership incentives can be motivational, you should also consider the additional value they can add to a business. Clients and suppliers often offer opportunities for synergy.

Consider competitors. Is there a competitor owned and run by a Black person? Do not reject this as an opportunity. Sell the Black competitor a share in your business and buy a share in that person’s business. The increased size creates better buying power and potentially eliminates replicated resources. Mergers and acquisitions are based on this principle. If it works well for big business, it can work well for small business.

Employees, clients and competitors offer operational partners, although influential and broad-based partners are also represented in these groups.

Influential partners in the form of Black people employed in key government positions relating to the business often have the ability to introduce new market opportunities. It is important that all personal interests be disclosed when a public servant has an interest in a private entity.

The industry sectors

Nothing beats networking. There are various other ways of sourcing partners and opportunities through industry:

• Attend conferences and functions.
• Industry associations usually have annual meetings.
• If the sector has a charter drawn up, participation in the charter process is an excellent way of meeting potential partners. The charter process includes indabas, which anyone can attend.
• Go through the various business chambers.

Industry forums such as the BMF or Black Managers Forum, ABASA, BITE, FABCOS or any sector-specific groups provide networking opportunities that can lead to BEE partners.

Sourcing the correct empowerment partner is a case of identifying the need and implementing the search in a logical direction.