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 We do not see the B-BBEE act being rescinded when a new president takes office.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.

Financial Services Charter

Financial Services Charter (FSC) had a self-imposed deadline of completing the process by 31st August 2008. This was missed – although in reality the dti BEE codes does not have this deadline. At the very best the FSC could have had a draft ready for gazetting, but this would not have been finalised, so their own deadline was unachievable. The private agreement that the dti had with the FSC, that originally had no legal force, expired on 31st August and therefore is null and void.

What it does mean is still to date no charters have been gazetted. The tourism charter has progressed furthest, but is still not finalised. In the meantime, every/any entity that needs to follow BEE can only follow the Codes of Good Practice.

Accreditation of Verification Agencies

SANAS (SA National Accreditation System) has put an indefinite hold on accreditation. There are still no accredited verification agencies. ABVA (Association of BEE Verification Agencies), an industry body representing prospective verification agencies is understandably concerned as it could impact on the profitability of their members. There has even been a bit of a public argument between ABVA and the dti over ABVA using the dti name in its advertising.

We believe the reason for the delay has less to do with ABVA and more with the interpretation of the codes. SANAS is intending accrediting agencies based on an ISO standard (17011). ISO requires some form of definite answer to questions, and the codes themselves are still very open to interpretation.

There are many areas of controversy, and until they can be solved, it would make sense for ISO to refuse accreditation:

• The on-going issue of self-assessment vs independent assessment vs ABVA members
• The detail of evidence required for assessment
• Specific interpretations: for example:
  • Adjustment for gender – see our article on why we believe most agencies are getting it wrong
  • Procurement: What is included and what is excluded?
    • Some consultants believe that spend on TELKOM is excluded, while others include TELKOM as both a 50% black owned and 30% black women owned company
    • The jury is still out on whether spend on local authorities is included or not – rates/taxes are excluded, but the debate is around water and electricity, even though clause 6.2.1 seems to apply
    • ESKOM – is it an organ of state or public entity that enjoys a statutory or regulated monopoly?
  • Enterprise Development. We have seen arguments around the inception date and assessment of monetary of spend.

Until there is clarity and consensus and an independent resolution body, I suspect that SANAS will not be able to accredit any organisation.

The dti has published its methodology guidelines to verification which does help, but it too has a long way to go to meet full ISO standards.

BEE Procurement and Enterprise Development

We had a positive response to at our recent BEE Procurement and Enterprise Development Conference. The delegates left with more information than they could have imagined.