BEE Partner, South Africa Economy Watch

The skills development levy was designed to force entities to invest in skills development by paying money to a SETA. This money is recoverable from that SETA when the company invests in skills development. A large majority interpreted the skills development levy as a pure tax, paid the money to the SETA and never reclaimed it. This approach results in zero return and becomes, as mentioned, a straight tax.

The objective of BEE is to stimulate growth, not to invoke taxes. If the skills development initiative is not going to result in a return for the business then it is likely to result in unsubstantial skills training. If it is unsubstantial, then the trainee is not going to be any closer to participating in the mainstream economy and the exercise lacks substance. Strictly speaking, BEE contributions that lack substance are not measurable.

An investment implies that the employee will return from training with the ability to make more money for the company than prior to the training. Whether that training entails operating a computer programme more efficiently or part-time study for a university degree is particular to each business. But it must result in a return for the company greater than the initial investment. Read the rest of this entry »

The procurement recognition level refers to each supplier’s BEE procurement recognition level as determined by that supplier’s BEE status level. The table below is sourced from Statement 000. Suppliers should be able to provide the purchasing business with a BEE certificate from a verification agent. The certificate will contain the BEE status level and probably the BEE procurement recognition level. Read the rest of this entry »

The Codes use enterprise development as a secondary driver for encouraging BEE contributions. Becoming a beneficiary for enterprise development is attractive to any business because it means other BEE contributors may invest their enterprise development contributions in that qualifying business.

Qualifying contributions are not restricted to Black-owned businesses. By allowing a white-owned business that achieves a substantial BEE score to qualify as an enterprise development beneficiary, it is argued that this would encourage the facilitation of Black ownership in the white businesses through financing mechanisms. 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 problem in most organisations seems to be that value innovation is kept at the corporate level and does not permeate the entire organisation. Employees need to see themselves as a critical resource in the job that they do, not just for the organisation, but also for themselves. Put simply, if an organisation creates an environment in which value innovation is encouraged and rewarded, the participating individual’s self-worth will improve, which in turn will have a positive spin-off on job satisfaction, job involvement, and, ultimately, customer satisfaction and loyalty. Read the rest of this entry »

8. Share wealth

According to holistic health guru Deepak Chopra, one of the fundamental universal principles is that of giving.” This principle works through a form of universal reciprocity, whereby the act of giving, in whatever form it may take, is returned to the giver. This reciprocity may not come from the recipient, but may find its way to the original giver via another source. In a business context, sharing wealth, particularly with one’s employees, in whatever form that may take, is a form of giving. The new breed of South African manager will find it particularly beneficial to enhance the talents, willpower and motivation of his or her employees by sharing the company’s wealth with them. South African companies have to have as many of their people as possible feel part of the company’s strategic initiative if it is going to be successful in tackling the opposition. Sharing the wealth of the company with employees rewards them for their endeavours and spurs them on to achieve even greater feats. Read the rest of this entry »

In its earliest and simplest forms, the gold standard meant that the money in circulation, including the money the government minted, consisted of gold coins. When the US officially joined the gold standard in 1879, the value of the dollar was set as equal to the value of 23.22 fine grains of gold, where 480 fine grains made a fine troy ounce. This was equivalent to $20.67 per ounce.

Under the gold standard, the constraint on the creation of bank money posed by reserves is critical. Bank money consists of notes issued as claims to real money, that is, to gold or silver coins, money with intrinsic value. But at any time, most of the public would prefer to use the more convenient paper money, provided they are confident that they can convert the (intrinsically worthless) paper to gold at a moment’s notice. For this purpose, reserves are kept in proportion to the note issue. Read the rest of this entry »

A ‘transformational growth’ perspective (Nell, 1998a) would suggest that these principles are connected in an evolutionary pattern: as technology developed, production and employment took on new forms, and came to require different kinds of financing (Nell, 1998b). To keep pace, the monetary system also had to adapt and develop in new ways.

This took place in several stages. In the first instance, as transactions became more complex, metallic money proved inconvenient. Paper claims to gold could be used more easily, and came to replace gold. But bankers noticed very early that a given supply of gold could support a larger amount of circulating paper, since only a fraction would be presented for conversion at any given time. Convertible paper based on a fractional reserve, however, is fiduciary money. It is based on the trust the public has in the banks. Read the rest of this entry »

Now let us look at modern money, which is not anchored in gold or precious metals, and consider how money that is purely a matter of convention or fiat obtains and keeps its value. In the older economy, money was anchored to metal that had ‘intrinsic value.’ Such money is an asset to its possessor, but it is no one’s liability. This connection is broken in modern systems in which money has no intrinsic value. It is an asset to its possessor, and a liability to its issuer. Between these, we have a system in which paper money and bank deposits are loosely tied to intrinsic value by being convertible into bullion, plate or coins. Such money is also a liability to its issuer. The implications of the change from money of intrinsic value to modern money are striking. Read the rest of this entry »

In the older economy, the monetary system did provide a constraint, and this constraint helped stabilize the economy; changes in the value of reserves worked in conjunction with the price mechanism. By contrast, the modern monetary system offers no constraint, and, in fact, inflations and asset price booms are self-financing, since price rises increase the value of collateral, on the one hand, and raise the value of bank capital on the other. The modern monetary system also allows for a creative use of the central government’s budget. The shift in money from real to nominal, following the changes in technology, has brought a new role for the government. The government budget is both much larger and plays a stabilizing role in the way it affects the economy. Read the rest of this entry »