Socioeconomic development is given the smallest weighting, 5%, in the finalised scorecard of the broad-based BEE codes of good practice released by the department of trade & industry this week. This implies it is not a call to substantive new social investment activities for most businesses, and interestingly also implies the focus of the codes is on those already active in the economy rather than on people with the greatest need. I can only assume that the call to business is to focus on their value chain and allow other stakeholders in the economy to focus on the development of our children.
As grants, loans and investments into empowered businesses qualify for enterprise development, it would appear that companies are encouraged to become mentors, financiers or venture capitalists. This is not a standard business competence and hence has the potential to be badly done. With a weighting of 15% it is now vital that businesses examine their value chain and establish relationships with empowered businesses to create an ongoing source of enterprise development.
There are three notable changes in terms of preferential procurement. The most significant is to allow for self-assessment in your suppliers. Though this goes a long way to reducing the costs of BEE compliance, it does not promote quality in the empowerment scorecard produced, or ensure data integrity.
The second change is the superb innovation of sliding targets. Industry has not by and large recognised that BEE is a process or given the right consideration to the dates by which the targets must be achieved.
The third change is separate targets for spend with black-owned businesses. This, together with the requirements to qualify for enterprise development, provides a platform to support black-owned businesses.
The first impression is that skills development is now of lesser importance. We must, however, recognise that companies are not going to withhold tools from their employees to effectively do their jobs. So by focusing on employment equity and encouraging a better talent pipeline you would also be encouraging a skills transfer to more black employees. This re-weighting is a positive step, as is the broadening of the learnership definition to in-service training that includes artisanships and internships. It also appears the emphasis on black women has softened.
There are few changes to the ownership and management scorecard, which will draw sighs of relief as we are well down the road in ownership and to change tack now would have been disorientating. The changes to the ownership scorecard are not in the measurement, but rather in facilitating more black capital deals and then freeing black capital to do more deals. The former is done through limiting the amount of points that can be attained from broad-based schemes as ownership. This was born out of the fear of black capital that it would shrink the ownership pie, and that these schemes were unable to drive transformation. The "once empowered always empowered" concept will rightly be met with mixed responses. It will again be great for the incumbents, but will restrict the entry of new black capital.
The small enterprise (QSE) scorecard is less onerous and the limit of who qualifies is lifted to reasonable levels.
Generally, the codes are well structured and took into account the issues raised by stakeholders since the draft version. They are a sophisticated tool to measure your company's empowerment journey.
But our country is at a tipping point, with a Zimbabwean scenario still more possible than we like to admit, so I have to ask, is it too little, too late and just a tinkering on the edges of a neoliberal economic framework?
Time will tell.
Woolley is a director of Ownership Solutions
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