2013 marks a decade of the existence of Black Economic Empowerment (BEE) in South Africa, with the country set to host the first ever summit on BEE today.
Through the hosting of the two-day summit, the Department of Trade and Industry (dti) intends to re-orientate the framework, as well as reposition B-BBEE as a catalyst for economic growth and development. It also aims to demystify the myth of B-BBEE being viewed as non-productive and not growing the economy.
Through a decade of BEE, companies have become successful. Among those who have succeeded in growing their business is Strategic Outsourcing Solutions, a company based in Cape Town.
Some of the objectives of government’s BEE policy include empowering more black people to own and manage enterprises and to promote access to finance for black economic empowerment.
Strategic Outsourcing Solutions’ core business is in the building of ribbon blenders and filling equipment; and piston filler, which is used to fill liquid and semi-viscous products such as hot soups, water, jams and spreads, among others.
Prior to approaching the Small Enterprise Development Agency (SEDA), Regi Jordaan, owner of Strategic Outsourcing Solutions, had experienced difficulties in running his company, which he established in 2010.
“I was running a business with minimum equipment,” he said of his business prior to SEDA’s assistance.
SEDA did a business analysis on Jordaan’s company, which involved looking at sales, overheads and profit, among others.
In order to make a success of his business, Jordaan had to make a plan.
“I went there [SEDA] to look for funding for equipment because I got a big contract and I couldn’t keep up with the work because of the lack of equipment. After doing the exercise, we applied for grant funding,” said Jordaan.
Jordaan’s information was passed on to the provincial Department of Economic Development, after which he received a grant to the value of R50 000 through the Enterprise Development Fund (EDF). The grant was approved on 26 March this year.
Having received his equipment, Jordaan’s company — which he runs with his wife — has been able to take on more work.
“This has definitely assisted my business in moving forward. For example, welding has become a lot quicker … and a lot more efficient. Obviously I could take on more work because being more efficient increased my turnover. Business has grown,” said Jordaan.
Through the years since its establishment, Jordaan’s company has done work for several businesses and institutions like Stellenbosch University.
“I’ve found a niche market of making enclosures for the University and GeoSun, where they’re doing research on solar power. They need enclosures to protect their equipment, which is put in remote areas,” he says.
Although government is trying to level the playing field, there is still a perception that BEE is a form of affirmative action.
“I think that the perception is incorrect. I probably had a similar perception until I was faced with the dilemma of how to fund my business. I think BEE is probably the fairest way of levelling the playing field in my eyes. I’m saying BEE is good for small business and entrepreneurs,” says Jordaan.
The company made a loss in the beginning, but now it employs six people and an additional five people who come in when needed.
Tightening BEE policy
This year also marks the sixth anniversary of the Codes of Good Practice for B-BBEE.
The summit will also see the unveiling of the amended B-BBEE Act and refined B-BBEE Codes of Good Practice among others.
The measurement of BEE is based on seven pillars (including ownership; management control; employment equity and skills development), each with a relative weighting on a balanced scorecard. This is used to calculate the extent of BEE compliance or status. The scorecard is binding on industries operating within sectors that have no gazetted charters.
In 2011, government embarked on a review of the BEE Act to tighten up the Act and address certain challenges, including malpractices like “fronting”.
These interventions resulted in the refinement of the Codes, and the amended B-BBEE Codes of Good Practice were gazetted by Trade and Industry Minister Rob Davies in October 2012. The refined areas are aimed at enterprise development and for procurement to be elevated, among others.
On 20 June, long-awaited amendments to the BEE Act No. 53 of 2003 were passed by the National Assembly. Among the amendments, the new Act contains a clear statutory definition of “fronting” and criminalises this practice (which essentially entails misrepresentation and falsification of BEE status to benefit from public procurement) and provides a framework for and sets new standards for the BEE verification industry.
The BEE Amendment Bill also makes provision for a B-BBEE Commission with the powers to oversee, supervise and promote adherence to the Act in the interest of the public; strengthen and foster collaboration between the public and private sector to promote and safeguard the objectives of B-BBEE; and investigate complaints relating to B-BBEE.
The summit will take place at Gallagher Estate, Midrand. – SAnews.gov.za