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ABVA comments on dti's draft revised B-BBEE Codes

by , 16 January 2013
The department of trade and industry (dti) rose to the challenge of aligning the draft B-BBEE Codes to other key socio-economic policies and strategies. These include the ASGI_SA, NIPF, IPAP, CSDP, NIPP and the NGP. The Association of BEE Verification Agencies (ABVA) has commended on how this affects BEE good practice in your company, stating that together, these emphasise the following means to the end goals - supplier development, industrialisation, localisation, job creation and skills development. In the long run, this assists in dealing with poverty, inequality and unemployment.

The ABVA accepts that the dti's objective is not 'business as usual'. All measured entities will have to do more to maintain their current BEE levels. There is going to be a lowering of the BEE levels achieved by these companies if they continue at the same pace. The average score levels for companies in similar circumstances will also be lowered until they acclimatise to the new regime, to score higher again.
Other penalty forms should be used
In terms of framework, the ABVA says discounting of the scorecard due to non-compliance with the priority elements should be reconsidered and that other penalty forms like the current subminimum approach should be used instead. It also feels that increasing the EME threshold will set back the transformation momentum and that EME certificates should still be properly evaluated by properly trained and regulated professionals. Sector codes and charters are seen as too costly and unwieldy to administer.
Looking at ownership, the ABVA understands and supports the choice between modified flow-through and exclusion principles but notes this will result in increased time, cost and complexity. The increased threshold for new entrants, from R20 million to R50 million, is also seen as a risk for further narrowing empowerment to a few already empowered black people.
Junior management shouldn't be removed
In terms of management control, the ABVA feels the low score yet high targets could result in reversal of gains. It also feels junior management should not be removed as it could result in reversal of gains at this level and there is still large room for improvement, especially for women. Demographic targets should also be reconsidered, especially for smaller companies.
Moving on to skills development, the ABVA feels learnerships and apprenticeships are not in same league as internships, and should be rewarded accordingly. It also finds that on-the-job and critical life skills training are not yet incentivised properly, but should be capped in terms of overseas exposure, Excel training and Aids awareness.
BEE compliance is driven by the supply chain
On enterprise and supplier development, the ABVA commented that BEE compliance is driven by the supply chain. To exclude Non-Value-Adding suppliers will defeat the purpose of procurement-driven BEE compliance. It also states that exclusion of imports in entirety should be reconsidered. Lastly, it states that enterprise development should cover the entire value chain as black-owned non-suppliers are not adequately supported, as there are no related incentives in the BEE Codes.

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