THE BLACK BUSINESS COUNCIL

1. BBC PRESENTATION TO PORTFOLIO COMMITTEE OF TRADE & INDUSTRYPresenter: XOLANI QUBEKA AJAY LALUMXOLISI LINDIE

2. THE BLACK BUSINESS COUNCIL • The Black Business Council (BBC) aims to provide a platform for black businesses and professionals to contribute towards and engage in transformation of the economy. The BBC has fought for: • A single united Black Business voice • The implementation of a BEE Strategy (BEECOM) • The creation of new job opportunities • The development of skills

3. GOVERNMENTS APPROACH • The BBC welcomes the release of government’s BEE Strategy. • The stability, growth and development of the SA economy will be more secure with a fuller exploitation of its resources, including human capital and talents, as well as broadened interest and stakes of black people in the economy.

4. GOVERNMENTS APPROACH • Whilst Government has made an attempt to address some of the fundamental elements which the BBC espoused within the BEECom Report, there are a number of areas of concern. • These will be discussed in greater detail but include, amongst other things: • More certainty is necessary on who, how and where charters and industry empowerment initiatives will be driven; • More certainty is required on the use of the scorecard; • Government should provide guidance on national targets; • A better - capacitated BEE Advisory Council; • A mandatory reporting requirement for companies, industries, government should be explored; and • The nature of the NEF restructuring and the allocation of the R10bn;

5. THE BEE ADVISORY COUNCIL The BBC welcomes the establishment of the advisory council. However, it must be adequately capacitated, to enable it to employ an executive director. A merger with the BEE unit in the dti could be considered, however an indication of the total budget would be necessary. The exclusion of any trade union or community representative in the newly appointed BEE Task Team is concerning The mandate should be expanded to include, the ability to • Recommend new interventions; • Liase with sector charter committees and monitor progress in the various sector charters; • Award prizes for good performance; • Refer inquiries or investigations to the competition commission or relevant licensing authorities; • Receive reports from all government departments and entities and from relevant private sector bodies e.g.. industry associations or sector charter committees;

6. THE BEE BILL • The BBC welcomes the enactment of BEE legislation. The Bill should include: • A reporting requirement for all government entities, SOEs, listed companies and all companies of a certain size should be included in the act; • All government entities should be bound by transformation charters, in a similar manner to codes of practice;

7. THE SCORECARD AND CHARTERS Whilst the scorecard is a useful initiative, however it should be clearly stated that this is a guidelines for companies. It does not negate the need for industries to pursue consultative discussions on BEE, which would inform a common scorecard and charter. It remains unclear in which industries charters would be agreed to and who will drive the development of those charters. Government should outline which industries will have charters, it should clearly state its role within these partnership arrangements and it should explain in greater detail to companies and other industries what is required of them in relation to enterprise BEE charters. Government must explain how it will utilise the scorecard in areas of government business. e.g. a code of practice would be issued, which government entities would be going to implement it, when and how will they use it.

8. TARGETS Government should explain how government entities benchmark companies against each other in the absence of industry processes which set common targets; Government should introduce a list of guidance targets for use by all companies and industry processes through codes of practice; These targets should be modeled along the lines of the BEECom targets.

9. PROCUREMENT • Government should provide more information on the nature of the reforms being undertaken in procurement. • A target for the procurement of supplies in government should be introduced: • 40% from Black empowered and black owned companies in 5 years • 60% in ten years • Procurement should be used as the vehicle to aggressively drive new Enterprise Development as part of an integrated SMME Development Strategy • BEE companies with potential should be awarded large contracts on the basis that they partner with larger experienced companies with the necessary capacity and capability • Contract period should be extended beyond the normal one year to a minimum three years to allow fro capacity building

10. FINANCE The BBC welcomes the revision of the mandate of the NEF. Government should provide more details on the structure of the NEF, the allocation of the R10bn and other mechanisms to effectively coordinate and streamline funding initiatives In terms of access to finance and targeted investment, the BBC notes that these issues are being addressed by Nedlac and in the Financial Services BEE Charter.

11. ORGANISATIONAL CAPACITY The strategy with respect to business organizations remains unclear. In particular, government has said it will financially support black business organizations, it should indicate the proportion of funds it will allocate to business originations.

12. BROAD BASED OWNERSHIP AND OTHER BROAD-BASED INITIATIVES The BBC has always understood BEE to be broad –based, this is clearly stated in the BEECom definition of BEE; The BBC believes that the dti should provide an indication of its strategy and policies in relation to broad-based ownership, these are not dealt with adequately in the strategy and there is no recognition for broad-based ownership in the scorecard; In terms of rural development and access to land, the BBC addressed these issues in detail in the BEECom report, whilst governments strategy does not deal with them substantively; Similarly, human resource development is a critical component of a broad based empowerment programme. This was addressed substantively in the BEECom report and has not been dealt with in significant detail in the BEE Strategy. With respect to these issues, it is proposed that government undertake a review of the impact of the respective strategies and clearly articulate on the manner in which these will be coordinated with and integrated into a BEE programme.

13. CONCLUSION • The responsibility to implement BEE is not just one, which falls on government; the BBC is cognisant of the role of business in this regard. As black business we have examined our responsibilities and we have committed ourselves to drive transformation in companies and industries. • The BBC believes that it is time for established industry to demonstrate real commitment to and progress in the implementation of BEE. • Governments Strategy does provide guidance against which companies and industries must move forward. • Similarly, for empowerment to meet the objectives outlined, all stakeholders must constantly strive for better implementation and improved results, which benefit all and meet the objectives captured in the definition of BEE. Unless empowerment is approached with such rigour it would be sure to fail us.