Author Archive
Tourism Sector Code Salient Points
Posted by patience in BBBEE Knowledge, Charters on September 18th, 2009
The Tourism sector code is based on the Codes of Good practice, however it has some differing weighting points, targets and definitions. The Exempt Micro Enterprises have a reduced threshold of R2.5 million and not R5 million. They enjoy automatic BEE level 4 and those, which have more than 50% black ownership, are elevated to a Level 3. The Qualifying Small Enterprise (QSE) threshold is between R2.5 million and R35 million, whilst the Generic threshold is above R35 million. The Tourism sector code has a two-phased approach, points and targets for 2012 and 2017
The main acclamation of the Tourism sector code is the prominence of skills development, which we believe should be the foundation that will spearhead Broad Based Black Economic Empowerment. The sector certainly took heed of Zuma’s emphasis on training and skills development as the cornerstone of transformation in the country. The skills development element now has 20 points, which is the highest on the scorecard until 2012. The sector code recognises the skills shortage in the country and that all the other elements of Broad Based Black Economic Empowerment can easily be achieved if the nation has skilled employees.
The reduction on the ownership element weight and targets affirms the need to shift focus from the ownership element to other elements of true empowerment. Ownership targets for the period up to 2012 for both QSEs and Generics was reduced from 25% to 21% and ownership fulfillment, net value and the bonus points were removed. The weighting points dropped from 28 to 25 for QSEs and from 23 to15 for Generic Companies. However there was a regression on the preferential procurement element, which was reduced from 20 to 15 points and Enterprise development, which was slightly reduced from 15 to 14 points.
Socio-economic Development points increased from 5 to 8 and included two additional indicators. A drive towards the inclusion into the mainstream economy of the black unemployed school leavers without work experience was included. Enterprises in the sector are encouraged to employ black new recruits with no prior work experience and the target is 10% of all new recruits. Furthermore if the enterprise is a TOMSA (Tourism Marketing South Africa) levy collector it earns 3 additional points.
EconoBEE assist companies to understand the B-BBEE codes and to produce and improve their scorecards through workshops, EconoBEE V3 Scorecard software and BEE managed services.
Preferential Procurement
Posted by patience in BBBEE Knowledge, Scorecard points, procurement on July 27th, 2009
Preferential procurement encourages procurement opportunities to be made available to B-BBEE compliant suppliers. It is the immediate reason for companies and government entities to request B-BBEE scorecards from suppliers and potential suppliers and the B-BBEE cascading effect begins with preferential procurement. The self-regulation of B-BBEE is also centered on this element.
Companies can easily earn and continuously improve their points by preferring to procure from B-BBEE compliant suppliers. However in most cases earning points and calculating the preferential procurement score can be an administration irritation. A quick look at the top 200-empowerment companies on the JSE shows that only 1 company out of the 200 companies earned all the maximum 20 points on Preferential Procurement. According to President Zuma’s recent comments on B-BBEE “Access to government procurement opportunities by black firms has been raised as a serious challenge.” This undoubtedly is happening because enterprises and government departments do not have an understanding of Preferential Procurement and also do not have the proper systems in place.
With an understanding of preferential procurement and a system aligned to BEE initiatives, private companies and government entities can begin the kazien or improvement of preferential procurement and the procurement points. Our upcoming Procurement and Enterprise Development Conference can definitely help you in understanding preferential procurement, overcome the administration irritation and ultimately improve your B-BBEE points.
Financial Year End
Posted by patience in BBBEE Knowledge, General, Scorecard points on July 1st, 2009
Most companies have their financial periods ending February or June and in most cases companies realize it when its too late to carry out any B-BBEE initiatives that can make them earn the B-BBEE points for that period. I recently talked to a company, which is just finalizing its year-end and they already know their score and are now looking at ideas and ways of improving their B-BBEE score in their new financial period. Such a company will surely meet its customer’s needs of a good B-BBEE score and hence improve their chances of getting the much-needed business in the new financial period. However for other companies the B-BBEE quandary continues they are not doing anything and are going to continue to give their customers empty promises of becoming B-BBEE compliant in the next financial period.
Like any other business policy or strategy, B-BBEE requires all the basics of effective strategy implementation – good ideas, organisation, resources allocation, action plan, monitoring and evaluation. Our workshops/conferences and scorecard methodology can help you produce / improve your scorecard and effectively implement B-BBEE.
Adoption of BBBEE
Posted by patience in BBBEE Knowledge on May 20th, 2009
The adoption and implementation of BBBEE is still varied in the country. Where does your company fall in the adoption process of BBBEE?
Innovators
Brave companies with people, pulling the change. Such companies have embraced BBBEE and are continuously improving their BBBEE points.
Early Adopters
Respectable companies, opinion leaders in their industry leading the pack and are improving their BBBEE points.
Early Majority
Thoughtful companies, careful but accepting change more quickly than the average companies and are beginning to implement BBBEE.
Late Majority
Skeptic companies which will only implement BBBEE when the majority have implemented BBBEE.
Laggards
Traditional companies, caring for the “old ways”, and are still critical towards BBBEE and will only accept it when it becomes mainstream or when forced to comply.
BBBEE is here to stay and will continue to gain momentum. The only way for your company to accept this noble phenomenon is to understand it and know how it affects your business. Our workshops/seminars and conferences are there to help you.
BEE and the Youth
Recently I watched a TV programme that asked the youth to give their views and feelings towards BEE. According to the youth it depends on whether you are black or white. The feelings ranged from BEE being considered unfair to youths since they were not part of the apartheid and to its promotion of discrimination through rewarding others based on race or gender and not merit. There are various arguments for and against BEE, however the important fact is that the economic imbalances in the country need to be addressed.
I believe proper implementation of BEE will positively play an important role in molding the youth who are the future of the nation. It is often said ability is of little account without opportunity. Giving the poor black children the opportunity to go to better schools through socio-economic development or helping young black entrepreneurs through enterprise development certainly breaks the cycle of poverty.
Skills development, which is at the core of BEE, also gives the black young people the opportunity that they would otherwise not have due to poverty or discrimination. Skills development improves the employability of the youth and if companies have well-targeted skills development initiatives and learnerships they will be able to close the skills gap in the long run.
Socio-economic Development in the context of Business
Posted by patience in Socio-economic development on March 6th, 2009
Socio-economic Development is one of the noble and good ways to earn BEE points. The key principle of Socio-economic developments is for enterprises to carry out initiatives that result in the beneficiaries having sustainable access to the economy and hence reduce the poverty barrier. However it involves costs to the enterprise since the enterprise should spend 1% of its Net Profit After Tax to earn all the points available.
In this period of recession where budgets are tight and management of costs is imperative, it is prudent for companies to align their social development programs that include corporate social investment, corporate social responsibility and marketing programs with their BEE targets and initiatives. We always say BEE initiatives should be implemented within the context of sound business principles. So I encourage businesses to incorporate and align their BEE activities with business goals and strategies. If your business strategies are linked to your social development campaigns the enterprise can earn the BEE points required whilst the enterprise market its image, brands or services and gain respect from government and customers.
Strength of a Black Business
A database of black owned business will help in the implementation of BBBEE. However black businesses also need to play their part. Using SWOT analysis, a powerful and simple tool, used in the first stage of strategic planning and that helps a business focus on key issues, 50% black ownership and a good BEE score is a strength to a black enterprise. This strength should be used to take advantage of the opportunity that has been presented by preferential procurement and enterprise development.
Black owned enterprises especially EMEs and QSEs that have good BEE scores are not realising and utilising their status to their advantage. A 50% black ownership and a good score incorporated in the marketing and sales activities should not only result in better chances of getting the much-needed business, but will also make the business a candidate for enterprise development.
Recent Comments