Financial Mail Essentials ABC of BEE 2020/2021 by business_essentials

2021 ABC of BEE

ENTERPRISE DEVELOPMENT

SME and Supplier development is a global priority for Accenture Zandile Njamela, Enterprise Supplier Development lead for Accenture in Africa.

A global professional services company, Accenture, believes that it has a responsibility to engage proactively with the businesses in the communities in which it works for maximum positive impact. This is done through inclusive procurement practices and its Enterprise Supplier Development (ESD) programme, which creates a more inclusive and empowered marketplace.

he ESD programme is the South African implementation of the company’s global priority initiative, the Accenture Global Diverse Supplier Development Program (DSDP). This programme reflects Accenture’s commitment to developing and expanding relationships with diverse businesses owned by minorities, women, persons with disabilities, LGBT, veterans, and others. Started in 2006 in the US, it now runs in five geographies (US, Canada, UK, South Africa and India), and has successfully graduated more than 175 diverse suppliers. The programme will be extended into four more international regions in 2021.

total, Accenture’s procurement with present and past participants of its ESDP reached R67-million in FY20.

Starting with a pilot of seven small and medium-sized (SME) companies in 2015, the programme has grown from strength-tostrength with 19 companies in the current intake that will run until the end of May 2021.

“At Accenture, we understand that our ultimate success is intricately linked to South Africa’s prosperity as a nation. We are, therefore, committed to unlocking South Africa’s abundance for all by building a sustainable economy that can address the needs of all citizens,” explains Zandile Njamela, Enterprise Supplier Development lead for Accenture in Africa.

Every company that has participated in the Accenture ESD programme is so far still operational and 60 percent of them are now Accenture suppliers and partners. Five SMEs in the current group have graduated from Enterprise Development to Supplier Development and now render services to Accenture. Five have grown into generic businesses and three are now top category suppliers. In

Accenture remains at the forefront of social upliftment and empowerment in South Africa. It is unwavering in the priority its ESD programme enjoys, far beyond mere compliance for the firm’s maintained Level One B-BBEE certification. Accenture South Africa is also proud that the impact of its ESDP effort is recognised by peers, with awards like the Absa Business Day Supplier Development Awards where it was lauded as the top Nation Builder programme.

@AccentureSA

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

@AccentureSA

Njamela says that supplier development must become a national imperative for the private sector and support government’s efforts to realise the country’s economic growth ambitions. Accenture’s ESD programme forms part of a broader strategy that addresses grass-roots challenges. These are in areas such as skills development and job creation through a range of learnerships, internships and socioeconomic development and preferential procurement programmes that benefit both the ICT sector and society as a whole. “We use a blended, six-pillar approach that leverages Accenture’s capabilities and resources to assist SME business owners in building innovative, agile and sustainable businesses. The programme offers training, business development support, access to market, mentoring, early payments and collaboration for high performance,” says Njamela. This provides them with access to market via opportunities within Accenture’s supply chain or those of its clients to drive value, both internally and externally. The company’s procurement processes further promote the use of black women-owned suppliers and business partners. Accenture is also committed to paying invoices from SMEs within 15 days after submission to assist with cash flow.

@Accenture

ENTERPRISE DEVELOPMENT

CASE STUDY ONE:

CASE STUDY TWO:

ICT company providing digital solutions from ERP to security

Seasoned veteran in the start-up and entrepreneur space, Marilyn Radebe moved to work for herself more than a decade ago: “One of my clients required data analysis and told me he thought I was just the person for it. The only stipulation was that I would need to register a company for them to pay for my services. And that’s how, Soma Solutions came into being.”

Our allocated mentor fully supports and understands what we are trying to achieve.” – Marilyn Radebe

11 years and 18 employees later, Soma Solutions, which initially offered SAP consulting as Radebe’s main strength, now casts a broader net to include multiple digital solutions, including custom applications development, Oracle, IT managed services, server, data recovery, database and back-up support.

More recently, Radebe and Soma Solutions have joined the Accenture ESD programme. She has been working alongside Accenture, with support from the Henley Business School Africa and Lesedi Strategic Services Coaching Team, in the development and launch to market her online platform, SmartSaver. This platform is goal-based savings and allows customers to leverage savings from the platform’s collective buying power. “Accenture has been providing us with the support to develop our online platform. Our allocated mentor fully supports and understands what we are trying to achieve with SmartSaver and has been great at removing stumbling blocks and providing assistance when engaging the bigger Accenture community,” she concludes.

Solving small business sector business problems

t 29 years old, QH Consulting Founder, Arthur Mahlangu, has lived in five townships around Gauteng, is a well-versed problem-solver, and has been working on his start-up for more than two years. No problem can withstand the assault of sustained thinking is his life motto as borrowed from Albert Einstein. “Our app, BizTweak, has been devised to ensure that other entrepreneurs do not make the same mistakes I made I have and that they have access experienced to tools that I did not so that they can progress quicker. a lot of personal For entrepreneurs, it helps to growth … the know what they don’t know,” knock-on effect he explains. BizTweak offers of that is clearly self-assessment tools that seen in the look at the business structure and concept to provide users business.” with a comprehensive health – Arthur Mahlangu check. “Our approach to solving problems is what makes our application stand out. It creates opportunities for jobs, market access, and a secondary market that integrates our platform to other existing platforms that add value,” he says. Through multiple engagements with Accenture, Henley Business School Africa and the Lesedi Strategic Services Coaching Team, as a candidate of Accenture’s ESD programme, Mahlangu has grown his network to include other entrepreneurs who fit the target of his app, as well as potential clients and collaborators.

Address: 3 Waterfall Corporate Campus Building. 74 Waterfall Drive, Waterfall City 2090 Contact: 011 206 3000 | Zandile.njamela@accenture.com | www.accenture.com/za-en ESD website: https: //www.accenture.com/za-en/insight-enterprize-supplier-development-programme

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

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THOUGHT LEADERSHIP ARTICLES 07 WHAT IS B-BBEE? 09 D efending the value of B-BBEE 10 R ising to the challenge of what it means to be a responsible business

The COVID-19 pandemic has hit the small business sector in South Africa the hardest. Now is the time for corporate South Africa to take its BEE responsibility seriously and not just pay lip service to the B-BBEE Codes of Good Practice by ticking boxes. If we want South Africa to flourish, we need to support small businesses as they are the lifeblood of the economy and contribute significantly to job creation in South Africa.

12 B uilding solid business foundations: It’s the simple things that count! 14 H ow is Covid-19 impacting compliance with the BEE Codes? 19 T he property sector makes a considerable contribution to the GDP – MAKING it a catalyst for economic growth and transformation 21 Yielding consistent ROI, whilE generating measurable, positive impact

The only way to economic prosperity for all is to create an inclusive economy. To achieve this, it’s imperative that companies have a cohesive strategy that embraces all elements of the BEE scorecard. By giving opportunities to those excluded from the formal economy, we can create a better South Africa for all.

24 T iger Brands expands its B-BBEE mandate to the logistics sector

SMMEs need your support now more than ever.

27 S cramble for Covid-19 Vaccine exposes pitfalls of Africa’s pittance investment in Research and Development

25 W hy Samsung’s Level 1 B-BBEE rating is good news for the transformation journey of corporate South Africa

28 P hillipa Susan Van Zyl V The Road Accident Fund: A Shift In The Law? 30 S mall businesses are vital for business recovery 32 S hould Government still apply the BEE policy in times of Covid? 34 three steps to implementing BEE codes

Jennifer Potter

35 G rowing Township Economies: A Key Opportunity for Skills Development and Youth Employment

Copyright © ABC of BEE is published by Cold Press Media (Pty) Ltd for Arena Holdings (Pty) Ltd. Copyright: Cold Press Media. All rights reserved. Reproduction in whole or part is prohibited without prior permission of the publisher. Opinions expressed do not necessarily reflect those of the Board of Management of Arena Holdings (Pty) Ltd. All correspondence about ABC of BEE should be directed to Cold Press Media. FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

CONTENTS

ASSET MANAGEMENT

Future Growth Asset Management BEE SERVICES

The Transformation Legacy BEE VERIFICATION & RATINGS

Honeycomb Bee Ratings Izwelisha Bee Verification Agency

10 12 14, 15 32, 33

BUSINESS DEVELOPMENT SUPPORT

MyCFO 17 CONSULTANT

Trans4mation Consulting

ENTERPRISE SUPPLIER DEVELOPment

Liberty2degrees 18,19 FINANCIAL SERVICES

Novare Holdings RMB FMCG

Tiger Brands Limited INFRASTRUCTURE DEVELOPMENT SOLUTIONS

Bigen Group LAW

MNS Attorneys MINING

Accenture SA TELECOMMUNICATIONS

Samsung TRANSPORT

Gautrain Management Agency

20, 21 8, 9 22, 23, 24 26, 27 28, 29 2, 3, 30 25, 38 31

YOUTH DEVELOPMENT

NBI

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

35, 37

WHAT IS B-BBEE? B-BBEE is a policy of government which aims to address inequalities from the past of South Africa and Apartheid by driving more participation of black people (African, Coloured and Indian people who are South African citizens) in the management, ownership and control of South Africa’s economy.

WHAT ARE THE CODES OF GOOD PRACTICE? B-BBEE compliance is regulated by Codes which provide a clear framework for how B-BBEE should be measured and implemented. There are five elements, where entities earn points on a scorecard, based on their level of compliance:

Ownership

Management Control

WHAT IS A B-BBEE SCORECARD? Points dictate B-BBEE status level, which is measured from:

Level 1 Contributor (±100 points and 135% procurement recognition)

Level 8 Contributor (˃100 points and 135% procurement recognition)

Non-Compliant Contributor (<40 points and 0% procurement recognition)

48 H| EALTH & WELLNESS

Skills Development

Enterprise Supplier Development

WHO MUST COMPLY? All organs of state and public entities, as well as private enterprises conducting business with organs of state or government. There is no penalty for non-compliance, but it shows commitment to transformation. There are three levels of compliance based on the size of the business. EME

Exempt Micro Enterprise Annual turnover less than 10million

QSE

Qualifying Small Enterprise Annual turnover 10 - 50million

M&L

Medium to Large Enterprise Annual turnover 50million+

To become compliant, the relevant entity must be audited by an accredited verification agency.

Socio-Economic Development

ADVANTAGES OF COMPLIANCE Allows participation in the formal South Africa economy.

Business is not lost to B-BBEEE compliant competitors.

Favourably considered for procurement by public sector and B-BBEE verified entities.

Have access to tax incentives and financial grants.

WHEN IT COMES TO BEE, NOTHING IS BLACK AND WHITE. Our BEE team provides unique solutions to optimise value creation. RMB has been a market leader in structuring and advising on some of the largest BEE ownership transactions across all industries in South Africa. We partner with our clients to provide multidisciplinary solutions to enable our clients to achieve their BEE ownership objectives. Call RMB at +27 11 282 8000 or visit rmb.co.za.

CORPORATE AND INVESTMENT BANKING a division of FirstRand Bank Limited, is an Authorised Financial Services Provider and Credit Provider NCRCP20. Terms and conditions apply.

THOUGHT LEADERSHIP ARTICLE

Defending the value of B-BBEE By Kgolo Qwelane, Head BEE Corporate Finance Advisory, RMB

years and recently paid an annual dividend of R22.22, which provides an ongoing incentive to remain invested. One of the primary concerns surrounding B-BBEE is its social impact. Intellidex’s research into the broad-based impact of B-BBEE deals in The Empowerment Endowment states that, of the 100 largest JSE-listed companies, 35 facilitated empowerment deals that included public-benefit organisations, 27 of which involved the creation of new trusts intended to benefit communities. Education stood out as a priority for these foundations, estimating that 67% of financial resources were flowing to education-related funding objectives. This is a core strategic decision, with education being seen as a key enabler to improving outcomes for individuals and society.

Kgolo Qwelane, Head BEE Corporate Finance Advisory, RMB

s our democracy has matured, the concept – and reception – of Broad-Based Black Economic Empowerment (B-BBEE) has changed. Commentators have introduced a cynicism to the narrative of B-BBEE, questioning its long term efficacy. However, on closer inspection of the life-cycle of B-BBEE deals, the future still looks bright for the majority of the sponsor companies, their shareholders and, most importantly, the beneficiaries of such deals. Indellidex’s 2015 research report The Value of BEE deals promises enduring value. Admittedly, the age of this report has its limitations in commenting on the current B-BBEE climate, but is still cited owing to the unparalleled detail of the study. The study presented interesting findings on value generation, and noted that since 2000, B-BBEE deals initiated by the JSE’s 100 largest companies have generated R317 billion in total value attributable to beneficiaries. R52 billion of this (16%) can be attributed to staff schemes, R196 billion

(62%) to strategic investment partners and R69 billion (22%) to broad-based community schemes. Strategic investment partners also often boast large, broad-based beneficiary groups as shareholders. In response to criticisms that deals aren’t broad-based enough, evidence suggests that employees realise ongoing benefit from these transactions. Employee share ownership plans (ESOPs) form part of most empowerment schemes. In the case of the Kumba ESOP, the first maturity date of the 2006 deal, which occurred in November 2011, resulted in a pre-tax payout of approximately R576 000 per employee. A number of large companies have gone on to undertake public offers, including MTN, Multichoice, SAB (AB InBev), Sasol and Vodacom. Multichoice’s Phuthuma Nathi scheme recorded a historical entry price of R10 per share paid in 2006/2007, with Phuthuma Nathi shares currently trading at R119.50 per share. Phuthuma Nathi has been a consistent dividend payer over the

Further criticisms relating to B-BBEE have emerged on the topic of black shareholders allegedly being unable to exit their deals. This argument fails to consider that the longer the term of the deal, the more likely the deal will create value. Intellidex states that deals that spanned eight years or longer delivered an average return of 4.5% of the market capitalisations of investee companies (compared to 3.2% for shorter term arrangements). Furthermore, many shareholders make the strategic decision to stay invested following the maturity of the deal to benefit from dividend flows and capital appreciation. It can also be a financing decision for shareholders who hope to raise capital for future deals against a strong asset. Finally, there is the reality that some B-BBEE deals do not work. In this case, we have to remember that B-BBEE is a form of equity investing, and sometimes equity investments fail to deliver. This is a reflection on the business and its unique circumstances, not the nature of the funding model. Like any asset class, B-BBEE deals need time to realise their innate value and to distribute this across a broad base of beneficiaries. It would be short-sighted to abandon it now.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

Rising to the challenge of what it means to be a responsible business Paul Rackstraw, Managing Director @ Futuregrowth

he COVID-19 pandemic has raised many challenges for companies over the past few months. It has also highlighted the critical role firms play in the broader fabric of society and how much they can, and should, contribute as responsible businesses. From supporting staff and facilitating comfortable remote working conditions through to providing other stakeholders with a seamless experience of the business through potentially disruptive lockdown conditions, companies have had to step up to the challenge of navigating the changes imposed on them by this unprecedented health crisis. Business responsibility is not a new concept. It is a process and culture in an organisation where the management and staff choose to take responsibility for all their actions and ensure that they have a positive impact on everything they do when it comes to: - the environment - the communities within which they operate - transformation - their clients - their staff and shareholders - their suppliers - the industry in which they operate With a growing proportion of clients and investors now prioritising responsible and ethical behaviour in where they choose to work, companies are coming to understand that they cannot adopt a box-ticking approach and need

to embrace being a responsible business in a genuine way. It’s more than deciding where to spend money Being a responsible business is not only about how you spend your profits but, more importantly, how you make them. Before doing anything, a company needs to approach all decisions and actions with the ethical consequences top of mind. If the action or decision has the potential to cause harm to society or the environment in which the company operates, it should be considered socially irresponsible. Looking at the world through a responsible business lens will also guide you in the partnerships you are willing to establish. Being responsible and ensuring the company you run has a bigger purpose than merely generating profits is also about tackling the challenges facing society as a whole. There are a few main areas you need to consider when looking at what it means to be a responsible business. - how you do business with clients - how you can contribute to the betterment of the industry in which you operate - how you should treat clients/staff/shareholders - how you should treat the environment - how you should respond to specific social requirements in the countries/environments in which you operate

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

These are tough asks and have an impact on all aspects of how you do business. For example, how do you approach the rules and regulations that govern your industry? Do you make sure you are always on the right side of the regulations, operating within the spirit of the law, or are you always looking for grey areas and loopholes that you can exploit? Are you always looking at what you can get away with as a business, or do you ask yourself the following question: If you read about an action or decision your business had taken in the headlines of the newspaper, would you be embarrassed or proud of it? Partner with clients for the long term To be a responsible business, in our case as an asset manager, you need to view every client investment as a performance promise and a commitment to making a difference in their life by improving their living conditions, for example facilitating access to water or electricity or enabling them to retire respectably. Several businesses view their clients only as a way of making money, prioritising how much profit can be extracted from each client. This short-sighted approach does not take the longterm best interests of the business or your client into account. Your business is far more likely to benefit from treating each client as a long-term investment and as a partnership with yourself. To establish whether you are treating customers purely as profit generators, you need to ask yourself the following questions: - If there is an error, will you always make good on it for the client, even if they are not aware of it? - If pricing has changed and your client is still paying too much for historical reasons, will you adjust the client fee without being prompted by the client? - If you have underperformed, or have not delivered on your client promises, will you consider reimbursing them a portion of the fee?

THOUGHT LEADERSHIP ARTICLE

These are essential questions you need to answer because if your clients don’t benefit from what you’re doing, then your work and your business quickly becomes irrelevant – and so do you. Another crucial question to ask yourself is whether you will take on any client at any cost and whether you consider the reputational and ethical risk of doing business with clients that may operate in an unethical manner or in grey areas of the law. As a company, where do you draw the line on whether you are comfortable taking on that business? Play a role in uplifting the industry as a whole All businesses operate in an industry, and in Futuregrowth’s case, it is in the financial services industry. As an industry player and a responsible company, it is critically important that you play an active role in improving the sector to the benefit of clients and other stakeholders. Business leaders can do this in many different ways. They can participate in industry bodies that press for change, call out unfair business practices and actively promote regulatory changes that will benefit the industry and its clients. Trying to foster change in an industry can be tough, though. You are dealing with many vested interests and, as a result, you will sometimes need to make brave and unpopular moves to have an impact. It is much easier for businesses to operate underneath the radar, rather than spend time and resources on improving the industry to the benefit of clients and investors. Some practical things you can do to improve the industry in which you operate include: - highlighting the areas where regulations and client protections are weak and actively fighting for change; for instance, Futuregrowth has been an active participant in challenging the shortfalls in the JSE bond listing requirements and pushing for these to be changed - standing up when other stakeholders are compromised; for instance, in August 2016, Futuregrowth decided to withhold funding from state-owned enterprises due to the corruption and malfeasance taking place in these entities - c alling out any malfeasance you see

happening in an entity and standing up for what is right, even if it imposes a cost on your business. Taking transformation seriously Black economic transformation is an important initiative aimed at broadening the economic base of the country, stimulating further economic growth, and creating much-needed employment in a country that suffers from massive unemployment and income disparity. As a responsible business, you need to ask yourself the following when you apply the BEE legislation in your business: - Do you pay BEE lip service and skirt around the edge of the regulations? - Do you try to do as little as possible, using smoke and mirror structures to maximise your points by aiming to spend the minimum rand per point? There is another way to approach transformation and that is to tackle it as a responsible corporate citizen of the country. If your goal is to be a responsible business, you need to ask the following questions: - Do you make sure that you never get involved in any tenders that appear to be corrupt? - Do you embrace the spirit of what the legislation is trying to achieve? - Do you encourage your staff to get involved in your company’s CSI projects? - Are your employment policies and practices set up to ensure that your organisation transforms your staff complement, ensuring there are no unfair biases in your processes? - Do you reach your staff targets by poaching staff from other organisations, or are you actively bringing young students into the asset management industry and giving them opportunities by creating an environment of learning and growth? - Do you make decisions only to score points on a scorecard or are your efforts part of your organisation’s higher purpose of doing business by investing to make a difference in people’s lives and improve our country? Treating the environment responsibly Part of being a responsible business also entails being environmentally conscious and investing in its sustainability. You can do this in many ways, including: - investing in, and applying pressure on, investee companies to be more environmentally-friendly

- maximising effectiveness when you are engaged in activities that will result in carbon emissions; for example, when you have to fly somewhere on a business trip, you can increase the number of appointments and engagements you schedule so that you minimise the amount of flights you need to take - making recycling available in the office - considering the environment when making investment decisions - using efficient lighting and turning off screens overnight - educating your staff to be environmentally responsible - eliminating plastic water bottles in the office - minimising the use of paper Treating staff fairly and with respect A crucial part of being a responsible business is treating your staff fairly and humanely – and that does not mean offering the legislated minimum benefits. It does mean doing what is right for your staff members, including providing flexibility during times of hardship or illness and building a productive and fair work environment for your staff. Measures you should take include: - creating a conducive work environment, with ample resources available to your staff, enabling them to fulfil their responsibilities - implementing fair employment policies - treating people fairly and as part of the organisation’s family when they experience hardship or experience severe illness instead of treating them as a disposable item you can replace - in the COVID-19 environment, making business decisions around your operating practices that prioritise your staff and their families’ health, safety and security Conclusion Operating as a responsible business does not mean you are running a charity that has no focus on performance. Instead, it means thinking deeply about everything you do and considering whether your actions are adding positively to society, communities, the environment and people. Acting as an agent of change could well pay off even more than focusing on short-term revenue generation because your business will be built on solid, sustainable foundations and benefit from the improvements you make in society, your industry and the country as a whole. Published on www.futuregrowth.co.za/newsroom. Futuregrowth Asset Management is a licensed discretionary financial services provider.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

Building solid business foundations: It’s the simple things that count! By Sibusiso Raphekwane, founder and CEO of The Transformation Legacy

tarting a business is much like creating something so valuable that you foresee it lasting a lifetime. No one starts a business, only for it to close down after a few years. Every entrepreneur wanting to start a business does so with a clear purpose in mind - to grow it and create value so that they can sell it after a certain period; to build a successful business that the owner can then retire from. Either way, there is a specific end that the entrepreneur has in mind before the business even comes to life. This brings me to the first critical step to building a solid foundation for a sustainable business: 1. Start with the end in mind It is essential to know what the ultimate goal is for the business. As an entrepreneur, how would you like to exit your business? It is much like building a house. When you start building, the first thing you do is to visualise what you want the house to look like. You, therefore, get an architect to design the home in line with the vision you have. So before you start, ask what would you like your business to look like when it’s operating at its optimal level and you are content and ready to exit? 2. D evelop a comprehensive business plan There is an unfortunate misconception that a business plan is a document that should only be drafted when funding is required. It serves a much-greater purpose. A comprehensive plan that details how you will go about achieving the ultimate goal of your business- ‘your end’. It’s crucial to develop a plan for the business. A good business plan should incorporate the following: • Company vision, mission and values • One to 10-year goals for the business with specific timelines and a detailed outline of the resources required • Marketing plan based on market research & industry analysis • Financial model and projections • Human resources plan • Operational plan: how will the business run on a day-to-day basis • Company processes & systems • Response to periods of uncertainty • Action plan: how will the plans be implemented • Business owner’s succession plan This is a ‘live’ document, so it can be amended as and when new changes are implemented in the business. 3. Set up the right structure to enable you to achieve your goals It is crucial for an entrepreneur to understand what he/she needs to do daily, weekly and monthly for the business to achieve its goals. Having the right structure sets the tone for the business

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

Sibusiso ‘’Busi’’ Raphekwane is the founder and CEO of The Transformation Legacy, she is also a Business Mentor and Entrepreneur Development Expert.

and allows you to understand precisely what you need and who you need on board to achieve your goals. ‘’Give me 6 hours to chop down a tree and I will spend the first 4 hours sharpening the axe.” (Abraham Lincoln) I enjoy this quote because if you are starting a business, you need to spend time building a solid foundation which will enable your business to survive during difficulties, thrive during seasons of high opportunity and be stable when required. Contact: info@transformationlegacy.com, 010 005 5753 or 010 023 0508 or visit: www.transformationlegacy.com.

BEE Services

We focus on ensuring that business owners reach a certain level of personal mastery which would allow them to have the right mind-set to thrive as entrepreneurs.” – Sibusiso Raphekwane

ccording to the Small Business Institute, seven out of 10 small businesses fail within the first five years of operation. This alarming reality has unfortunately become part of the narrative for far too long in our country. The impact of this statistic is not only felt in the small, medium and micro-enterprise (SMME) sectors. It is a reality that affects the whole economy. Our organisation exists to create a new narrative of thriving SMMEs that remain sustainable, are able to create jobs and thus make a positive contribution to the economy. To ensure that we achieve this, we implement enterprise and supplier development that is holistic in its approach. Not only do we impart critical business and entrepreneurial skills, our progamme also focuses on ensuring business owners reach a certain level of personal mastery, which enables them to have the right mindset to thrive as entrepreneurs.

driven Enterprise & Supplier Development (ESD) initiatives that are geared towards empowering small businesses to significantly grow their enterprises. We do this through business mentorship, practical training programmes, thorough monitoring and evaluation, and personalised growth development programmes that are aimed at providing entrepreneurs with the necessary skills and support to build their businesses. For corporate companies, the contribution made towards the development and implementation of effective enterprise and supplier development programmes can lead to more sustainable SMMEs, securing excellent black-owned suppliers, maximising company BEE compliance and thereby improving the corporate company’s market competitiveness.

Our offering to corporates: • D evelopment and implementation of impact-driven Enterprise and Supplier Development initiatives. • T h e Tr a n s i t i o n i n g E n t re p re n e u r programme: reskilling of retrenched individuals aspiring to start their own businesses. • Skills Development programme: SETA accredited NQF Level 4 Business skills training to train and upskill unemployed individuals. • S o c i o - e c o n o m i c D e v e l o p m e n t programme: training and mentorship of unemployed youth in township and rural regions. We are a team of passionate experts who believe that through our programmes, we can significantly improve the competitiveness and sustainability of corporate companies by building SMMEs that can grow into sustainable enterprises and thus leave a meaningful legacy for our nation.

Physical Address: 526 Constantia Square Office Park,

The Transformation Legacy is an Enterprise Development company providing impact-

16th Road, Randjespark, Midrand, 1686 Contact: 010 023 0508 or 087 153 2143 | info@transformationlegacy.com

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

How is Covid-19 impacting compliance with the BEE Codes? By: Deirdre Mitchell, Managing Director, Honeycomb BEE Ratings

he long-term impact and effects of COVID-19 will be prevalent for years to come in the recovery of economies and businesses globally. The impacts and effects of COVID-19 and the lockdown the country endured in 2020 will, in turn, uniquely affect South Africa’s transformation efforts of broad-based black economic empowerment (BEE) status of a business.

For instance, B-BBEE can be used to offset the effects on communities and assist with awareness through the Socio-Economic element by embracing initiatives implemented to help people impacted by COVID. In this manner, companies will certainly turn over the spends made on initiatives and ensure they are being handled in the most effective manner to see results rather than just throwing it at various entities set up to “handle” these initiatives. This new approach will see BEE being implemented carefully and directly for what it is intended for.

While most entities thought there would be a reprieve in B-BBEE requirements due to the impact of the lockdown, this was not so as the B-BBEE Commission said that the B-BBEE Act would still be applicable during the lockdown period and all measured entities were required to comply with the requirements in order to receive a B-BBEE Certificate and scorecard. If your organisation was B-BBEE compliant in 2020, you would have received some form of assistance from the government due to the pandemic. However, with this came some animosity as naivety around being B-BBEE compliant for small organisations was and is still unknown as most small organisations assume they need to be 100% Black-owned, which is not the case. The instability of business operations due to lockdown regulations, will without a doubt have had an effect on the annual plans and extent of performance of some measured entities with regards to an organisation’s rating against the elements on the scorecard.

Going forward, we might see less money spent as companies are closing, but the strategies that work will result in positive outcomes for both the Measured Entity and the beneficiary entity/beneficiaries themselves.

Deirdre Mitchell, Managing Director, Honeycomb BEE Ratings

With this said, measured entities were advised to relook at their B-BBEE strategy roll-out plans for 2020 and, to the extent possible, continue to implement initiatives towards achieving their annual targets as organisations will be measured based on initiatives implemented during 2020’s Measurement Period.

B-BBEE can be used to offset the effects on communities and assist with awareness through the Socio-Economic element by embracing initiatives implemented to help people impacted by COVID.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

Therefore, we encourage organisations to continue to evaluate their B-BBEE strategy and targets and the implementation thereof, based on the challenges identified last year. Organisations should consider where their B-BBEE spend may be best allocated, assess their B-BBEE ownership funding structures, address any Net Value deficiencies, and focus on other areas of B-BBEE where additional points may be scored. Once again, it has been confirmed that even living through a worldwide pandemic, B-BBEE is here to stay and is a way of life and doing business in South Africa. We urge organisations to accept this legislation and start or continue their B-BBEE compliance journey. As individuals and business owners, we need to support the transformation of South Africa’s economy and people and sequentially reap the benefits of what B-BBEE can do to make you, your organisation, and our country a success.

BEE and Verification agency

Ensuring the empowerment of people and businesses

oneycomb has been acknowledged as a leading expert in the B-BBEE industry. We were one of the first companies to become SANAS Accredited in 2007. Our Team was awarded the Best BEE Verification Agency in the BEE Verification Agencies Sector in Top 500’s Best Managed Companies in South Africa for two consecutive years. We placed in the Top 20 of the South African Small Business Awards, and we have a client portfolio that contains 60% of South Africa’s top 10 blue-chip companies such as Discovery, Hollard, Pick n Pay, Anglo American, De Beers, Redefine, Growthpoint, Peermont, Cell C, Huawei, Actom, Attacq, DSV, AVBOB, Massmart and The Capital Hotel and Apartments, to mention but a few. Honeycomb prides itself on building and maintaining client relationships. We apply the same philosophy to our staff, and therefore, we have built a strong foundation, which has been our pillar of strength in all auspices of business. Our enterprising ethos and culture contribute to our clients achieving a B-BBEE Certificate reflective of the transformation within their organisations. We believe in the universal values of honesty, integrity, non-discrimination and reliability for each-and-every

BEE Verifications & Ratings

Zunaid Vallee – Technical Director

decision taken by Honeycomb relative to each-and-every BEE verification process and retain authority over all such decisions. Our value-add philosophy is to ensure the empowerment of people and businesses through the prompt and efficient turnaround of certificate verification. We are not only committed to the business activities of our enterprise, but we are

also passionate about the success of our country. We aim to empower and uplift the people of South Africa through our social responsibility initiatives. Our mission is to be the preferred Verification Agency in South Africa, ensuring a systematic verification process to benefit our clients and their businesses to support the imperative transformation of South Africa.

ABOUT HONEYCOMB Honeycomb BEE Ratings is an independent, nationally based, SANAS accredited Verification Agency that conducts professional and impartial verifications of all enterprises, countrywide. Our Team is equipped with qualified and efficient directors and staff who are highly trained in the BBBEE Codes of Good Practice to ensure professional and impartial verifications. The following services we offer are simple, streamlined, hassle-free, and positions our clients as our number one priority: • On-Site or Remote Document Verifications, resulting in a B-BBEE Certificate. • Pre-rating Assessment, resulting in a B-BBEE scorecard. • We are competent in complex Ownership Structures and can offer an Ownership Assessment, Ownership Verification, as well as opinions on current or future transactions to ensure compliance for all companies.

Address: 27 14th Avenue, Northmead, Benoni, 1501 Contact: 011 880 1630 | info@honeycomb-bee.co.za www.honeycomb-bee.co.za

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

Consultant

About TRANS4MATION CONSULTING Trans4Mation Consulting offers a B-BBEE consulting service to support our clients in the process of aligning their business activities with the targets set out in B-BBEE legislation. Wherever our clients find themselves on the journey of transformation, we are able to meet them there and guide them through each step of the process.

Gcina Mahlaba, Trans4Mation Consulting’s founder, has nearly a decade of experience in the transformation and B-BBEE arena. She has worked in B-BBEE as a consultant, verification analyst and corporate transformation manager at BDO and KPMG.

One of our most significant achievements was being selected to be a part of the SAB Foundation Tholoana Programme.

PRODUCTS & SERVICES We offer the following: • B-BBEE Strategy Development Consulting and Implementation Support • Enterprise and Supplier Development Consulting • Ownership Structural Consulting • Scorecard Element workshops • Verification Preparation workshop • Score Progress Monitoring & Measurement • Verification Preparation, Management & Support We also offer the following HR Consulting Services. • EE Submissions • EE Plans and Analysis • Human capital compliance solutions • Policies and procedures • IR and ER consulting

3249 Silicon Street, Lenasia South Ext 7, Gauteng, South Af rica

Mahlaba, received her B-BBEE MDP qualification from UNISA in 2014.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

Off ice: +27 (0)81 454 9018 • Mobile: +27 (0)72 725 0691 gmahlaba@trans4mationconsult.co.za • www.trans4mationconsult.co.za

ESD Program

Business Development Support

How financial coaching improves ESD outcomes

y CFO’s Business Finance Coaching Programme has been an empowering learning opportunity for SMMEs, designed to help strengthen their financial understanding and decision making, to create value and wealth in their businesses. Programme Objectives The programme aims to advance SMMEs by improving the owners’ engagement with their company’s financial information and utilising those new business insights for better decision making. The programme helps owners account and report to their stakeholders while ensuring all compliance requirements are met so that the business is funding ready. Facing Business Challenges My CFO identifies six key challenges that new businesses face that the Business Finance Coaching Programme looks to help

SMMEs overcome. To overcome these challenges, we need more prudent financial knowledge and tested best practices, which helps keep our SMMEs competitive in always-evolving market conditions. They aim to help companies reach their highest potential. My CFO has identified these key challenges: • Limited financial expertise • Not understanding the drivers of financial performance • Unprepared for funding opportunities and investor interest • Costly and time-consuming trial and error • Poor business planning discipline • Lack of financial management experience Desired Outcomes By completing this programme, owners can gain enhanced understandings of the finance function and how to improve its productivity - building the confidence to engage with financial reports and relay the insights gathered to funders and investors. Enterprise and Supplier Development (ESD) is central to the economic transformation of South Africa and My CFO helps improve ESD outcomes in most industries and in all three criteria: Preferential Procurement, Supplier Development and Enterprise Development.

About My CFO My CFO provides virtual CFO services to SMMEs. Our offerings have been designed around providing SMMEs with accessible, high-quality business financial advisory and solutions with the aim of achieving Growth, Acceleration and Funding. MyCFO’s group services include: • Business finance advisory • ESD solutions • Learning solutions About Mamoroke Lehobye Lehobye qualified as a CA in 2001 and has 19 years of experience in financial management, internal control and risk management for South African SMMEs. A dynamic businesswoman with an entrepreneurial spirit, Lehobye is transforming South African businesses through financial coaching and business advisory.

Address: Building 5, Summit Place, 221 Garsfontein Road, Menlyn, Pretoria, 0108 Contact: 066 293 7907 | mamoroke@mycfo.af rica

Mamoroke Lehobye CA(SA) Chief Executive Officer

www.mycfo.af rica

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

ESD

SUB-CATEGORY / TAG

Liberty Two Degrees goes beyond box-ticking compliance to ensure purposeful and impact-based transformation

iberty Two Degrees (L2D), a precinct focused, retail centred Real Estate Investment Trust (REIT), co-owns a quality iconic property portfolio of South African assets that are primarily retailfocused, namely: Sandton City, Eastgate Shopping Centre and Nelson Mandela Square in Johannesburg and Liberty Midlands Mall in KwaZulu-Natal among others across South Africa. As a significant contributor to the South African property sector and the economy, L2D is committed to positively and ethically transforming the sector by creating an empowering culture that enables sustainable outcomes and meaningful opportunities for all South Africans. L2D supports the Property Sector Charter’s efforts to promote a vibrant and growing property sector that reflects the South African nation, contributes towards development and the establishment of an equitable society.

These initiatives aim to ensure that L2D: • Engages in programmes that make a difference in positively transforming the sector, with a particular focus on the elements that present a constant challenge. These include: ◊ Appointments to the L2D Board in line with gender diversity and transformation initiatives, as well as to the executive management to close the Management Control and Employment Equity gaps ◊ Upskilling the youth in South Africa through internship programmes to close the Skills Development gap ◊ Upholding its integrity and commitment to advocating the very principles of fair and just business practices in its procurement initiatives, and ◊ Supporting small black-owned businesses to close the Enterprise and Supplier Development gap •M akes a purposeful contribution that to all stakeholders.

The Property Charter identifies that transformation in the property sector remains a challenge and L2D is committed to addressing these challenges. Since listing in 2016, L2D has actively promoted transformation in its long-term sustainable growth action plan and continues to place emphasis on the importance of managing plans effectively, having implemented several initiatives to ensure its contribution to a positive turnaround of the sector’s current trends.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

In addition to its commitment to the Business Leadership South Africa and B4SA #Payin30 initiative to pay suppliers within 30 days, one of the key challenges that L2D aims to address is the lack of entrepreneurship and business skills, which predominantly impact blackowned entities that struggle to take their businesses from survivalist or micro-level to sustainability. To aid in addressing this challenge, L2D has partnered with Akandi, an office-solutions entity to supply workplace furniture for the new L2D office. Furthermore, L2D has provided resources in order to propel the Akandi business forward from an enterprise development perspective and is assisting in taking in taking the business to a sustainable enterprise. L2D believes that the industry embraces the possibilities that are presented, as well as the opportunity for the sector to change the lives of South Africans.

Amelia Beattie investors@liberty2degrees.co.za Registered off ice: 17 Melrose Boulevard, Melrose Arch, Johannesburg, Gauteng, 2196

THOUGHT LEADERSHIP ARTICLE

The property sector makes a considerable contribution to the GDP

…making it a catalyst for economic growth and transformation

he Property Sector Charter, which establishes a framework and principles upon which transformation will be implemented in the sector, has committed to strive for a transformed property sector in South Africa and to promote a vibrant and growing sector that reflects the South African nation as a whole, contributes towards development and the establishment of an equitable society. As a large contributor to the economy, the sector has a significant role to play in transformation. Despite legislative and policy interventions to eradicate inequalities, participation in the sector poses a challenge inhibiting the sector from making a meaningful and progressive contribution towards transformation. Signs of growing

improvement are present, albeit at a slow pace and seemingly not yet deep enough. Opportunities do however exist to make a meaningful contribution towards transformation. The sector is showing growth in the elements of Enterprise and Supplier Development as well as Socio-Economic Development, with Ownership progressing well. The challenge lies in the elements of Management Control, Employment Equity and Skills Development where the sector is not making an impactful contribution as yet. The sector continues to draw further and further away from achieving the milestones set towards these elements. A turnaround point is, therefore, urgently required to address the challenges in these areas. Compliance box-ticking is however, never the solution.

Industry players such as Liberty Two Degrees (L2D) are making a concerted effort towards providing an empowering and enabling environment that embraces purposeful transformation, diversity and inclusivity through good governance. The company is making good progress in contributing towards closing the gaps that exist in the property sector, responding relatively well to the key elements that drive good transformation in the areas of Management Control, Employment Equity and Skills Development. L2D, through various initiatives, is aiming to make continuous progress, reflective in the company’s policies across governance, human capital and procurement initiatives. One of the key challenges being addressed is the lack of entrepreneurship and business skills, which predominantly impact black-owned entities that struggle to take their businesses from survivalist or micro-level to sustainability. To aid in addressing this challenge, L2D has partnered with Akandi, an office solutions entity to supply workplace furniture for the L2D office. Furthermore, L2D has provided capital in order to propel the Akandi business forward from an enterprise development perspective aiding in taking the business to sustainability and profitability. Drawing from the learnings of the property sector benchmark to better a company’s position in the BEE scorecard plays a significant part in achieving B-BBEE goals however, it is imperative to aim to deliver beyond the minimum requirements of the legislation in order to make a meaningful contribution and effect a significant impact. This means placing more robust programmes that make a material difference to positively influence Management Control, Employment Equity and Skills Development to improve the current performance of these elements as well as enhancing the current offerings in Enterprise and Supplier Development and Socio-Economic Development.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

National

Private Equity

NOVARE MAYIBENTSHA MODERATE QUALIFIED FoHF:

YIELDING POSITIVE RETURNS DESPITE MARKET SWINGS

anaged by Novare Investments, a subsidiary of Novare Holdings, the Novare Mayibentsha Moderate Qualified Fund of Hedge Funds (FoHF) is a qualified investor FoHF with the long-term objective to achieve a SA CPI of +3.5% over a rolling three-year period, which is also considered the portfolio’s benchmark and hurdle rate.

Its fund managers are purposefully selected to drive a multidisciplinary, multi-strategy investment offering that invests in various asset classes. Essentially, it maintains moderate investment parameters, at a moderate level of volatility, where it can deliver consistent capital preservation and growth, plus compound returns over the medium to long-term.

To consistently achieve these objectives, the Novare team blends diversified hedge funds with an approach that places emphasis on investment in various sources of returns. The coveted 2020 HedgeNews Africa FoHF Award, which this FoHF recently received, is no doubt a strong testimony that this strategy works.

Proven outstanding results, year-on-year Despite market misconceptions, hedge funds in SA have consistently shown outstanding results year-on-year. This is predominantly due to their flexible approach which enables them to leverage the use of derivatives and short selling, among other strategies, to protect invest-

Finding a middle ground often leads to the high road Risk-wise, the Novare Mayibentsha FoHF is pitched ‘in the middle’ of the two other key strategies; a higher-risk/higher-return focused strategy - and the more conservative low-risk/low-return strategy. These strategies are underpinned by a collective investment scheme (CIS), where several investors pool their money into the portfolio, which is currently worth ≥R400 million.

ments and achieve ongoing positive returns - regardless of markets swings. Over the past five years, for example, this portfolio has experienced remarkable growth of 118.3% in assets due to its stability. Due to latest regulations, hedge funds are now basically at everyone’s fingertips Considering that hedge funds are now heavily regulated under the Financial Advisory and Intermediary Services Act (FAIS), hedge funds now fully meet the requirements of the Financial Sector Conduct Authority (FSCA), which basically means anyone can now invest in a retail investor hedge fund, including those who were traditionally limited to invest in longonly unit trusts.

About Novare Founded in 2000, Novare Holdings is a premier provider of investment solutions across the African continent. Johannesburg: First Floor, 30 Jellicoe Avenue, Rosebank, 2196, South Africa Tel: +27 (0) 11 447 9605 | Fax: +27 (0) 11 447 9405 Cape Town: Third Floor, The Cliffs Office Block 1, Niagara Way, Tyger Falls, Carl Cronje Drive, Bellville 7530, South Africa Tel: +27 (0) 21 914 7730 | Fax: +27 (0) 21 914 7733

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

Yielding consistent ROI,

while generating measurable, positive impact By Benedict Mongalo, Managing Director: Novare Impact Investment Partners

Poised for success The following are some of the key cornerstones that the fund’s strategy for success will be built on: • A b l e n d e d i n v e s t m e n t a p p r o a c h : Combining relatively low-risk, low-return infrastructure projects with high-risk, high-return priority sector transactions, with the aim to achieve a moderate risk portfolio. that targets returns of an SA CPI rate of +12%.

s a fully-owned subsidiary of Novare Holdings, Novare Impact Investment Partners is excited to announce the launch of the new Novare SA Impact Fund, which we believe is quintessential to help South Africa and its people recover from the devastating social and economic consequences of the COVID-19 pandemic. One of the key differences between such an impact investment fund and a private equity fund lies in its primary goal. Even though ‘impact’ has always been central to any of Novare Holdings’ investment strategies, traditionally, the primary goal of a private equity fund is to maximise financial returns. The primary goal of an impact investment fund is to generate optimal ROI, and achieve measurable, positive impact on both the environment and our society. The four key objectives of the Novare SA Investment Fund The Novare SA Impact Investment Fund has been purposefully structured to effectively address four key objectives: i. To consistently generate positive financial returns ii. Predominantly invest in projects with socio-economic and environmental impact in South Africa; iii. Also invest around 25% of the committed capital in the Southern African Development Community (SADC) - to support regional integration and possible expansion endeavours of investee companies, and iv. Help counteract the effects of the current economic downturn, through, for example, job creation.

• Deal pipeline: A multitude of solid crossindustry deals have already been lined up through exclusive, proprietary networks. Coupled with the fact that this is the fund’s vintage year during which we offer ultraattractively priced assets in a volatile economic climate, all indicators point to a substantial influx of investment capital. Benedict Mongalo, Managing Director, Novare Impact Investment Partners The impact projects will strategically be earmarked to help drive and support the priorities of our National Development Plan (NDP), in critical, targeted sectors such as agriculture, manufacturing and economic infrastructure. Apart from its financial performance, the success of the fund will also be measured by the social returns generated and the key pillars of the UN Sustainable Development Goals (SDGs). These are poverty eradication and inequality, environmental sustainability and the creation of sustainable economic infrastructure, which have been identified as the barometer for measuring these social returns.

The success of the fund will also be measured by the social returns generated and the key pillars of the UN Sustainable Development Goals (SDGs)

• Multidisciplinary fund management team: The uniquely diverse team consists of veterans in both impact and privately negotiated investments, transactors, and specialists in environmental, social and governance (ESG) and technical matters, with the full support of the well-established back office of Novare Holdings. The team has extensive experience in the unlisted investment space and has raised and invested no less than two successful private equity funds which were largely deployed in greenfield projects. Doing well, while doing good The Novare SA Impact Investment Fund is ideally poised to become an investment-ofchoice for institutional investors (pension funds and developmental financial institutions) and high net worth individuals who are mindful of investing responsibly, by gaining optimal financial yields whilst making a difference in the greater scheme of things. Novare Impact Investment Partners is an authorised financial services provider. For more information, go to www.novare.com.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

FMCG

Tiger Brands surpasses its B-BBEE goals for 2020

This is testament to our unwavering commitment to transformation and our contribution to economic empowerment in South Af rica.”

espite an extremely challenging year nationally and globally and across all sectors and industries, Tiger Brands improved its B-BBEE (Broad-Based Black Economic Empowerment) rating from Level 4 to Level 3 in 2020 – two years ahead of its projected target. “This is a testament to our unwavering commitment to transformation and our contribution to economic empowerment in South Africa,” said Mary Jane Morifi, Chief Corporate Affairs Officer. In 2019, when the amended Agri-codes dropped the company’s level from Level 3 to Level 7, Tiger Brands developed a B-BBEE strategy and glide path that aimed to restore the organisation’s rating back to at least Level 3 by 2022. Further governance structures and management tools were put into place to ensure that the targets were achieved and that B-BBEE became an inherent part of the organisation’s everyday group culture.

– Mary Jane Morifi

Mary Jane Morifi, Chief Corporate Affairs Officer

“Our B-BBEE progression, however, is only possible when each and every employee owns transformation and sees it as a journey, not a destination,” said Preeya Naidu, B-BBEE and Social Transformation Manager at Tiger Brands.

Part of this approach included setting up a BEE Steering Committee comprising C Suite executive members as the organisation’s BEE custodians. A working group comprising pillar champions across various sections of the organisation aims to execute Tiger Brands’ BEE mandate. This has given the organisation a clear overview of its goals and areas that require attention and improvement.

This journey of transformation will continue to be an inherent part of Tiger Brands’ company culture in 2021 and beyond, as the organisation enters its second centenary of operation.

Our B-BBEE progression, however, is only possible when each and every employee owns transformation and sees it as a journey, not a destination.” – Preeya Naidu

@TigerBrandsFMCG

Furthermore, Tiger Brands’ strong enterprise and supplier development drive saw the organisation source wheat, maize and beans from emerging black farmers, which culminated in R12,3 billion being spent on B-BBEE-verified suppliers in 2020. An additional R32 million was spent on various socio-economic development projects that saw around 100 000 beneficiaries.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

@TigerBrands

“On the back of our three-level B-BBEE advancement last year, our goal for the coming years – as a proudly South African company – is to lead our industry, not just in terms of B-BBEE requirements, but in terms of the implementation of programmes and projects that reflect the company’s commitment to an inclusive economy and transformation of our society,” said Morifi in closing.

@Tiger Brands

FMCG

Driving the change When Kholiswa Zondani left her corporate job of 10 years to establish Tshimoloho Group in 2016, she never imagined that within five years, two of her eight trucks would be servicing the continent’s largest food manufacturer. “It’s a male-driven sector. When you meet a potential client, they often look to see if a man is coming to talk business. But Tiger Brands gives people opportunities based on performance,” says the 40-year-old entrepreneur. “They are invested in growing my business while they grow theirs. Tiger Brands said if I’m not making money, there’s no point in doing it. This made me feel like

a stakeholder in their business, not merely a supplier as part of a tick box exercise,” she continues. Her company’s vision is to offer opportunities to those who previously didn’t have and also help them realise their dreams where possible. “I am helping one of the drivers realise his dream of having his own transport”. “What’s most important is that I’ve experienced this in practice as I have negotiating power in terms of pricing and they ensure that my trucks never have empty legs, Zondani concludes.

Tiger Brands said if I’m not making money there’s no point in doing it. This made me feel like a stakeholder in their business, not merely a supplier as part of a tick box exercise.” – Kholiswa Zondani

3010 William Nicol Dr, Bryanston, Sandton, 2191

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

Tiger Brands expands its B-BBEE mandate to the logistics sector By Litha Kutta, Director for Enterprise and Supplier Development

This is true globally. Seventy-two per cent of multinationals expect SMME providers to play an important role in their business five years from now, according to a recent Economist Intelligence Unit survey. Half of the executives surveyed say they would prioritise hiring SMMEs over large firms, if they could strengthen their value proposition.

iger Brands is transforming its supply chain and supporting inclusive growth by developing and supporting nascent blackand female-owned SMMEs within the logistics sector as part of its enterprise development mandate. In his State of the Nation address, President Cyril Ramaphosa outlined how the Economic Reconstruction and Recovery Plan aims to decrease our reliance on imports by 20% over the next five years and has the potential to stimulate local production and the economy to the tune of R200 billion annually. South Africa imports around half of its grains to feed the nation. As the country’s largest food manufacturer Tiger Brands aims to minimise our national dependence on international grain growers by implementing a three to five-year R500 million programme to stimulate the local agriculture industry by supporting small-scale black and female farmers through its Smallholder Farmer Programme, as well as aggregators through its Agriculture Aggregator model. As of 2019, the company has supported black farmers to produce in excess of 20 000 tonnes of various grains, with the aim of targeting 100 000 tonnes as part of its Import Replacement Programme. This increase in local production and the need to transport it across the country has seen Tiger Brands form long-term partnerships with dedicated yet independent logistics companies as part of its supplier value chain. Instead of outsourcing its increasing logistics requirements to already established third parties, Tiger Brands is fulfilling its enterprise development mandate by developing and supporting nascent SMMEs, whilst creating a reliable supply chain for itself. “We are very deliberate in benefiting as many SMMEs as possible through our Enterprise and Supplier Development activities (ESD)

As of May 2020, Tiger Brands onboarded seven SMME logistics companies – all of which are black-owned and four of which are black female-owned – for three year contracts with a minimum value of R60 million. These suppliers will service the company’s factories and depots along lucrative routes between Durban and Gauteng. Litha Kutta, Director for Enterprise and Supplier Development

which are vital to our business strategy to help transform more lives every day in all that we do,” says Litha Kutta, who is spearheading the project as Tiger Brands’ Enterprise and Supplier Development Director. “During these tough economic times, SMMEs are helping to fuel job creation and drive socio-economic development more so than many other larger business operations. They also have the potential to develop muchneeded township economies and spread the wealth across many more players within the marketplace,” he continues.

“Tiger Brands’ success relies on a mutually beneficial partnership with our SMME suppliers who represent a transformed supply chain that supports inclusive growth. We are only as good as our suppliers,” says Kutta. “While many of these logistics companies have never serviced a corporate directly, but have rather been sub-contracted by other companies, we want them to grow their businesses alongside ours. Their success is our priority,” he continues. Tiger Brands is playing its part by assisting these SMMEs in developing viable business proposals that will attract the right funders to help them expand their fleets.

During these tough economic times, SMMEs are helping to fuel job creation and drive socio-economic development

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

Why Samsung’s Level 1 B-BBEE rating is good news for the transformation journey of corporate South Africa

t wasn’t long ago that black economic empowerment was best summed up by the narrative of black investors buying minority stakes in white-controlled companies and then being proudly presented as real change on the boards of acquired businesses. Fortunately, this cynical notion of empowerment has evolved. Organisations such as Samsung are intent on creating real empowerment. Samsung South Africa has therefore taken significant steps forward to build on its transformational vision, a journey long in the making – one which began with Samsung’s ongoing mission to attract and develop talent to address employment equity and skills development. It’s a philosophy that has been entrenched in Samsung’s DNA since day one. And now its Level 1 certification, achieved for the second consecutive year, is aligned with Samsung’s belief that companies must play an active role in empowering people across all industry sectors. Over time Samsung has also invested in major social, educational and enterprise development initiatives on a grass-roots level that allows the brand to be actively involved in the community as well as support local entrepreneurial talent. This is important as black investors are no longer content with being economic spectators simply collecting dividends. They want to innovate, uplift their communities and create an economy based on the freedom to pursue their dreams of being large-scale industrialists. This is an important step in building the economy from the roots up. “The certification demonstrates our dedication not only to operational excellence but to remain an active and enthusiastic contributor to the future of the South African economy. Samsung is dedicated to harnessing the power of technology to

“Samsung is dedicated to harnessing the power of technology to effect positive change. Our team is firmly committed to ensuring long-term sustainability and remaining aligned with the Government’s transformation imperatives – Hlubi Shivanda, Director: Business Innovation Group and Corporate Affairs at Samsung South Africa

effect positive change. Our team is firmly committed to ensuring long-term sustainability and remaining aligned with the Government’s transformation imperatives,” says Hlubi Shivanda, Director: Business Innovation Group and Corporate Affairs at Samsung South Africa. Samsung has wholeheartedly embraced the fundamentals of B-BBEE, which is why the company finds great purpose in contributing meaningfully to sustainable transformation across its value chain. Samsung’s enduring commitment to the objectives of the BroadBased Black Economic Empowerment Act is demonstrated by its ongoing objective to address the inequalities of the past. The economic fortunes of black people and black-owned businesses must gain a foothold in supply chains of both the public and private sectors, resulting in much needed market access to drive growth. Samsung is driven by a focus on the meaningful participation of black people in the South African economy through management

and business ownership. In 2019 Samsung launched a R280 Million Equity Equivalent Investment Programme, aimed at stimulating job creation. It is estimated that it will contribute nearly R1 Billion to the South African economy at large. This investment is an addition to initiatives focused on the upskilling of youth such as in the Samsung Engineering Academy, technology-based facilities in schools and universities, as well as student bursaries. Ultimately, the aim is to pursue opportunities for black people to become actively engaged in the economy. This will have an impact on families, communities and ultimately, the entire nation. “We will continue to work directly with Government through education and social upliftment programmes, bursaries and industry initiatives. Additionally, everything from the empowerment of our staff, Samsung Engineering Academies and Enterprise Development programmes will continue to actively reflect our unwavering commitment to the prosperity of the country and its people,” concludes Shivanda.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

Infrastructure Development Solutions

Bigen celebrates 50 years of “doing good while doing business”

igen has grown from humble beginnings into an influential multinational group, working in Africa, for the people of Africa. Since starting off as a traditional engineering firm in 1971, Bigen has kept pace with the fastgrowing infrastructure development needs of the continent. With incredible vision, founder Francois Swart took a bold step forward upon retiring in 2010 and appointed an unexpected candidate as his successor – not a seasoned engineer, but an exceptional female leader, Dr Snowy Khoza, an MBA graduate with a PhD in Social Policy and a passion for socioeconomic transformation of Africa. This step proved a catalyst for Bigen’s transformation into an influential contributor to socio-economic development across Africa. Empowering disadvantaged communities became the mandate of the entire Bigen Group of “engineers with a conscience”, embodied in its purpose of “doing good while doing business”. This encompasses both game-changing infrastructure development – water, electricity, roads, railways, schools, hospitals, housing and more – in disadvantaged communities, and also an

inclusive approach maximising the benefits for local labour, contractors, suppliers, women and youth on every project. Bigen is a partner of choice for African governments seeking bespoke, cost-effective infrastructure development solutions, and has transformed lives and economies in 19 countries. The Group understands that in this era of socio-economic transformation, public and private enterprises need to partner with experienced service providers who can offer synergistic benefits, joint value creation and practical solutions to support the achievement of Africa’s sustainable development goals by 2030. As Bigen continues to uplift impoverished and socially deprived communities across Africa, it invites like-minded, ethical industry partners to join its exciting journey of unleashing Africa’s potential through infrastructure development.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

About BIGEN As a driver of socio-economic change in Africa through innovative, solutionsfocused infrastructure development, Bigen provides a broad spectrum of development advisory and impact, financial, technical, environmental and institutional services and is a powerful change-maker in the real estate, agriculture, water and sanitation, transportation, energy and health sectors. A truly African Group with its Head Quarters based in Mauritius and South Africa (where we have eight regional offices), and with country offices in Ghana, Botswana, Kenya, Mozambique, Namibia and Zambia, Bigen has been supporting African governments’ sustainable development goals by providing cost-effective infrastructure and socio-economic development solutions since 1971.

Bigen Group: +27 (0) 11 824 8700 | pretorial@bigengroup.com | www. bigengroup.com Bigen Global: +23 (0) 403 6000 | md@bigenglobal.com | www.bigenglobal.com

THOUGHT LEADERSHIP ARTICLE

Scramble for Covid-19 Vaccine exposes pitfalls of Africa’s pittance investment in Research and Development1 By McLean Sibanda, Ph.D., Managing Director Bigen Global Limited

ations are built during times of crisis, when leaders and citizens come together as a common force to deal with the crisis. Increased research and development (R&D) investments by nations during times of crisis are attributable to the emergence of many technologies that shape our world today. The unprecedented impact of the COVID-19 pandemic unequivocally demonstrates Africa’s ill-preparedness and lack of capacity. The pandemic has revealed the pittance Africa invests in R&D and low supply of science, technology and innovation (STI) human capital. No COVID-19 vaccine has benefitted from R&D from Africa, embodies any intellectual property from an African country, or involves scientists from an African country. Consequently, in the scramble for COVID-19 vaccines, African countries find themselves at the bottom of the priority list. Instead of seeing this as a wakeup call to develop their own capabilities in vaccine production, African countries have resorted to lobbying the World Trade Organisation (WTO) for an intellectual property waiver for COVID-19 vaccines. In 2019, South Africa spent 0.82% of GDP on R&D and has 432 researchers per million inhabitants. This is in contrast to China, which spends 2% on R&D and has 1089 researchers, Brazil (1.3% on R&D and 887 researchers) and Russia (1% on R&D and 3075 researchers). There is less private sector participation in South Africa compared to its BRICS peers, most of which have a COVID-19 vaccine candidate. Asian countries such as Korea and China have demonstrated the impor-

McLean Sibanda, Ph.D., Managing Director Bigen Global Limited

tance of R&D investment to spur innovation, increase efficiencies, create new markets and increase GDP growth. No African country has reached the 1% of GDP target agreed to by African Union Member States as a desired minimum expenditure on R&D. Increased R&D investments results in increased intellectual property output, in particular patents, which form the backbone of many of the vaccines that are entering the market today. Accordingly, it is not surprising that South Africa’s aborted first batch of COVID-19 vaccine came from the Serum Institute in India, which is manufacturing a number of vaccines under licence from various parties. Government investment in R&D is critical. The European Union and German government have invested in BioNTech, which collaborated with Pfizer

1. B y McLean Sibanda, Ph.D., Managing Director Bigen Global Limited, is a published Author of the book Buts & Bolts – Strengthening Africa’s Innovation and Entrepreneurship Ecosystem, and an innovation expert that has worked throughout the country and has advised SADC, AU, various governments (Eswatini, South Africa, and Tanzania). 2. https://www.internationalhealthpolicies.org/featured-article/why-does-pfizer-deny-the-public-investmentin-its-covid-19-vaccine/ 3. https://www.ox.ac.uk/news/2020-05-18-funding-and-manufacturing-boost-uk-vaccine-programme

on vaccine development, thus explaining why the Pfizer vaccine is cheaper in Europe than in the US.2 The UK government also invested £65.5 million funding the Oxford University/ AstraZeneca vaccine.3 South Africa, being the single largest pharmaceutical market on the African continent; coupled with the most advanced science and technology infrastructure on the continent, as evidenced by R&D inputs and outputs (research personnel per million people,4 publications and patents), has a unique opportunity to lead Africa in vaccine development and manufacturing capacity. Past investment by the South African government in biotechnology R&D, albeit small, has contributed to South African scientists having a better understanding of a more transmissible COVID-19 variant.5 South Africa should not let the current crisis go to waste. R&D investment should go hand-in-hand with building a critical mass of STI human capital. This should be coupled with strategic acquisition of foreign-owned intellectual property and capabilities as well as technology transfer, to bolster the emergence of an industry that will serve the people of Africa, if we are to learn from the Asian countries. In addition, incentives for the private sector to invest in the pharmaceutical sector and build both vaccine and therapeutic R&D and manufacturing capacity. The announcement on February 18, 2021 by President Ramaphosa that he has directed that South Africa assemble a team of scientists to build vaccine development and manufacturing capability for future pandemics is encouraging6 but requires deliberate increased R&D investment.7

4. https://www.indexmundi.com/facts/indicators/SP.POP.SCIE.RD.P6/map/africa 5. https://www.moneyweb.co.za/news/south-africa/south-african-scientists-who-discovered-new-covid19-variant-share-what-they-know/ 6. https://ewn.co.za/2021/02/18/sa-must-develop-its-own-vaccines-says-president-ramaphosa 7. https://www.dst.gov.za/index.php/media-room/latest-news/3285-investment-in-r-d-declines-but-vitalin-the-era-of-covid-19

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

Phillipa Susan Van Zyl V The Road Accident Fund:

A Shift In The Law? By Feziwe Phungula, a director at MNS Attorneys

n M a r c h 2 , 2 0 2 1, t h e Constitutional Court heard argument in a matter between Phillipa Susan Van Zyl N.O. v The Road Accident Fund, which could clarify a critical question of law. The brief facts of the matter are that the Applicant was involved in a motor vehicle accident which led to his mental impairment. He was not detained as patient in terms of mental health care legislation, nor placed under curatorship. He lodged a claim seven years after the motor vehicle accident occurred and as a result, the Road Accident Fund (“RAF”) repudiated the claim on the basis of prescription.

Feziwe Phungula, director, MNS Attorneys

The Constitutional Court has to determine whether: • there should be a conjoint reading of the provisions regulating prescription in the RAF Act and in the Prescription Act; • the RAF Act limits the constitutional right to access to courts, and if so, if such limitation is reasonable; • t he RAF Act discriminates against persons who are mentally impaired and are not detained as patients in terms of mental health care legislation and/or are not under curatorship. This matter concerns the applicability of: section 23 (2)(b) and (c) of the Road Accident Fund Act 56 of 1996; and section 13(1)(a) of the Prescription Act 68 of 1969. 2.

The RAF Act discriminates against persons who are mentally impaired and are not detained as patients in terms of mental health care legislation and/or are not under curatorship.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

The time in which the claim was instituted, ousted the claimant from the reliance on section 23 (2)(b) and (c) of the Road Accident Fund Act 56 of 1996 (“RAF Act”). In terms of the RAF Act, prescription of a claim for compensation does not run against persons who are: minors; detained as patients in terms of mental health care legislation; and under curatorship. The Applicant sought protection from the running of prescription by relying on section 13(1)(a) of the Prescription Act 68 of 1969 (“the Prescription Act”), which state that completion of prescription is delayed if the creditor is an insane person. The High Court agreed with the contentions of the RAF by upholding the special plea of prescription. The Supreme Court of Appeal (“SCA”) upheld the High Court’s judgement. It held that the Prescription Act did not afford the Applicant protection against the running of prescription and that the prevailing provision regulating motor vehicle accident claims is the RAF Act. As a result, the SCA held that the Applicant’s claim against the RAF had prescribed. In reaching its decision, the SCA, relied on the judgement of Road Accident Fund v Mdeyide 2011 (2) SA 26 (CC) (“Mdeyide II”), which held that the provisions of the Prescription Act and the RAF Act are inconsistent, in that the prescription of third-party claims against the RAF are exclusively governed by the RAF Act. Despite the fact that the Constitutional Court has not handed down judgment, the enquiry during the proceedings point to the unconstitutionality of RAF Act. * MNS was instructed on behalf of the RAF to defend the matter.

Law Firm

The right legal expertise in your corner

NS Attorneys is one of South Africa’s leading black-owned law firms, with expertise across a wide range of disciplines. Formed in 2002 by founding partners Mncedisi Ndlovu and Tshiamo Sedumedi, MNS prides itself on providing top quality legal expertise in the most efficient time period and at the highest possible standards – summed up in the tag-line: “Legal expertise in your corner.” In just 19 years, MNS Attorneys has grown into a highly-regarded and unerringly professional law firm with wide-ranging public and private sector expertise. The firm specialises in the following areas of practice: •C orporate and commercial law •E mployment law. •C onstruction and engineering law •P roperty law •P rocurement law •E nergy and environmental law •L egislative drafting •M edical malpractice MNS has also conducted numerous forensic investigations into allegations of corruption, fraud and maladministration in the public

sector, and MNS forensic reports are currently being used to assist the Zondo Commission of Inquiry into State Capture. “Our growth mirrors that of the black legal profession and symbolises the new opportunities available to lawyers from previously disadvantaged backgrounds,” says Chairman Mncedisi Ndlovu. “We believe our growth depends on the growth of our clients and team members and we incentivise every member of the MNS family to continue with their personal and professional development as we continue to build a powerhouse of black legal excellence.” So what makes MNS different? “Our clients often say that the lasting impression of MNS Attorneys is our level of professionalism, and the hard work and dedication displayed by our team,” says Ndlovu. “We achieve this by focusing on three Ds: detail, determination and delivery. We never compromise on quality, and pay attention to

detail. That is coupled with a determination to provide innovative solutions and approaches. And when it comes to delivery, we meet all our deadlines and ensure quality work on time, all the time.” Managing director Tshiamo Sedumedi says the firm also has a deep-rooted commitment to giving back to society and to empowering communities. “In line with this, we support high school students from disadvantaged backgrounds with basic needs, and reward top-performing students,” he says. Ndlovu concludes: “As a black-owned law firm, our goal is to be the best of a new breed of legal practice and to lay down foundations that can be built upon by the next generation of black lawyers. “As we approach our 20th anniversary next year, we are more focused than ever on our goal of becoming one of the best law firms in South Africa.”

2nd Floor, 16 Fricker Road, Illovo 2196 011 268 5225 | reception@ndlovu-sedumedi.co.za

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

Small businesses are vital for business recovery By Zandile Njamela Mampone, Supplier Inclusion and Sustainability Lead at Accenture, Africa

mall to medium-sized enterprises (SMEs) are the lifeblood of the South African economy. Their survival is critical to economic recovery post COVID-19. According to Statistics South Africa’s Annual Financial Statistics 2019 survey, SMEs contribute 32% of the country’s R10,5 trillion total turnover of the formal business sector, which is a significant increase from 25% in the 2013 survey. In the same six-year period from 2013 to 2019, SMEs increased their turnover by 8,4% versus a 5.4% turnover increase seen from large business. The COVID-19 global pandemic has disrupted our entire existence - privately, socially and economically. Big, small and mediumsized businesses are feeling the impact of the pandemic. It needs to be recogised, however, that SMEs are more vulnerable to the prevailing uncertainty as the world adapts to a new way of doing business. Big business is able to adapt more rapidly and at scale in response to the changing business environment for its survival. On the other hand, SMEs often have more limited resources, hampering quick business adjustments in response to times of crisis. Government and private large business need to be mindful of the position SMEs find themselves in. It is the entire value chain’s responsibility to support SMEs towards a higher small business survival rate post the pandemic. Supporting SMEs is vital for economic recovery in South Africa Government has responded with various financial and other support structures to help SMEs navigate the impact of COVID-19. Although these public measures are welcome, the private sector must also take up its responsibility to support small and medium suppliers in the value chain for positive long-term business impact and survival.

opportunities often constrains SME growth and is an area where larger, private entities can make a significant difference in the business future of an SME.

Zandile Njamela Mampone, Supplier Inclusion and Sustainability Lead at Accenture, Africa

While access to capital is always a significant barrier to SME growth, solving the challenges that face small businesses and hamper their growth, requires more than a funding boost. SMEs often face other prolific challenges that impede their ability to reach their potential and deliver a meaningful business contribution. SMEs require access to initiatives that make them self-sustainable and ensure their longterm success. A lack of access to commercial

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

Create initiatives that are focus on shared value Shared value harnesses an organisation’s policies and system to enhance its competitive edge while increasing its social impact in the communities it operates in. Similarly, SME support and growth programmes need to address the organisation’s commercial objective and should be supported by policies and practices that enable them to remain sustainable. It is critical for an organisation to support and grow its small- and- medium-size suppliers through commercial opportunities. Such suppliers then become more effective as businesses and, in turn, contribute positively to the society they operate in by combatting unemployment, low education and widespread poverty. By partnering with SMEs through comprehensive shared-value targeted programmes, SME businesses gain valuable experience. The skills and knowledge transfer adds value while access to established business networks feeds their business pipeline. SMEs, in turn, grow their sustainable revenue streams as they become part of the procurement pipeline of larger businesses. As more corporates become more inclusive and willing to broaden access to business opportunities, SMEs will flourish and play their rightful role in an empowered economy.

SMEs grow their sustainable revenue streams as they become part of the procurement pipeline of larger businesses.

Transport

GAUTRAIN – EMPOWERING COMMUNITIES THROUGH TRANSFORMATION AND JOB CREATION

he Gautrain Management Agency (GMA) is a member of the Shared Value Africa Initiative and aims to make a positive contribution and have an impact on societal challenges. Through the Gautrain Project, the GMA continues to contribute to Gauteng’s economic growth and job creation. The Gautrain is a smart mobility project that continues to promote the Gauteng Provincial Government’s vision of transformation, modernisation and the reindustrialization of Gauteng. It was conceptualised as a catalyst to economic growth in Gauteng. To ensure that this was achieved, an innovative socioeconomic development (SED) strategy was adopted during the procurement process of Gautrain. An Independent Socio-Economic Monitor (ISEM) was appointed for the purpose of verifying SED achievements attained on the project. To date the Gautrain concessionaire has exceeded its SED obligations and Gautrain has made a significant contribution to Gauteng’s economy and job creation.

The Black Economic Empowerment (BEE) policy is another important element of Gautrain’s economic growth and SED strategy. It highlights equity participation by black people in the Project and partner entities. It also includes the procurement of services and materials from BEE entities, sub-contracting of service delivery to such entities and the establishment of new BEE entities. The job creation strategy focuses on a commitment to progress towards economic equity. This strategy includes a commitment to the employment of Historically Disadvantaged Individuals (HDIs), women, and people with disabilities and their participation in management positions. Gautrain has created the following jobs: • 35 000 direct construction jobs during the Construction phase - 3 800 direct jobs for women - 2 9 900 direct jobs for Historically Disadvantaged Individuals (HDIs) - 2 0 300 direct jobs for young people

• 10 900 direct operational jobs. Jobs created during Operational phase - 3 000 direct jobs for women - 10 100 direct jobs for Historically Disadvantaged Individuals (HDIs) - 5 800 direct jobs for young people The GMA has also conducted studies to measure the Gautrain impact to economic growth and job creation. An independent economic impact study on Gautrain by Hatch has concluded that for every R10m spent on construction work, 45 jobs were supported directly via supply chain and wage spend. For every R1 spent on Gautrain, R1.72 had been added to the Gauteng economy. The operating period has seen significant procurement from and subcontracting to Black Entities and SMMEs. Besides transforming the way people commute, the Gautrain project has been an instrumental driver of economic growth and social development in the Gauteng province.

gma.gautrain.co.za Call Centre – 0800 42887246 SMS alert line for service disruptions – 32693

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

THOUGHT LEADERSHIP ARTICLE

Should Government still apply the BEE policy in times of Covid? By Thulebona Buthelezi

resident Ramaphosa on Monday March 23, 2020 announced the l o c kd o w n i n S o u t h Africa from March 26 to April 16, 2020 to contain the spread of the coronavirus. This move had an impact on many business, as operating costs grew. To aid business and society, on the April 21, 2020 President Ramaphosa introduced a Covid relief fund amounting to R500 billion. Within the relief measures, tax incentives were introduced to lessen the cost burden on businesses.

from large companies through procurement and enterprise and supplier development policies. Industrial policy released by the government requires many businesses to support small, black-owned businesses through procurement. This is to encourage entrepreneurship, which leads to increased employment. Socio-Economic development: We look at the wellbeing of society. Companies must create initiatives that enable the ordinary man on the street to access the economy. These initiatives include grants and mentorship, and assisting with skills development.

Despite the various interventions from the government to alleviate Taking the above into considThulebona Buthelezi, Director, Izwelisha BEE Verification Agency the cost burden on businesses eration, BEE in times of Covid is operating in different industries, there still relevant. If these BEE policies were Management control were calls for the government to scrap to be abandoned now, it would worsen In this component we look at who runs the BEE legislation so that restrictions on the poverty situation in the country. In an company. The directors and the employees article published by IOL, on November 12, operating in certain industries could be are responsible for running the company. relaxed. The Solidarity and AfriForum took 2020, President Cyril Ramaphosa is quoted The Broad-Based Black Economic Empowthe Department of Tourism to court over as saying: “If we take steps to promote BEE erment (B-BBEE) Commission recently its BEE policy application on companies in it is wrong for those who think it is a racist published a report on transformation in the tourism sector that required access to policy. I’m frankly surprised at those who, South Africa for the 2019 calendar year. Covid relief funds. having enjoyed the privileges of the past The Commission found that companies regime take umbrage, are very angry when in South Africa are not fully transformed. The purpose of the Black Economic those who did not enjoy the privileges are There is a dearth of black directors and Empowerment policy is to ensure translifted up”. senior managers in many companies, an formation in the economy in terms of: indication that transformation is slow. Transformation is a continuous process Ownership: and the gap between the poor and the Skills development In this component, we look at the ownership wealthy is still too wide. It is imperative that This is the most imperative component. It of businesses. In a 2017 news article by companies through the BEE policy should involves training of people so that they can Moneyweb, it was stated that 40% of JSEassist the Government to close this Gap. be equipped enough to run and manage listed companies were owned by foreigners The government has special measures in companies. In South Africa, many people while 22% were owned by black people place for companies that serve as a hedge have low levels of education, which exac(Indian, Coloured, Chinese and black South against economic difficulties caused by erbates the unemployment problem. African) and 23% owned by white South Covid. Africans. If this policy is upheld, we would Enterprise and supplier development The BEE policy should not be abandoned see the gap widening, with fewer estabIn this component small businesses benefit by the government. lished black-owned companies.

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

Verification

Our Services •B -BBEE Verification •C onstruction Certificate •J oint Venture Certificate •R isk Assessments •B EE Scoring Tools •C ollation Services •O wnership Analysis •B -BBEE Assessments & Interim Scoring •B -BBEE Training •E nterprise and Supplier Development

About IZWELISHA BEE VERIFICATION AGENCY Izwelisha BEE Verification Agency was established in 2016 primarily as an independent BEE Verification Agency to assist companies with verification of their BEE status in a fair and independent manner. Our mission is to produce the right outcome through our procedures. Exercising good judgement in all B-BBEE

Verification Audits, while adhering to the Ethics Policy and Procedures set out in the Izwelisha BEE Verification manual. As a 100% black-owned, SAN ASaccredited agency, Izwelisha has the experience and knowledge to provide its clients with a professional approach to sustainable BEE.

We are passionate about customer service and accuracy in our BEE assessment activities. Our services include the issuing of BEE Certificates to Exempt Micro Enterprises, Qualifying Small Enterprises and Generic Enterprises and extends to all industry charters. Izwelisha BEE Verification Agency offers fully comprehensive BEE scorecard verification services to South African businesses. Using highly qualified analysts and our ‘value add’ philosophy, we ensure prompt turn-around of certification.

Association and Accreditation

For more information, please contact Mpumi or Thulebona on: Tel 010 110 1390 extension 105 Email: mpumi@izwelishabee.co.za or info@izwelishabee.co.za

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

to implementing BEE codes

DETERMINE STATUS

• Establish new data requirements necessitated by the current codes • Compare current data to the current requirements • Produce a Data Gap Analysis Report

• Produce a mock scoreboard based on current codes

2 PLANNING • Articulate the business case for BEE • Agree on BEE vision • Formulate BEE strategy • Set BEE targets • Compile detailed BEE plan • BEE plan approved by Leadership team

EXECUTION

COMMUNICATION

INTEGRATION

TRAINING

• CEO/MD launch the BEE plan • BEE plan communicated to various stakeholders

• Review business processes in the light of the current codes • Align business processes to the current codes

• Train Executives on the current codes, their roles and responsibilities • Train line managers on the current codes, their roles and responsibilites • Train business process owners on the current codes, their roles and responsibilities

MONITORING • Review BEE progress reporting in the light of the current codes • Produce and distribute BEE progress reports to various stakeholders • Evaluate impact of strategic initiatives and adjust where necessary

THOUGHT LEADERSHIP ARTICLE

Growing Township Economies: A Key Opportunity for Skills Development and Youth Employment By: Gugu McLaren-Ushewokunze

Why is addressing youth unemployment crucial? * The COVID-19 operating context has severely impacted South Africa’s economy with unemployment increasing by 1.7 percentage points to 32.5% in the fourth quarter of 2020. Unfortunately, the outlook is worse amongst the youth, with 63.2% (15-24 years) and 41.2% (25-34 years) unemployed. Unemployment amongst black South Africans (36.5%) and black African women (38.5%) remained higher than the national average. Entry-level opportunities for young people are contracting rapidly with the worst impacts experienced by already vulnerable groups. In South Africa, two million of the nearly three million job losses due to COVID-19 were held by women.i Fundamentally addressing youth unemployment is crucial for enhancing economic inclusion, gender equality and social cohesion in South Africa. Growing our township economies is a vital opportunity to create entry-level employment for young people where they live, while upskilling the most vulnerable groups. How do we grow the demand for skills and jobs in township economies? The development of artisanal skills, in wide demand across the industrial economy, is an important enabler of economic opportunities for young people. However, the majority of young people, especially township youth, face significant barriers in accessing and sustaining employment opportunities. Developing more inclusive artisanal learning lies in the broad SME environment, which currently offers little formal and recognised training. It

an opportunity to develop IRM Township Hubs which will: • Identify entrepreneurial IRM enterprises in townships • Create support packages to strengthen these businesses • Enhance SME market access through securing procurement options • Create opportunities for IRM candidates to be trained and employed in these enterprises

Gugu McLaren-Ushewokunze Head: Social Transformation National Business Initiative (NBI) is critical to support and develop township enterprises to grow economic activity and unlock employment opportunities where young people live. What is IRM and how does it address skills development and youth unemployment? Installation, Repair and Maintenance (IRM) roles comprise approximately two million jobs, a third occupied by young people and the majority within SMEs. Most IRM roles are in enterprises, which operate outside of the formal economy, with many being townshipbased. The National Business Initiative’s (NBI) IRM Initiative recognises that youth unemployment will not be solved through labour absorption in the formal sector alone. The NBI has identified

What differentiates our township economy model? The key success factor is the creation of market linkages between township enterprises and large companies in the formal sector. The programme works with Government to grow more inclusive access to procurement opportunities for township enterprises. The necessary enterprise development support is provided to equip township entrepreneurs for these opportunities, provided they train and employ young people, which actively grows the demand for skills and jobs in township communities. This is where your organisation can be part of the solution. The NBI is engaging with companies to develop Enterprise and Supplier Development (ESD) models to reach township based IRM enterprises and increase the demand for these services. Join us and be a part of this innovative, demand-driven solution to address both skills development and youth unemployment through growing our township economies. Please contact Dr Anthony Gewer (Programme Manager: Social Transformation): anthonyg@nbi.org.za

Source: *Unemployment data: StatsSA (2020): “P0211 - Quarterly Labour Force Survey (QLFS), 4th Quarter 2020”, 23 February 2021, Available at: http://www.statssa.gov.za/?page_id=1854&PPN=P0211&SCH=72942 i Iskander, M., A survey shows young women are bearing the brunt of Covid-19 unemployment, Daily Maverick, 12 August 2020, Available at: https://www.dailymaverick.co.za/article/2020-08-12-a-survey-shows-young-womenare-bearing-the-brunt-of-covid-19-unemployment/

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

INDEX

ACCENTURE SA

BIGEN GROUP

Futuregrowth Asset Management

GAUTRAIN MANAGEMENT AGENCY

HONEYCOMB BEE RATINGS

IZWELISHA BEE VERIFICATION AGENCY

LIBERTY2DEGREES

MNS ATTORNEYS MY CFO

2, 3, 30 26, 27 10, 11 31 14, 15 32, 33 18, 19 28, 29 17

NBI

35, 37

NOVARE HOLDINGS

20, 21

ORACLE 40

RMB

SAMSUNG

THE TRANSFORMATION LEGACY TIGER BRANDS LIMITED TRANS4MATION CONSULTING

8, 9 25, 38, 39 12, 13 22, 23, 24 16

Youth Development

About the NBI

he NBI is an independent voluntary movement of companies working towards economic and social transformation in South Africa through responsible collective business action. We were launched in 1995 by former President Nelson Mandela, initially to support the new democratic government. Our role is to build a South African business community that plays a meaningful, trusted and action-orientated role in the achievement of a sustainable, equitable and inclusive society. Our five focal areas are: Economic Inclusion; Social Cohesion and Equality; Environment; Institutional Capacity; and Bold and Transformative Leadership as a cross-cutting function. The NBI has a long-established role of impact through collective action with member companies. Our membership includes a significant proportion of the country’s leading listed companies, a number of major state-owned enterprises and a variety of medium-sized firms. NBI CEO, Joanne Yawitch, says: “Responding to the complexity of these issues and finding simple, practical and impactful means of addressing them requires companies to be informed, agile, able to address new risks proactively and initiate action that will have meaningful results.” This approach is illustrated through our Installation, Repair and Maintenance (IRM) Initiative, which recognises that

At the National Business Initiative (NBI), we believe in collective action and collaboration to effect change; building a South African society and economy that is inclusive, resilient, sustainably driven and based on trust. We are an independent business movement with close to 100 South African and multinational member companies committed to the vision of a thriving country and society.

Joanne Yawitch, CEO, NBI youth unemployment will not be solved via labour absorption in the formal sector alone. We are addressing youth unemployment by focussing on growing our township economies as a vital opportunity to create entry-level employment for young people while upskilling the most vulnerable groups. Your company can be part of the solution. We are engaging with companies to develop Enterprise and Supplier Development models to increase the demand for these services. Join us and be a part of this innovative, demand-driven solution to address both skills development and youth unemployment.

The NBI works with our members to enhance their capacity for change, leverage the power of the collective, build trust in the role of business in society, enable action by business to change society and create investment opportunities for them. The NBI is for the committed. Join us now in building South Africa’s tomorrow.

National Business initiative (NBI) Address: 5th Floor, 61 Katherine Street, Dennehof, Sandton, 2196 Postal Address: P O Box 294, Auckland Park, 2006, South Af rica Tel: +27 11 544 6000 | Fax: +27 11 484 2754 | E-mail: Info@nbi.org.za Contact Person at the NBI: Gugu McLaren-Ushewokunze – Head: Social Transformation E-mail: GuguM@nbi.org.za

FINANCIAL MAIL ESSENTIALS • ABC of BEE 2020/21

Samsung Opens Doors In The Tech Sector For SA’s Youth

Collaborative partnerships remain key to addressing the increasing need for quality software development skills in the country. Fortunately, Samsung South Africa, through its partnership with Wits University’s Tshimologong Digital Innovation Precinct has commenced with the second cohort of youths entering the App Factory Internship Programme. Following Samsung’s R280-million Equity Equivalent Investment Programme (EEIP) investment last year, Samsung and Tshimologong continue on the journey of building software development skills for unemployed youth. The App Factory is an essential learning ground for teaching the language of technology, which is coding. Interns get to work with experienced senior developers over 9 months to grow their competence and hone their skills – an education that can translate into a successful career in a rapidly expanding industry. “This is an immense platform for empowering deserving, previously disadvantaged youth. Aligned with our global mission of ‘Enabling People’, from here they can launch careers that place them at the forefront of the 4th Industrial Revolution,“ says Hlubi Shivanda, Director for Business Operations, Innovation and Corporate Affairs.” Since embarking on the programme in February this year the

current, outgoing cohort of interns say they have gained essential hands-on experience and unique insight into software development as a career as well as an understanding of the demands of the wider industry.“ The programme has had an impact on the lives of many according to participant Thendo Mudau from North-West University, “This is a once in a lifetime opportunity. There is so much to learn so that you can grow on a personal and professional level.” Chief Executive of the Tshimologong Precinct, Lesley Donna Williams, says, “The programme offers invaluable experience for graduates at a crucial point in the very beginning of their careers. Many graduates do not have the necessary experience to land their ﬁrst job as a software developer. Through the Samsung collaboration, Tshimologong is currently developing and growing 9 more talented graduates, by bridging the knowledge and experience gap under the mentorship of a senior developer to ultimately make them more employable at the end of the 9 months.”

Visit www.samsung.com

Unify your workforce Build a culture that brings out the best in your people by giving them the personalized experience they expect. Achieve operational excellence by connecting your business across HR, �nance, payroll, and planning. oracle.com/hcm

Financial Mail Essentials ABC of BEE 2020/2021

Articles inside

Should Government still apply BEE policy in times of Covid?

Small businesses are vital for business recovery

Phillipa Susan Van Zyl v The Road Accident Fund: A Shift in the Law?

Yielding a consistent ROI, while generating measurable, positive impact

The Property Sector makes a considerable contribution to the GDP

Building solid businessfoundations: It's the simple things that count!

How is Covid-19 impacting compliance with BEE Codes?

Scramble for Covid-19 Vaccine exposes pitfalls of Africa's pittance investment in Research and Development

Tiger Brands expands its B-BBEE mandate to the logistics sector

Why Samsung's Level 1 B-BBEE rating is good news for the transformtion journey of corporate South Africa

Rising to the challange of what it means to be a responsible business