TAKING B-BBEE ON BOARD
Growing the maritime industry
Taking B-BBEE on board Sadly, the subject of B-BBEE still creates an air of discomfort and uncertainty some 13 years after it was first introduced. Through conversations and unpacking the scorecard with business owners and corporate BEE champions, we have become cognisant that the problem is not the legislation, but the fragmented interpretation thereof.
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ut now, together with Smit Amandla Marine, we aim to embark on a journey to simplify B-BBEE and help the maritime industry understand that, apart from being a business imperative, it can be a truly fulfilling endeavour. Let us go back to 2003. The Department of Trade and Industry published the B-BBEE Strategy to outline government’s approach to redressing the barriers created by the previous dispensation for Black people. The four main barriers of poverty, skills, business and opportunities became the underlying pillars that defined the seven elements of B-BBEE that include employment equity, socio-economic development, skills development, preferential procurement, enterprise development, management control and equity ownership. That same year, the B-BBEE Act No 53 of 2003 was promulgated to provide the legislative framework for B-BBEE, to allow the Minister of Trade and Industry to issue the Generic Codes of Good Practice and to publish Sector Codes. In 2009, the Integrated Transport B-BBEE Sector Codes were published in line with the Generic Codes of Good Practice to institute the principles upon which the B-BBEE would be implemented in the Maritime Transport and Services Industry.
Aligning the codes The Department of Transport (DOT) has aligned the Maritime Transport and Services Industry B-BBEE Sector Codes to the Amended Generic Codes of Good Practice. The Amended Codes have five elements: Equity Ownership
Management Control Skills Development Enterprise and Supplier Development Socio-Economic Development, With Equity Ownership, Skills Devel-
opment and Enterprise and Supplier Development being deemed as priority elements. The Amended Maritime Transport and Services Industry B-BBEE were gazetted in April 2016 for 60-day public commentary which ended in June 2016. There are no glaring differences to the Amended Codes except for fundamental
industry and sector-specific sub-elements agreed upon by stakeholders during consultative processes with the DOT. The scorecard in the draft amended sector codes are for Generic Enterprises, Qualifying Small Enterprises, as well as Specialised Entities. The threshold for Exempt Micro Enterprises (EME) is R10 million; for Qualifying Small Enterprises (QSE) R10 million to R50 million and for Generic Enterprises R50 million and above.
Clarity for foreign companies The draft amended sector codes give clarity to foreign owned companies. Foreign companies should seek opportunities to sell equity to Black shareholders or participate in approved DTI Equity Equivalent programmes. Further to that, the draft sector codes state that foreign companies, which have an asset base in South Africa, will have to implement BEE strategies in accordance with the guidelines provided by the draft sector codes and are encouraged to sell equity in their local operations.
Ownership and management control The compliance under Equity Ownership for Black New Entrants, is 7.5 percent, which will ensure an increase in transferring economic emancipation and mainstreaming of black people who are not already empowered. Black New Entrants are defined as participants who hold rights of ownership in a Measured Entity, but who have not held equity instruments in other entities which have a total value of more than R50 million. Under the Management Control element Black Youth employees have been included as a sub-indicator. The maritime sector aims to increase the number of youth in technical and/or professional positions. This element is also aligned to the Economically Active Population (EAP) targets formula – which we will unpack in an article on Management Control.
Skills and supplier development Under the Skills Development Element, mandatory training is excluded from the Skills Development Expenditure. Yet, in the amended sector codes, the mandato-
ry training exclusion does not include the cost of training from initiatives listed in the Mandatory Training list, which works in favour of companies. The Integrated Transport Sector Codes are the only ones where the calculation for skills development expenditure includes the one percent Skills Development Levy, but does not include the discretionary and mandatory grant. Key under the Enterprise and Supplier Development (ESD) element is the allocation of points for procurement spend from empowering suppliers that are at least 51 percent Black Owned and at least 30 percent Black Woman Owned. And in the scorecard that governs Specialised Enterprises, like Transnet National Ports Authority and Transnet Ports Terminal, the ESD element includes spend on 51 percent Black Youth and 51 percent Black people living with disabilities as sub-indicators. The sub-indicators are to incentivise support for sustainable growth of Black owned enterprises. Under Socio Economic Empowerment element, given the lack of awareness about the impact and contribution of the Maritime Transport and Services Industry in our economy, it becomes an imperative to embark on a comprehensive maritime awareness campaign. Enhanced recognition will be given for such initiatives. The gazetting of the Amended Maritime Transport and Services Industry Sector Codes will mean that the Code will become legally binding from the date of its publication. We are hopeful that these articles will become a guide to provide clear direction on the basic principles, objectives and compliance targets to allow industry to implement the amended codes effortlessly.  By Kgomotso Selokane
ABOUT THE AUTHOR: Kgomotso Selokane began her career as a Black Economic Empowerment Project Administrator at Scion before moving to Discovery Holdings where she worked with suppliers to assist them with their BEE scorecards. In 2005 she became the Western and Eastern Cape Regional Executive for Empowerdex and later founded Kgoselo Holdings to focus on transformation consulting, legislation and regulations drafting, investments, deal structuring and training. Kgomotso was the Technical Advisor to the Department of Transport on the Alignment of their B-BBEE to the DTI Revised codes and is also currently Technical Advisor to the Transport Sector B-BBEE Charter Council.
Sponsored by SMIT Amandla Marine
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Maritime Review Africa JULY / AUGUST 2016