thought leadership bee presentation

Thought Leadership

TO BBBEE OR NOT TO BBBEE

BROAD-BASED BEE

OVERVIEW

Introduction

Empowerdex (Pty) Ltd was established in 2001, by Vuyo Jack and Chia Chao Wu.

Our Mission is to provide support to both the public and private sectors to accelerate

the implementation of broad-based black economic empowerment in South

Africa, thereby helping to bridge the gap between the country's first and second

economies.

Empowerdex was a pioneer of the rating methodology, having worked closely with the

Department of Trade and Industry in developing the framework for BEE and involved in

the drafting of the Codes of Good practice.

Based in Johannesburg, with offices in JHB, Pretoria, Cape Town, Durban, and reach

in all provinces through partnerships with external analysts.

Founding member of the Association of BEE Verification Agencies, and accredited by

the South Africa National Accreditation System.

Experience

•Our research division has worked in the development of sector

charters, and with particular industries on the assessment of BEE in

those industries, including:

•Produce the Top Empowerment Companies with the Financial

Mail annually since 2003.

•Were involved in the drafting of the Codes, Tourism Charter ,

AgriBEE, as well as the Liquor Charter, which is not finalised as

yet.

•Completed studies for the Department of Energy on the progress

of the petroleum industry in implementing BEE, as well as a similar

study for the CASA for the state of BEE in the Casino industry.

Some Rated Clients

Standard Bank SA Hollard Ltd

African Oxygen Ltd (Afrox) Nampak Ltd

Gijima AST Bidvest Ltd

Massmart Ltd Barloworld Ltd

Oceana Ltd GlenRand MIB

Mobile Telephone Network (MTN) Foschini

Adcorp Ltd Omnia Ltd

Aspen Pharmaceuticals African Bank

Sappi Ltd Alexander Forbes

Liberty Holdings Ltd

Multinationals rated by Empowerdex

Toyota Unilever

Siemens Volvo

DHL Accenture Chevron SA Adidas

Professional Firms rated by Empowerdex

PriceWaterHouse Coopers JP Morgan

Ernst and Young Deloitte

Bowman Gilfillan KPMG

Werkmens Deneys Reitz

Webber Wentzel RMB Asset Man

Cliffe Dekker Hofmeyr Eversheds

Other Rated clients:

South African Airways Astral Foods

Tsogo Sun ACSA

Shanduka Nashua Mobile

Mineworkers Investment Comp. Primedia Outdoor

Rhodes Food Group Landbank

Group 4 Securicor Mweb

Fidelity Security Services McCarthy

Butterworths Publishers Bateleur

Protea Hotels Southern Sun

Eskom Holdings Limited Mweb

Objectives of BEE

The Poverty Barrier

Employment

Equity/Job creation

Corporate

Social Investment

The Skills Barrier

Skills

Development &

Employment

Equity

The Business Barrier

Affirmative

Procurement

Enterprise

Development

The Opportunity Barrier

Ownership

And Management

Equitable Economic Opportunities

Black unemployed

& rural poor

Black workers,

professionals,

graduates, school-

leavers

Black

entrepreneurs

Emerging black

middle class &

investors

Government

Mining

Banks

Insurers

Retail

Tourism

Telecoms

Suppliers

Suppliers

Supplier

Suppliers Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Business Impact of BEE

INTENTION OF BEE

• Increase the level of participation by black people in mainstream economy

• Increase the real market in the SA economy

• Increase income through resultant economic growth

Second Economy

BE

E

Up

liftme

nt

Second Economy

Mainstream Economy

Mainstream Economy

More economic participants

Higher Economic Growth

Generic Scorecard BEE ELEMENTS WEIGHTINGS CODE

REFERENCE

OWNERSHIP

20 POINTS CODE 100

MANAGEMENT

CONTROL

10 POINTS CODE 200

EMPLOYMENT

EQUITY

15 POINTS CODE 300

SKILLS

DEVELOPMENT

15 POINTS CODE 400

PREFERENTIAL

PROCUREMENT

20 POINTS CODE 500

ENTERPRISE

DEVELOPMENT

15 POINTS CODE 600

SOCIO ECONOMIC

DEVELOPMENT

5 POINTS CODE 700

BEE Recognition Levels BEE Status

Qualification

BEE procurement

recognition level

Level One Contributor

≥100 points on the Generic

Scorecard

135%

Level Two Contributor

≥85 but <100 points on the

Generic Scorecard

125%

Level Three Contributor

≥75 but <85 on the Generic

Scorecard

110%

Level Four Contributor


Scorecard

100%

Level Five Contributor


Scorecard

80%

Level Six Contributor


Scorecard

60%

Level Seven Contributor


Scorecard

50%

Level Eight Contributor


Scorecard

10%

Non Compliant Contributor

<30 on the Generic Scorecard

0%

Ownership

Ownership indicator Weighting

points

Compliance

Target

Exercisable Voting Rights in the Enterprise in the hands

of black people 3 25%+1 vote

Exercisable Voting Rights in the Enterprise in the hands

of black women 2 10%

Economic Interest of black people in the Enterprise 4 25%

Economic Interest of black women in the Enterprise 2 10%

Economic Interest of the following black natural people

in the Enterprise:

black designated groups;

black Participants in Employee Ownership Schemes;

black beneficiaries of Broad-Based Ownership

Schemes; or

black Participants in Co-operatives

1 2.5%

Ownership fulfilment 1 Dependent on

below

Net value 7 10 year targets

on Formula A

Involvement in the ownership of the Enterprise of black

new entrants;

2 10%

Involvement in the ownership of the Enterprise of black

Participants in:

black Participants in Employee Ownership

Schemes;

black beneficiaries of Broad-Based Ownership

Schemes; or

black participants in Cooperatives

1 10%

Scorecard measures the ability of black shareholders to exercise and enforce their ownership rights to prevent exploitation

Measures Voting Rights, Economic Interest

And Net Equity Value

Specific Target on Black Women and

Designated Groups

Funding to be repaid over ten years

Ownership - QSE

Ownership Indicator Weighting

points

Compliance target

Voting Rights:

•Exercisable Voting Rights in the Enterprise in the hands of Black people 6 25%+1 vote

Economic Interest:

•Economic Interest in the Enterprise to which Black people are entitled 9 25%

Realisation points:

•Ownership fulfilment points 1 Yes/No

•Net equity points 9 25%

Bonus points:

•Involvement of black women 2 10%

•Involvement in the ownership of the business by:

•Black participants in Employee Ownership Schemes

•Black participants of Broad-Based ownership schemes

•Black participants in co-ops

1 10%

Management

Voting Rights in the hands of black-people using the Adjusted Recognition

Bonus point for black independent directors

Management - QSE

Management Control Indicator Weighting

points

Compliance target

•Black representation at top manager level 25 50.1% of top manager

representation

•BONUS: Black women representation as top managers 2 25%

Employment Equity

40%

subminimum

applied

Adjustment for

Gender

Employment Equity - QSE

Employment Equity Indicator Weighting

points

Compliance target

•Black employees in management, as a percentage of all

management, adjusted for gender

15 40%

•Black employees, as a percentage of all employees, adjusted for

gender

10 60%

•BONUS: Meeting or exceeding the EAP (economically active population)

in each indicator above (unadjusted)

2

CONCLUSION

This level can be maintained , especially if the work on procurement

and skills development is maintained.

2008 2009

Total Points 55.17 71.32

Level contribution 5 4

Skills Development

Expenditure on

training of black

people

Black people

participating

Accredited

learning

programmes

CONCLUSION



2008 2009



Skills Development - QSE

Skills Development Indicator Weighting

points

Compliance target

•Adjusted Skills Development spend on learning programmes for

black employees, as a percentage of the leviable amount

25 2%

CONCLUSION



2008 2009



Procurement

Criteria

Weighting

points

Compliance targets

Years 0 -

5

Years 6 -

10

B-BBEE Procurement Spend

from all Suppliers

12 50% 70%


from Qualifying Small

Enterprises or Exempted Micro-

Enterprises

3 10% 15%


from any of the following

Suppliers:

Suppliers that are 50% black

owned

Suppliers that are 30% black

women owned

5 15% 20%

CONCLUSION



2008 2009



Procurement - QSE

Preferential Procurement Indicator Weighting

points

Compliance target

•BEE procurement spend from all suppliers, based on BEE

recognition levels, as a percentage of total measured spend

25 40%

CONCLUSION



2008 2009



Enterprise Development

Criteria

Weighting

Points

Compliance

Target

Average annual value of all

Qualifying Contributions made by

the Measured Entity as a

percentage of the target.

15 3% of NPAT

CONCLUSION



2008 2009



Enterprise Development

- QSE

Criteria

Weighting

Points

Compliance

Target

Average annual value of all

Qualifying Contributions made by

the Measured Entity as a

percentage of the target.

25 2% of NPAT

CONCLUSION



2008 2009



Socio-economic

Development

Criteria

Weighting

Points

Compliance Target

Average annual value of all Socio-

Economic Development

Contributions and Qualifying

Socio-Economic Development

Contributions made by the

Measured Entity as a percentage

of the target.

5 %

1% of NPAT

CONCLUSION



2008 2009



Socio-economic

Development - QSE

Criteria

Weighting

Points

Compliance Target

Average annual value of all Socio-

Economic Development

Contributions and Qualifying

Socio-Economic Development

Contributions made by the

Measured Entity as a percentage

of the target.

25

1% of NPAT

A Practical Application

THANK YOU

Contact Person : Duncan de Groot : Regional Executive (W. Cape) E-Mail : [email protected] Cell : 082 410 6081 Tel : 021 419 5130 Fax : 021 419 5131 Physical Address: 14th Floor, Metropolitan Life Centre 7 Coen Steytler Avenue Cape Town

EmpowerDEX Details

mailto:[email protected]

Contact Person : Chalwyn Vorster : Managing Director E-Mail : [email protected] Cell : 082 502 7111 Fax : 086 522 0019

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