If you are having trouble reading this e-mail, please CLICK HERE
|
“Government is likely to amend the Companies Act to force large firms to disclose their black economic empowerment (BEE) initiatives…”
“Empowerment audits will be mandatory for companies of a certain size…”
“Government … believes legislative intervention is necessary to implement effective black economic empowerment.”
“Government is considering amending the Procurement Act, introducing penalties for companies that have a token black empowerment component..”
These were some of the statements published recently in a Business Day article. While it may take some time for BEE legislation to be enacted, the message is clear: BEE is going to become a fact of life for every business operating in SA.
Already - following the promulgation of Regulations relating to the Preferential Procurement Policy Framework Act - white-controlled corporates hoping to secure contracts with national, provincial or local government departments must prove that they direct a proportion of their spend towards black empowerment enterprises.
But a survey conducted by Miraculum earlier this year showed that private sector companies are nowhere near ready for any type of BEE procurement legislation.
The survey - which included parastatals and companies operating in the manufacturing, healthcare, financial services, general services and retail sectors - revealed that 95% of respondents were well aware of the need to ensure that a percentage of expenditure is focused on BEE-type suppliers.
But apart from the parastatals, which are under a government obligation to spend with BEE suppliers, very few private sector respondents have made significant progress in this regard.
Meanwhile, the government hopes that the implementation of BEE procurement legislation will not only enhance the involvement of black business in the public tendering system, but will also assist in the inclusion of the informal business sector into the main stream of the economy.
But will it?
There are those who summarily dismiss the preferential procurement regulations as “affirmative buying” which won’t make any sustainable contribution to BEE.
However, that’s speculation, not fact. The Centre for Advanced Purchasing Studies for Africa (CAPSA) has embarked on a research project to evaluate the effectiveness of e-procurement as an enablement tool to enhance BEE. The results probably won’t be known for some time.
Meanwhile, it’s useful to compare our current preferential procurement regulations with similar legislation elsewhere.
In 1978, for example, the US Federal Government introduced legislation which stated that prior to receiving a government contract in excess of $500 000, US companies must submit a MBE (minority business enterprise) subcontracting plan, including goals. They have to have the plan approved and subsequently monitored throughout the contract’s performance period.
There is widespread consensus in the US that this legislation been has not been particularly successful in advancing MBEs. But research conducted by the Centre for Advanced Purchasing Studies in the US shows that’s largely because companies have not embraced their MBE plans. In fact, there’s a direct correlation between the practices organisations follow in support of their MBE buying programme – and the degree of success of the programme.
The Centre’s study found that among companies with a formal policy regarding minority purchases, percentage spend was nearly three times higher than among those without a formal policy.
Strong or very strong support from the CEO for the MBE programme resulted in percentage spend of between five and six times higher than among companies with little or no CEO support.
Of particular interest to South African companies is the finding that 95% US companies which have MBE purchasing policies in place do not relax their established purchasing practices in order to support their MBE buying programme. In addition, 63% don’t make any allowance for pricing differences.
It therefore appears that an MBE buying programme – or a BEE procurement policy - should not create any conflicts with sound purchasing practices.
Miraculum is proud to welcome Rand Water to the community.
Andy Brown, Director of black economic empowerment for the Department of Trade and Industry was quoted in the Business Day on June 19 2002 as saying:
"There has been discussion on a broad black economic empowerment act. Government has said in the past that it believes legislative intervention is necessary to implement effective black economic empowerment. Many established firms still aren't reporting on black economic empowerment. We would like to see this substantially enhanced. While the details are still being finalised, empowerment audits will "be mandatory for companies of a certain size".
|
|
|
