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The private sector has “a moral, economic and social responsibility” to ensure that some of the R6-billion likely to be spent through e-procurement systems this year, is directed towards BEE (Black Economic Empowerment) suppliers. So says Cyril Ramaphosa, chairman of Johnnic Holdings and the government appointed BEE Commission (BEECom), which delivered its report to the Cabinet last year. Government reponse to the report is expected within the next few weeks. And legislation which is likely to result from the report’s recommendations could materialise before the end of this year.
So what did the BEECom recommend?
First, it gave a very clear definition of BEE: BEE, according to the Commission, is “an integrated and coherent socio-economic process aimed at redressing the imbalances of the past by seeking to substantially and equitably transfer and confer the ownership, management and control of South Africa’s financial and economic resources to the majority of its citizens.”
“BEE,” the report continues, “seeks to ensure broader and meaningful participation in the economy by black people to achieve sustainable development and prosperity.”
The BEECom proposed that the following targets be achieved within a period of 10 years: - At
least 50% of State Owned Enterprise (SOE) and Government procurement – at
national, provincial and local levels – should go to black companies and
collective enterprises.
Black women should account for 35% of all these targets and disabled people 5%. This is a change from definitions of ‘designated’ groups as contained in other “affirmative” legislation. These did not specify “black” women, but women in general.
From Miraculum’s perspective, the most important chapter in the report was devoted to what’s termed “Affirmative Procurement”.
We recently conducted a survey among our customers and other private sector corporates. We found that due to the complexity and costs involved in setting up the procedures and support infrastructure required to procure from SME and BEE companies, few have made any real progress in developing programmes designed to ensure that a percentage of their expenditure is focused on SME and BEE suppliers.
While the BEE Commission found that government initiatives in the procurement arena have been one of the drivers behind the development of black-owned businesses since 1994, our survey indicates that private sector organisations have lagged considerably.
However the BEECom believes that institutionalising a formula – as has been done in the Preferential Procurement Act – will not eradicate obstacles in the way of increasing black participation in the economy.
In fact, despite all government efforts, government procurement initiatives have encountered a number of problems – the main one being that it’s difficult to estimate what portion goes to SME and BEE because of poor, and in many instances, non-existent monitoring and evaluation of contract awards.
The private sector faces the same obstacles.
The BEECom recommends an overhaul of the entire public sector procurement system with a view to ensuring that procurement meets the objectives of the RDP. It suggests the creation of a National Procurement Agency (NPA) within the Department of Trade and Industry.
It also proposes the establishment of an Accreditation Unit as a joint venture between the public and private sectors, with a mission to stimulate private sector procurement from black suppliers and to broaden ownership structures.
Meanwhile, the BEECom believes that not all BEE companies can claim equal BEE status. The report differentiates between “black”, “black empowered”, “black influenced” and “engendered” companies.
A “black company” is one that is 50,1% owned and managed by black people. The Commission maintains that a black company should receive an “A” rating for Accreditation purposes, allowing it to qualify for set-asides and a 15% price preference.
A “black empowered company” is one that is at least 25,1% owned and managed by black people. Such a company should receive a “B” rating for accreditation purposes, allowing it to qualify for set-asides and a 10% price preference.
A “black influenced company” is one 5-25% owned and managed by black people. Such a company should qualify for a “C” rating for accreditation purposes and a 5% price preference. It would not qualify for set-asides.
An “engendered company” is one with at least 30% representation of black women within the black equity and management portion.
Companies in any of the above three categories with at least 30% representation, will receive another 5% price preference. Therefore an “engendered black company” will enjoy a 20% price preference and an “engendered empowered company” will receive 15% and so on.
Miraculum is proud to welcome Select Sally to the community. We are also proud to be the technology partner for the NEC "Fire Sale Auction."
Jayendra
Naidoo, Director J&J, had this to say about
“SMEs and BEEs will not only be able to gain effective access to large corporate buyers without being prejudiced by their lack of access to technology, the venture between TradeWorld and Miraculum will also ensure that the relationship between corporate buyers and SME suppliers is considerably enhanced. Indeed, there will be benefits for both parties involved in the buyer-seller transaction. With the support of private corporates, SME Africa will precipitate significant growth opportunities for the SME and BEE sector – which is good news for the country’s macro economy.”
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