Tag Archive | Joan Fubbs

25.1% is maximum BEE control, says DTI

DTI upbeat on implementation of BEE codes…..

lionel october 3

In a report to Parliament on the amended BEE Codes of Practice and their implementation as from 1 May 2015, Lionel October, Director General of Department of Trade and Industry (DTI) and his B-BBEE staff team, emphasised that the generic scorecard was aligned to government’s key priorities. He also said the State had no ambitions to take their target on black control beyond 25.1% of ownership.

Supplier Development is new title

DG October said the main emphasis of the codes had now switched to greater emphasis on what was previously termed procurement – now referred to as “supplier development”. This approach was more in alignment with the National Development Plan (NDP) objectives, DG October said, simply because that was the main direction needed to empower the development of black enterprises and build the economy on a stable growth path.

“In fact the German auto industry working with the German Chamber of Commerce had established a fund

BMW-Werk Südafrika

in South Africa”, he said, “for financing, training and building expertise in black businesses to supply the auto industry”.

There was considerable discussion on this by members and DG October said that there had been a general recognition in business and industry of the word “must” had replaced “may” in terms of B-BBEE requirements; that level four had to be reached for incentives and in general now “certainty” had been restored to the business environment on BEE issues, he felt.

Five “Elements”

The generic scorecard now had five elements, he said, which all companies, except those micro-exempted, had to comply with for recognition. All employment equity and management control had now been merged into one of those elements, now termed “management control”.    Sector codes were now to be aligned by 1 Nov. 2015, as set out in Code 003.

He said that “in response to public submissions” the import exclusion principle would be maintained and that the definition of an “empowering supplier” in the context of code alignment was a compliant entity which could demonstrate that its production and/or value adding activities were taking place in this country.”

DTI said that that “deviations of sector codes in terms of targets must be over and above those of generic codes and companies that derive more than 50% of revenue from sectors where there is already a sector code must be measured in terms of that sector code.”

DTI has no doubtful intentions

George Washington, having cut down the cherry tree, with his fatherIn general, DG October said in response to questions from MPs about the amendments, it had been his impression that business seemed to accept there were no political mala fides on the part of DTI; just a wish to get on with the planned NDP growth path which required the co-operation of business and industry on black empowerment.

The funding of Sector Charter Councils was a “joint responsibility between government and the private sector and entities must report annually on their B-BBEE status to sector council who will in return reports to the BEE Commission”, DTI said.

New sectors in the sights

Sector codes were being considered for the tourism, which had reached the stage of gazetting for public comment; “alignment” was being reached in the construction, integrated transport, ICT, financial services and chartered accountancy sectors; the property and forestry sectors had reached gazetting stages and marketing, advertising and communication were with their appropriate ministries for approval.

DG October mentioned the fact that the manufacturing industry stood alone as there were so many different sectors but over a period, aspects would be dealt with such as the film industry and textile and clothing industry.

DTI concluded their input to the meeting by advising that a technical assistance guide to B-BBEE was in process and DTI were in the process of finalising the B-BBEE verification manual.

Recent faux pas

rob davies2Opposition members asked how it was that DTI went so wrong with the question of  downgrading the pointing system for employment schemes and why it was that the Minister of Trade and Industry, Dr Rob Davies, had to retract that portion of the amendments which were not gazetted for public comment.

Chairperson Joan Fubbs intervened at this point, noting the Minister had taken the blame, had apologised for the mistake and could do no more than admit that DTI had been wrong.

DG October added that at a DTI workshop on the subject with “some stakeholders” this direction had been considered as a good option for broader rather than narrow empowerment but it had now been recognised by DTI that “they had gone down the wrong route as far as investor confidence was concerned”.

DTI had now reversed everything with the promise that this would not occur on the agenda again.

Better ideas could come

It had also been realised that such a move could also destroy imaginative plans for black management control such as that pitched by Standard Bank where 40% shareholding went to staff who could have representation on the board; 40% went to recognised BEE shareholders and 20% went into community organisations and trusts.

In answer to direct questioning by MPs, DG October confirmed that by the term “black”, DTI translatedlionel october this as African, Coloured, Indian and Chinese. He also confirmed that all these groups, if foreign and not South African citizens, were excluded.

More than 25.1% “unrealistic”

DG October, when asked by ANC MPs whether the 25.1% target for black ownership was realistic and fair considering that the demographics in South Africa demonstrated a far larger proportion of black people, he said that 25.1% could be considered as a “basic critical mass to engender a solid forward movement”.  To go any further would be unrealistic, he added.

In Malaysia, he said, local ownership was considered fair at 30% and other African countries as high as 50%, but he felt that in South Africa, where the need for the transfer of skills and training from large to small companies, especially through supplier development by state utilities and large businesses, was essential, this was a fair percentage assumption and which called for co-operation and fairness between all parties, all bearing in mind “a pretty hideous past”.

Redress of the past in all preambles

joan fubbsAt this point, Chairperson Joan Fubbs referred to the South African Constitution, reading out the clauses which not only stated that all were equal despite race colour or creed but that discrimination was possible if it was fair and she reminded MPs that redress of the past was “fair”.

She asked for all “not to isolate clauses in the Codes to determine personalised interests but get on with job of re-aligning communities that had been excluded from ownership for over 300 years”.

One ANC MP asked that the focus on big businesses be less emphasised and that DTI rather spent considerably more time with the job of developing ownership of black small business, which he stated could be “the power house of South Africa”.

He called for legislation that enforced government and public utilities, “as custodians of state power” to set an example on supplier development since, he said, one could hardly expect the private sector to follow suit, if the SOEs did not lead the way on this issue.

Incentives needed, not law says DTI

DG October said such sort of things were “impractical in the real world” and said the main challenge was a phased process of change which now had the support of many in positions of power in business. He also emphasised that B-BBEE had to tie in business and industry with incentives rather than with the law.

When asked about his recent public statement that he had set DTI’s target to produce “100 black industrialists”, he was referring rather to 100 black industrial leaders “financed and supported by DTI initiatives”.

Other articles in this category or as background
BEE comes under media scrutiny – ParlyReportSA
Rumblings in labour circles on BEE – ParlyReport
B-BBEE Codes of Good Practice far more onerous – ParlyReportSA
One year to implement B-BBEE Codes – ParlyReportSA

Posted in BEE, Facebook and Twitter, Finance, economic, LinkedIn, Special Recent Posts, Trade & Industry0 Comments

DTI earns ire of Parliament on BEE

 

Lack of BEE transformation flagged….

plan BEEThe divergence of views on BEE between the parliamentary committee on trade and industry and the department of trade and industry (DTI)  heightened recently with committee chairperson, Joan Fubbs, demanding that within seven days a “technical explanation” as to why  DTI was not hastening speedy transformation within South Africa.

A full report on Broad-Based Black Economic Empowerment (BBBEE) had to be submitted. to all the members of her committee on progress, or the lack of it in certain areas and the reasons why,  she said, and this was to be submitted before the Christmas recess for further debate in the New Year first session.

Uphill presentations

After a presentation on the current position regarding BEE as a broad subject, Ms Nomonde Mesatywa – chief director of DTI’s BEE secretariat – ran into heavy traffic upon her failure to quantify the nature and amount of research that had been conducted on the success or failure of BEE and the total lack of data on its implementation in her presentation.

The governing party MPs bitterly complained regarding the “soft nature” of recent BBBEE legislation, including the recent BEE Amendment Bill and the powers and suspected lack of ability of the proposed BBBEE Commission to enforce any of the current legislation.

Ms Mesatywa went through the standard briefing for the benefit of newer MPs to explain that the Act had been amended and promulgated in January 2014 to ensure standardisation in reporting from all sources reporting across the economy; the BBBEE Commission having been established to monitor and evaluate BBBEE processes.

The new amendment, she said, aligned the anchor legislation with other legislation impacting on BBBEE and with the Codes of Good Practice.  All the provisions had come into effect on 24 October 2014, she said, except for the trumping clause (section 3), which had been deferred for 12 months and would come into force in October 2015.

DTI said the alignment of sector charters was at an advanced stage and included the construction, property, tourism, transport, financial, mining, chartered accountancy, forestry, agriBEE and IT charters.

Elite only benefitting

Committee members from both the opposition and governing party both lodged complaints that there was a public perception that it was only the black elite who benefited from BEE programmes and there was little factual evidence to the contrary that “ordinary black South Africans” were benefitting.

The Democratic Alliance said it was totally offensive that the state offered a reward to companies only if they complied with BEE regulations and if they did not do so, not only could they not do business with the state but also not with any other companies that dealt with state. The DA described this as “awful”.

The EFF was called to order for suggesting that economic transformation would only be realised “if the ANC was taken out of power” but it was the ANC who sought clarity from DTI on how the new mechanism of using a commission in terms of the new Bill could possibly monitor and evaluate compliance “to ensure that the Codes of Good Practice were taken seriously.”

Long term view

DTI responded on the basis that they had been “overseeing, monitoring, and evaluating black empowerment for a long time” and they wished to assure parliamentarians that they had the experience to do this.

With regard to research generally on the subject of BEE compliance, DTI said their the original survey of some ten years ago showed pretty dismal results at around “level four” but DDG Mesatywa said the latest surveys were on the DTI website and had risen to “level eight”.

The chair commented that such kind responses were vague and unhelpful and the nature and lack of adequate quantitative results was unacceptable and, rather than return for a further presentation in view of the Christmas recess, DTI were instructed to respond in writing to Parliament giving exact numbers on it success or failure, sector by sector, within seven days.

ParlyReport will ask for this document.

Other articles in this category or as background
http://parlyreportsa.co.za/bee/court-ruling-equity-quotas-affects-bee/
http://parlyreportsa.co.za/bee/liquid-fuels-industry-short-transformation/
http://parlyreportsa.co.za/bee/one-year-implement-b-bbee-codes/
http://parlyreportsa.co.za/bee/bee-comes-under-scrutiny/

Posted in BEE, Facebook and Twitter, Finance, economic, Labour, LinkedIn, Trade & Industry0 Comments

National Credit Amendment Bill changes

Further comment on National Credit Amendment Bill…

joan fubbsIn an interesting parliamentary development, due in the main to what appears a determined attempt to listen to the banking industry, the portfolio committee on trade and industry made public its intention to make further amendments to the National Credit Amendment Bill tabled at the end of last year. Chairperson Joan Fubbs made her point during general debate.

In doing so, the committee  called for further public comment but such comments were restricted to the actual amendments  proposed by the portfolio committee and not the Bill itself as was first tabled, i.e. on the basis of the need for such a Bill or its rationale.

Bill cuts down on credit info

The Bill, which amends the anchor legislation to incorporate affordability assessments and will enable removal of some of the adverse credit information from credit bureaus, plus strengthen debt counselling, was strenuously criticised during hearings by those who opposed self regulation,, as suggested by the banking industry on debt assessment.

The matters involved are technical and appear to involve banking procedures, the granting of credit and credit granting governance issues.  The Bill is expected to be approved as the present government ends.

Amongst the points which came up at the hearings, and which the portfolio committee wanted further input, were as follows:

•    Revision of the governance structure of the national credit regulator to remove the board and allow the regulator to be directly accountable to the minister
•    New clause: Providing for an offence where prohibited charges are charged by the credit provider, including where the capped interest rate is exceeded
•    New clause: Capping and/or regulating the cost and not just the value of credit insurance)
•    Proof that notices are delivered (section 129 of the Act).
•    New clause: Providing for an offence where debts that have become prescribed under the Prescription Act are collected, sold, and re-activated
•    New clause: Providing for the minister to prescribe additional regulations such as ‘fit and proper’ test; a process to payment distribution agents to de-register them; the duties, obligations and fees of alternative dispute resolution agents; and other issues such as penalties for late renewal of registration and withdrawal from a debt review process.

Previous articles in this category
http://parlyreportsa.co.za//health/health-dept-winning-on-hiv-aids-therapy-and-tb/
http://parlyreportsa.co.za//uncategorized/state-acknowledges-responsibility-to-increase-health-staff/
http://parlyreportsa.co.za//uncategorized/competition-commission-promises-health-care-inquiry/

Posted in Facebook and Twitter, Finance, economic, LinkedIn0 Comments

Port charges and inefficiencies leaving SA behind

Transnet port charges far too high…..

portsharboursEscalating administered prices in SA’s manufacturing system including port charges that were amongst the highest in the world were amongst the subjects discussed during a colloquiun called by Parliament’s portfolio committee on trade and industry.

The meeting was called by Joan Fubbs, the PC trade and industry’s chair and in responding director general of department of trade and industry (DTI) Lionel October said these high costs pointed at Transnet were undoubtedly coupled with “significant logistical inefficiencies” to form a major reason for the country’s inability to compete in global export markets.  Transnet’s tariffs were far too high, he said and were contributing to high import costs in most sectors.

The good and the bad

He said there were some successes recorded recently, such as South Africa being high on the list of best places to invest in automobile assembly plants, but decreased demand from traditional trading partners, coupled with the fact that “container and automotive cargo owners faced price premiums of between 710% and 874% above the global norm. “Such facts were leaving South Africa as an uncompetitive nation”, he said.

During a rigorous and frank debate on the multiple shocks facing manufacturing in South Africa, which were stated as ranging from rising electricity prices to the costs involved as a result of unstable labour-relations, a gathering of Eskom officials, Transnet executives, South African Local Government (SALGA) representatives, the electricity regulator NERSA, and the department of trade and industry (DTI) gathered to debate the current picture facing the SA manufacturing sector under the chairmanship of Parliament’s trade and industry portfolio committee.

Electricity charges vary from one to another

In addition to existing other and well established problems in the electricity transmission and generation area, DTI’s deputy director Garth Strachan, weighed in saying that there were complete anomalies in tariffs charged either to members of the same sector of industry and to manufacturing plants existing next door to each other.

Strachan said DTI had examples where one manufacturer was facing certain price increases in electricity and another factory “right across the street” was paying a tariff more than double.

He said that whilst global recession might have played a part in the current negative situation mostly arising from “bunched up” administrative prices from state utilities, some thinking “outside of the box” was now called for if South African manufacturing was to gain any traction and contribute to growth in a meaningful manner, thus creating more jobs.

Next to New York comes SA

marineReturning to the high port cost issue, Strachan said that Cape Town, Port Elizabeth and Durban port terminals had the dubious honour of following Charleston, Baltimore and New York, as the top high-cost terminals worldwide, mainly as a result of excessive cargo dues charged.

Returning to electricity charges, he concluded by saying that one of the biggest problems facing South African consumers was the considerable publicity given to the NERSA announcement that Eskom had been restricted to an 8% hike, which had given the impression to consumers that “this was the end of the story”.

Yet manufacturers still had to face up to municipal mark-ups, he said, both in the case of urban and peri-urban situations, a matter which had not been discussed on a national basis nor any guidelines established.

Dry bulk goods to be target

On the matter of port charges, Transnet’s Mohammed Abdool said Transnet was applying to the ports regulator for a complete re-structuring of tariffs applying to containers, dry bulk goods and manufactured and beneficiated goods.

He said a complete “rethink” on the objective of encouraging the export of beneficiated goods had taken place, coupled with the principle that Transnet would move from becoming one of the lowest rental charging landlords in the world by re-aligning its land based rentals by upwards of 46%.

Abdool said the new suggestions would result in up to 43% reductions in total port revenues for containers, whilst dry bulk exporters would go from a current 18% contribution to about 33%. All this from April next year which was given as a possible starting date.

NERSA will control municipal incenses

Still on price hikes and specifically on electricity mark-ups, NERSA responded to DTI comments and confirmed that it was obligatory for Eskom not go above the 8% allowed but that agreed limits would be allowed for each municipality or local authority as per agreement made or being made. No deviations would be tolerated and the case brought forward by DTI of two adjacent manufactures with vastly differing electricity rates would be investigated.

Touching up the recent decision to fix the Eskom price at 8% increase, NERSA said that in their view it was not correct for South African consumers to pay for massive reserves and financial safety margins on Eskom’s balance sheet and that Eskom should be run like any other state utility in an atmosphere of total adherence to the principle that where costs are concerned the interests of the consumer must be borne in mind.

SALGA must be committed

Joan Fubbs, chair of the committee, then sought a verbal pronouncement by SALGA to all present into Parliament, both stakeholders and members, that no deviations from the NERSA allowances to be agreed as reasonable mark-ups by their members would be accommodated by SALGA.

SALGA spokesperson, Mthobeli Kholisa, in charge of infrastructure development,  said there was no other system in place in most local authorities to pay for such items as street lighting, pumping of water services or handling of waste facilities. However, such an undertaking was  given by him.

Eskom chips in

Eskom presentations added little that was new to the situation, other than spokesperson for Eskom, Hillary Joffe, said that Eskom was “reserving its comments” on the situation until it had re-studied the entire financial situation but asked for an inter-governmental task team to be set up to align municipal tariffs and called for a plan to ensure that municipalities had sufficient fiscal support to maintain infrastructure and essential social services in the long term.

DOE warns on China

On the rising costs of fuel prices, department of energy’s deputy director general, Tseliso Maqubela, said  that oil and gas exploration would play a large part in South Africa’s energy future but that the unseen and hidden player in South Africa’s structural and economic future remained the economic giant China.

With vast reserves of cheap coal, China had not yet entered the market, he said, and when this occurred it would amount to a “game changer” in every respect, affecting not just the energy scenario for South Africa.

April looks better

On prices generally, he said that things were looking better for April but that oil and gas prices were long-term issues in general and current factors at play would not affect the situation in the short term.

He said exploration would probably would remain, by and large, in the hands of private ventures for years to come. He said that the costs of exploring for oil using one rig could amount to US$1m to 3m for one day alone and “that kind of money does not come easily to a state utility”. Maquebela said that the country owed the present private owned refineries much as they stabilized the chemical industry and saved much in imports but warned that they also faced enormous recapitalization costs in the near future.

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Posted in Finance, economic, Mining, beneficiation, Public utilities, Trade & Industry, Transport0 Comments


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