Tag Archive | NDP

BEE: Davies drives on with Black Industrialist Policy

Report on Black Industrialist Policy awaited….. 

sent to clients 21 January….  The Black Industrialist Policy, now in place and engineered by the Department of Trade and Industry (DTI), is due to be debated in Parliament early February.

ack bdlive

ack bdlive

A progress report will be made by Trade and Industry Minister, Dr Rob Davies to the relevant portfolio committee shortly. The plan was submitted to Cabinet by and approved in early November 2015. The purpose of the policy, the Cabinet said at the time, was to focus on growth and competitiveness of Black-owned enterprises.

The plan is designed to “facilitate the meaningful participation of Black-owned and managed companies within industry” and is another extension to DTI’s Industrial Action Plan (IPAP).  It backs up, Minister Davies said when launching the programme, both the NDP and President Zuma’s nine-point plan laid out in the 2015 State of Nation Address.

More Black control releases more State money

The scheme offers a cost sharing grant with the DTI, ranging from 30% to 50%, to approved entities to a maximum of R50m.   The value of the grant in terms of any proposal will depend on the level of Black ownership and management control and must be for capital investment and other support measures, such as working capital.

Minister Davies said in his launch parliamentary media briefing  that a number of private banks black ownershiphad  approached DTI prepared to partner with government on the initiative. He said the idea was “to unlock the industrial potential that exists within Black-owned and managed businesses through deliberate, targeted and well-defined financial and non-financial interventions.”

Focus on Black ownership

Not mentioning job creation specifically, he said that his department particularly wanted to “speed up the entry of Black industrialists to enter strategic and targeted industrial sectors and value chains.” “South Africa will not be able to industrialise to maximise growth “unless it simultaneously includes the Black industrialist on a sustainable basis”, he said.

Manufacturing core needed

Minister Davies said that the only route for future of the economy was to build the manufacturing sector and the inclusion of the black industrialists and manufacturers had to be encouraged.

The DTI had earmarked R1bn of seed capital to assist the Black industrialists to raise the necessary equity required to access the private sector/banking market to access debt funding, he said.  This capital would be complemented by funding from developmental finance institutions.

He added that while incentivising the inclusion of the Black industrialists in the manufacturing sector, the parties involved “needed to be committed, willing to take risks and be willing to look for long-term returns and not short-term rents.”

” This policy proposes focused efforts to facilitate inclusion and participation of Black industrialists in manufacturing activities, with an understanding that more equal societies tend to grow faster than those that are unequal,” said the Minister.

Opposition members will specifically ask how this programme has contributed to job creation.

Previous articles on category subject
SA’s economic woes not BEE, says DTI – ParlyReportSA
25.1% is maximum BEE control, says DTI – ParlyReportSA
DTI does flip flop on BEE codes – ParlyReportSA

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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

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Zuma

Nkandla vs NDP: the argument rages

Editorial…

Has the emperor got clothes on?….

Whilst the nation focuses on the Nkandla issue, which has now involved to a lesser or greater extent the parliamentary process on the subject of who reports to who in terms of the Constitution, the largest elephant in the room still remains. This, of course,is how far the ANC will go to protect President Zuma in terms of the law, aside from the Constitution.

Accordingly, we have not monitored the issue further until the subject once again reaches the level of parliamentary committee debate.

Nevertheless, there still remains a smaller elephant in the room. Whilst this issue does not reach the media in the same way, it concerns business, manufacturing and industry to a far greater extent than the Nkandla issue.

Reality check

This smaller elephant concerns the ever-present issue of how to create more jobs in South Africa.  It also concerns the manner in which South Africa goes about achieving the noble aspirations of the National Development Plan (NDP).    Meanwhile, unemployment has now reached a record 45%.

MPs across party lines are of two minds on this. There are two distinct camps of thought developing on these subjects and attitudes are hardening on which approach should be taken.  Firstly, to put it in question form, are the state utilities really the controllers of our destiny and will a massive infrastructure spend by state institutions alone, with emphasis on black procurement, turn the economic corner as far as jobs are concerned?

Or, is the answer to create a very much more enlightened environment for investors on the basis that we need their money and is this sufficient excuse to play down some more investor-unfriendly legislation and regulatory red tape and a place less emphasis on BEE with its sad and long history of black non-empowerment?

Problems, problems

In every parliamentary committee meeting one can sense this philosophical and ideological problem.   Indeed, if this is not the commercial and industrial elephant in the room, it is the dichotomy that ANC whips have to handle on a daily basis and work hard with every party MP involving strong messages coming down from Lithuli House.

Witness the confusion of the power of African traditional leaders, which clearly emanates from the President himself; the necessity to bulldoze through certain unworkable legislation on transformation which then gets returned to Parliament on good legal advice; and the fight between finance minister Nene to suck in more for the fiscus to finance social welfare and health budgets with ridiculous customs and excise tariffs at the expense of the national deficit.

Stay positive

mantasheWe cannot comment, only observe, but somehow we believe that many of Gwede Mantashe’s more obtuse observations do not represent all of ANC parliamentary thought patterns.   We sincerely believe that within the governing party machine and with added well-tuned opposition, there will follow a sensible compromise in order to survive.

We also believe that it may be discovered by adherents that the emperor may not have clothes on, despite what the praise singers say, and that also, and more importantly, a good investment climate can be balanced with social imperatives.

Hof Communications

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