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Opportunities abound in amended ICT sector B-BBEE codes

Opportunities abound in amended ICT sector B-BBEE codes

The amended B-BBEE Codes of Good Practice demands decisive transformation action from South African companies. While concerns around compliance are understandable, the constructive approach is to look at the opportunities the codes bring, advise Bytes People Solutions managing director, Dr Madelise Grobler, and Jonathan Goldberg, CEO of Global Business Solutions.

South Africa’s BEE Act creates the B-BBEE Codes of Good Practice (CoGP) that inform the BEE scorecard and the rules associated with claiming BEE points.

The first BEE codes were introduced in 2007; revised codes were published in October 2013. The new CoGP is more stringent, particularly in closing the loopholes that had allowed fronting to take place, and forces companies to radically transform through tougher targets and stricter penalties.

A significant change is that ownership, skills development, and enterprise and supplier development have been given the status of priority elements. Consequently, the non achievement of a 40% score in their three categories, results in the discounting of the company’s B-BBEE status, by one level. Large companies have to comply with all three priority elements, while qualifying small enterprises (QSEs) have to meet the requirements for ownership and those for either skills development or enterprise and supplier development.

Another noteworthy amendment is that the number of points an entity needs to get to Level 4 contributor status has increased substantially

The above may sound onerous but, as Goldberg points out, all ITC sector players are in the same boat. “We are all being treated equally, hence there’s no point in wanting to cry foul. The issue is how to make the Codes work for you.”

The key to success is finding the business rationale and logic that drive transformation activities, and work with it to the benefit of the business. The starting point should not be how to get B-BBEE points; it should rather be an assessment of what the business needs to be more successful, and how that can be brought about in a way that supports transformation. “Then it becomes sustainable and truly meaningful,” says Goldberg.

He is of the opinion that the amended ICT codes present significant opportunities for substantial and meaningful compliance, especially in the areas where it deviates from the generic amended CoGP.

The single biggest opportunity lies in enterprise and supplier development where full compliance comes with a generous 50 points. The generic amended CoGP ascribes only 40 points for a similar achievement.

“Support the suppliers that support you,” advises Goldberg. “Find the ones whose service delivery will improve substantially through an investment in critical skills, preferential payments terms or even a cash injection. Invest in them and you are likely to get much more than scorecard points in return.”

Skills development, which carries a full compliance score of 20 points for large ICT companies, is another example of great opportunities fruit. The industry experiences serious skills shortages; what better way to earn B-BBEE points than to address an issue that materially impacts the performance and sustainability of your business?

“Companies already spend vast sums of money on training, but few approach it strategically and even fewer are meticulous about recording what they do,” says Goldberg. “The ICT industry is furthermore uniquely placed to make the most of learnerships in general, and learnerships for disabled young people specifically.”

Grobler, whose company specialises in ICT-related learnerships, agrees. “In addition to developing skills, learnerships afford companies considerable tax refund benefits,” she says. “The critical factor is to make sure you select a credible learning and development provider with a proven track record. Bytes People Solutions currently trains over 2000 people per year, with 60% being female and a significant number being people living with a disability.”

Enterprise development is the third area that offers B-BBEE scorecard opportunities. “Radical economic transformation is a much-mooted concept in our country,” says Goldberg. “Lip service in this regard is no longer an option; companies have to grab the nettle and invest in enterprises that can help change the economic landscape.”

The message is simple and straightforward, according to Goldberg and Grobler: the days of messing around on the transformation front is over. In order to do business with the state and, more importantly, to contribute to the growth and prosperity of the country, companies have to invest in achieving a healthy scorecard.