B-BBEE Deserves a Nobel Prize for Economics – EconoBEE Newsletter 29 April 2010

The Fifa World Cup is 42 days away. A great opportunity for the country and the economy. We support the World Cup, we support Bafana Bafana, we support South Africa and we support Nation Building.

When all factors of your service / product are equal to that of your competitor, such as price, quality and reliability – your B-BBEE score could be the deciding factor in the deal. More and more customers are asking for a BEE score as using a BEE compliant business contributes to their BEE scorecard. Therefore it is apparent that a high BEE score will provide the competitive edge over the opposition which will help open doors, get those tender appointments, and conclude contracts.

Keith Levenstein of EconoBEE believes that many companies do not fully understand the requirements of BEE and there are still many misconceptions in the industry. Making use of the professional services of a consultant such as EconoBEE could make all the difference in identifying the factors that will contribute to your business’s scorecard.

A good BEE score is based on the seven elements of BEE, and does not rely only on narrow based black ownership as many people tend to think. Ownership does make a difference but that is only one of the seven elements considered when calculating your scorecard. The percentage of black management and employment equity also play a major role in attaining a good score.

Using the principles of preferential procurement means that utilising service providers / suppliers that are either black owned or BEE compliant also contributes to your score card. Assisting in the enterprise development of small black-owned businesses and skills development of your black staff will further ensure a higher BEE score. Finally, giving back to your community or donating to your local charity organisation could earn you the last few points you require to bring you up to a Level 1 or 2 BEE company.

Keith Levenstein of EconoBEE added; “Becoming BEE compliant is an essential part of doing business in South Africa. When starting the process, one needs as much information about BEE as possible. It is essential to get an understanding of what BEE is, how it affects your company and what you need to do in order to create a scorecard as quickly and cost effectively as possible.”

Read more…

Someone asked me if I really thought B-BBEE was a good, well thought out policy. I had just finished explaining to him about the scorecard and the various calculations needed and he was feeling a bit overwhelmed.

I reflected a bit and then explained:
How do you measure empowerment in a company? Do we just ask each company if they are empowered, and based on their very subjective answers decide if they are empowered?

In the case of B-BBEE the architects of the policy realised that a subjective answer would not be fair, and would be difficult to evaluate. They decided on a scorecard. The higher the points earned, the more empowered the company would be.

To give an analogy: Who is the better rugby team? In the last World cup, the British press thought it was England. South Africans thought it was South Africa. Would either side have been objective? When we played in the final, South Africa scored more points, in a game with specific rules, and adjudicated by the referee. In the end it was agreed that the Springboks were best simply because they earned more points. The Bulls have scored more points in the Super 14 final in the past two years and are therefore the best Super 14 team.

In economic policy this was quite a step forward – to find a way to objectively measure companies via a scorecard.
The next point I had to make was that the scorecard fairly represented “empowerment”. If the scorecard was based on only ownership, it would not have encompassed all aspects of empowerment. The authors of the B-BBEE codes realized this and looked at all aspects of economic and social activity. By taking into account all seven elements, they took a further step forward. They decided upon indicators within elements which will give an even more accurate measure of empowerment.

The man I was speaking to initially felt intimidated by the amount of calculations. I pointed out that the architects and designers of the policy had managed to identify less than 40 indicators with associated targets, which is not a huge amount of data to gather and calculate. However this is sufficient to very accurately and objectively evaluate a company’s empowerment performance.

I am in awe of the design of B-BBEE as an economic policy that so effectively measures empowerment. I concluded my meeting by stating that the overall design of the B-BBEE codes, the indicators, weighting, and broad spectrum of data gathered is worthy of a Nobel prize!

South Africa is widely known world wide for its past racist policies and even though it has been over 20 years since the abolishment of these policies we are still not living in a normal society.

It is also vital to remember that the face of transformation is now the Broad Based BEE Scorecard and no longer the narrower discredited failures at transforming the country. Even though other forms of transformation have been introduced and sadly failed, their introduction was instrumental in developing a complete Broad Based approach. It should be regarded as a success that the Broad Based BEE scorecard was introduced.

Transformation is a long term process. The ultimate goal is to give those people who previously did not have an opportunity, an opportunity to participate in the economy.

So, when will BEE come to an end? Quite simply when the “playing fields” are level and those people who did not have an opportunity are now actively participating in the economy. Now from a Broad Based BEE perspective the incentive lies in Preferential Procurement. Once all companies have reached all their points on the Preferential Procurement scorecard then they no longer have any incentive to continue asking for a BEE scorecard.

and your customers, colleagues and friends
and receive calls from customers and colleagues and friends
and transfer the call to almost unlimited extensions
and have an electronic secretary to answer and direct calls to the correct extension
and take messages
and work with TELKOM
and Neotel
and cell phone providers
and VOIP

all at an affordable cost
It’s not science fiction

A great way to get all the knowledge and tools to Become BEE Compliant. Join us in Johannesburg – May 4,10,18 and make sure that none of the confusion costs your business valuable time.

While there is demand for a BBBEE Scorecard someone will be taking advantage, shouldn’t that someone be you…

About EconoBEE

EconoBEE is a BEE consultancy that has developed extremely effective tools to measure and implement Broad Based Black Economic Empowerment. Our services focus on the business side of BEE.  Our services include EconoBEE Scorecard, BEE Scorecard Workshops, EME Pack, Document Pack, EconoLog and the 10 Step Process to BEE Compliance.

Our company supports various organisations and drives the BEE Expert Group to help maintain and develop knowledge in the BEE industry.

Please send it to us and we will include it in our BEE Procured database.

Tel: 0861 11 3094 or 011 483 1190
Fax: 011 483 1195
Email: info@econobee.co.za
Web: www.econobee.co.za

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That’s it for the time being.
Regards
Gavin and the EconoBEE Team