New DTI document may mean more work for BEE consultants

Published by SEDA Business Brief Jan 2008.

A RECENTLY-released Department of Trade and Industry draft document for rating agencies could mean more work for BEE consultants and rating agencies if released in its present form, but at least one BEE consultant says it may sow more confusion than it is meant to.

The document called Guide for Verification Agencies” is dated 31st October 2007 and is currently being using by BEE rating agencies who are undergoing accreditation with the South African National Accreditation System (Sanas).

While Keith Levenstein, who heads up BEE consultancy EconoBEE, was told by the DTI’s Rachel Sethaiso, who authored the document, that DTI has no intention of distributing it, Chairperson of the Association of BEE Verification Agencies (Abva), Theo Lombard, said the draft document was already being used by the association as a guide to those rating agencies wishing to be accredited with Sanas.

The document, which says agencies need to be accredited by 9th February 2008 may mean more work for BEE rating agencies and indirectly consultants, as it states that all enterprises, other than exempted micro-enterprises (EMEs) will need a scorecard produced by a verification agencies if that scorecard is to be used by their customers in its procurement calculation.

This will rule out the option of self-assessment for many businesses that have a R5 million and above turnover and that do business with corporates.

BEE consultants will stand to make more advising small businesses on how to obtain a more favourable rating.

Though Lombard said the document wouldn’t necessarily mean more work for consultants and rating agencies, a head of a one rating agency currently undergoing Sanas accreditation said it would mean more income for consultants and rating agencies.

“At the end of the day that’s what is going to happen,” said CEO of rating agency Emex, Jacomien van Tonder, who estimates that Emex conducts some 60% of all BEE ratings in the market.

She said the accreditation procedure was “quite stressful” especially because all of Emex’s some 70 staff were compelled by the document to join training.

Not one rating agency has yet been accredited by the DTI but Lombard said presently some 50 rating agencies had applied to Sanas for accreditation. He said he expected the DTI to make an announcement on the first batch of accredited rating agencies by March.

But Levenstein said the draft document fails to explains how many of the calculations required for a BEE rating are made. Says Levenstein: “It actually confuses the issue more than it explains it.”

He says for example, the draft fails to clearly explain the calculation under adjustment for gender calculation made under each code – where women should comprise at least 50% of the target.

Says Levenstein: “If you don’t have a clear interpretation, everyone is going to come up with their own definition.”

The DTI could not be reached for comment.

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