Amended BEE Charters Surpasses Crisis Point

For years we have been pointing out the problems with sector codes: ineffective sector councils, non-compliance by entities, delays with reports and amendments to name a few.

The original amended codes were issued as a draft in 2012. Final codes in 2013. In 2012 we pointed out that the sector codes needed to be aligned. By 2014 this had become a crisis. Nothing happened. In May 2015 after the amended codes came into effect the minister stated that he would consider repealing  any sector code not ready for gazetting by 30th October 2015. Various media statements in October 2015 confirmed that the minister would make his decision by 15th November.

On 2 November 2015 the dti spokesperson stated:
Sector Charter Councils have until the 15 November 2015 to submit aligned Sector Codes for approval to Minister of Trade and Industry, Dr Rob Davies.
All existing Sector Codes that have not submitted application for approval to the Minister to be aligned with Broad-Based Black Economic Empowerment Codes of Good Practice will be repealed. Once sector codes are repealed, entities operating in the affected sectors will use the Amended B-BBEE Codes of Good Practice for measurement.

The above is not an official notice. All is says is sector codes not submitted by 15 November will be repealed. WE, the public do not know which sector councils have, or have not submitted their draft. We have to wait until the minister issues his gazette!
Even this would have been very late, and too delayed. However the minister has still not issued any gazette formally giving his intention to abolish any sector code. The BEE Act is clear: tHe minister must in a notice in terms of section 9(5) of the act, give the public 60 days notice and invite comments and only then can he issue a notice in terms of 9(1) of the act formally repealing the sector codes. Until this is done entities in those sectors MUST use the old sector code. This is giving those entities an unfair advantage. They will use the “easier” codes, without the problems on priority elements or empowering supplier status, or more onerous procurement targets. The whole point of a sector code was to exceed some of the targets.

If the minister follows the act, the earliest that a sector code can be repealed will be 60 days – 2 months AFTER his initial notice, that to date has not been issued. Taking into account delays at the government printer and the necessity to read public submission, this means that it is unlikely that the sector codes can be repealed before end April 2016. This is exactly one year since the delayed Amended Codes came into effect.

This is is causing confusion in the market: The construction and accountancy sector have unilaterally declaring their sector codes repealed. They have no legal right to do so, and have caused confusion not only in their own sector but all sectors think that a precedent has been set. We would indeed like to see all sector codes abolished, but we would choose to follow the law. They are obviously two of the sectors caught out by not issuing their codes by the 15th November, so we know from the media statement that those two sectors will be repealed by the minister, but we cannot know when the minister will do so.

Status of the sector codes

Sector codeOriginally gazetted as a final codeAmended Code draftedAmended Code final
TourismYesYesYes
Forestry   Yes   Yes   No
AgriBEEYesYesNo
PropertyYesNoNo
ConstructionYesNoNo
Finance (FSC)YesNoNo
TransportYesNoNo
ICTYesNoNo
AccountancyYesNoNo
Media, Advertising and Communication (MAC)YesYesNo

It can be seen that only 1 sector code has been finalised – Tourism. Ironically this is the sector that is mostly ignored by entities in the sector.
Three other existing sector codes, Forestry, AgriBEE and Property has issued a draft. The time taken from draft to final could be as little as 3 months but could be as much as a year. This means that entities in forestry, agriculture and property could continue with their old sector code for another week or another 6 months.

Weirdly the MAC charter was never finalised previously but they seem to want their own charter. This draft has already dragged on for 4 months without finalisation. Ironically entities supporting the sector code are intent on not becoming compliant themselves.

Action by the minister: The minister should issue a notice asap giving his intention to repeal ALL sector codes not yet aligned. If the sector via the dti manages some time in the future to issue a final sector code, it can be reinstated.
We renew our opposition to all sector codes. We feel that they cause more problems than they are worth, as we have been saying since 2009.

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