BEE Scorecard = Business
High BEE Scorecard = More profits

You get business when you give your customers what they need. Right now they need a high BEE scorecard from you as it impacts on their own BEE score. We’ll help you get a BEE scorecard and work to regularly improve your score and watch your business grow.

EconoBEE V3 will help you get you a BEE scorecard and improve your BEE score

• Makes it easy to get a scorecard at a low cost

• Helps you calculate your BEE score

• Helps you understand BEE so you can make informed decisions

• Helps you find areas of improvement to maximise your BEE scorecard

• Helps you prepare for verification once you have sufficient points

• Helps identify the proof needed for verification

• Provides all the support and help you need

Other information:

Regards

Keith and the EconoBEE Team

B-BBEE – whereto next year?

Many “BEE deals” are unraveling due to the drop in the JSE. Many “BEE” companies are struggling to pay their debts now that the share price is below the strike price of the deal.

We have little sympathy. BEE is not, and has never been about the size of the ownership deal. Yes, ownership is one of the elements of BEE, and we have always liked the concept of a properly structured and paid for deal, but the other elements are as important as ownership. Some of the companies whose deals are going to fall down have never made a sincere effort to implement Broad based black economic empowerment. They have earned very few points on socio economic development, enterprise development, skills development, employment equity and procurement. They thought, mistakenly, that by doing a deal they could ignore the true essence of BEE. Now these deals are falling down. These deals caused lots of unhappiness and brought true empowerment no closer than it has been.

What they should have done is implemented true broad based black economic empowerment. The designers of the BEE codes thought the process through properly. They understood that for transformation to work, it must be an inclusive process. They realized that true transformation is based on the seven elements – ownership, management, employment equity, skills development, procurement, enterprise development and socio economic development. Each element was given a weighting indicating its relative importance to the overall cause of transformation. The designers wanted enterprises to maximize those points, by taking “BEE actions” over most, if not all of the above elements. Companies that have concentrated on one element to the detriment of other elements, e.g. the ownership deal, are finding that they are on the losing side. Their new shareholders may have to sell their shares, leaving them with no empowerment partner and no BEE points. Those companies that have broadly made an effort across all elements will find more business coming their way.

They should have looked at the points they could earn from BEE, and attempted to maximize those points.

Our predictions for next year: Next year will see elections, and ANC will likely win with a smaller majority. Jacob Zuma will be our next president. He has already stated how concerned he is about skills development. B-BBEE is here to stay but more emphasis will be placed on the seven elements, rather than just the ownership deal. If BEE is seen as being a combination of all seven elements, and not about enriching some individuals, there is most likely to be more support and less anger over BEE.

A good or high BEE scorecard is likely to be your most potent marketing weapon next year. The companies whose deals are unraveling will have to make up their points via procurement and the other elements. If you position your business as being one with a high BEE scorecard, you are most likely to find more customers. A high BEE score is earned, not by doing a deal, but by becoming aware of the elements and indicators of BEE, and making the right decisions.

To repeat a series of phrases we coined three years ago:

“Your business decisions must make BEE sense”
“Your BEE decisions must make business sense”
“Above all, you must make a profit”

BEE Points = Business

BEE compliance has become a major influence on the way South Africans do business. If you have a BEE scorecard, you have a better chance of being awarded business. If you are able to give a scorecard with a good score you stand an even better chance of winning the business.

“Get a BEE scorecard – Get the Business you Desire”

EconoBEE Launches – EconoBEE Scorecard Version 3

EconoBEE V3 is EconoBEE’s newest and easiest BEE scorecard calculation tool. With years of experience in BBBEE consulting and creating scorecards, we have taken BEE and self rating solutions to a new level.

What is BBBEE?

Lets go to the very beginning of BEE compliance to get a better idea of what BEE really is.

The basics – background to BEE (Black Economic Empowerment) or more precisely BBBEE (Broad Based Black Economic Empowerment), is a government policy aimed at increasing black participation in SA business. BBBEE started its journey in 2003 with the Broad Based Black Economic Empowerment Act (the act was gazetted in January 2004). If you think about it, it is only a few years back, less time than the Cell Phone or even the iPod.

Before 2004, the concept and the idea existed, but we did not have any methodology for companies to measure and implement it.

The Department of Trade and Industry started work on the Codes of Good Practice. The Codes of Good Practice gave companies an idea of how to implement BEE objectively, by using a scorecard. The scorecard could be used to gauge the compliance level of a company. It does this by allowing companies to earn points by doing various business activities, which includes Skills Development and CSI (now Social Development).

The State of BEE

Much has happened in the BEE arena in the past weeks, as well as the country.

Where is BEE going?

Many people have asked me this question in the past two weeks. We do not see the B-BBEE act being rescinded when a new president takes office. We do see the codes of good practice being adjusted over time, but not immediately, and not significantly. We do see the codes eventually being reconciled with other transformation efforts, e.g. the PPPFA, the mining act etc, but we do not see that “BEE will go away”. I expect and hope that more emphasis will be placed on job creation, enterprise development and skills development.

Financial Services Charter

Financial Services Charter (FSC) had a self-imposed deadline of completing the process by 31st August 2008. This was missed – although in reality the dti BEE codes does not have this deadline. At the very best the FSC could have had a draft ready for gazetting, but this would not have been finalised, so their own deadline was unachievable. The private agreement that the dti had with the FSC, that originally had no legal force, expired on 31st August and therefore is null and void.

What it does mean is still to date no charters have been gazetted. The tourism charter has progressed furthest, but is still not finalised. In the meantime, every/any entity that needs to follow BEE can only follow the Codes of Good Practice.

Accreditation of Verification Agencies

SANAS (SA National Accreditation System) has put an indefinite hold on accreditation. There are still no accredited verification agencies. ABVA (Association of BEE Verification Agencies), an industry body representing prospective verification agencies is understandably concerned as it could impact on the profitability of their members. There has even been a bit of a public argument between ABVA and the dti over ABVA using the dti name in its advertising.

Many companies waste valuable time and effort and money in doing BEE deals to earn only between 15 and 20 points. What a waste! Attend our conference and learn how to earn 35 points by doing true empowerment.

Clever businesses recognise that Preferential Procurement and Enterprise Development are “easy” ways to improve your BEE scorecard. Together they account for 35 points on the scorecard.

Encourage your Suppliers to give you a BEE Scorecard

In the past companies would send out bulk faxes/emails to all their suppliers asking for a BEE scorecard, in the hope that they would do well on Preferential Procurement. This method of collecting scorecards is great for reminding companies that can respond to respond, but not very good when it comes to companies who have not started their BEE endeavours.

It becomes extremely difficult for your suppliers to respond if they have done nothing. In addition it makes them feel very scared that they will lose business. It is important to reach the Preferential Procurement targets but it is also important to supply good quality products at competitive prices. Procurement is largely built around sound business relationships that take time to develop.

BEE Procurement must be implemented in a practical business environment. It is not possible to change suppliers in a month, similarly it takes time to develop a good BEE scorecard.

Where should you start if you want a BEE scorecard from your suppliers

How does one interpret a BEE scorecard?

Over the past weeks we have come across hundreds of BEE scorecards, certificates and letters.

Some originate from the companies themselves, some from consultants and some from verification agencies.

Unfortunately there is no consistency in these documents. Each company uses their own “look and feel”, which is perfectly acceptable, but the information contained in each certificate or scorecard differs widely.

Some scorecards use the as-yet ungazetted financial services charter, for which the financial services companies have approval from the dti until the end of August 08 to use.

The role of Consultants compared to Ratings Agencies.

There is a lot of confusion as to the different roles that ratings agencies (BEE Auditors or Verification Agencies) play compared to consultants in the BEE industry.

A rating agency, whether they have applied to SANAS to eventually become accredited or not, has the role of verifying/auditing your BEE score. The best description is they are the auditors of the industry. Their job is to ensure that the points you claim are correctly claimed and that you have sufficient evidence to prove the points you are “claiming”.

The consultant, on the other hand is there to assist you to find those points – to educate you and help evaluate your business to find the most effective way to earn points. The consultant will assist you in collecting evidence and documenting your BEE activities so that the auditors are satisfied with the score you have claimed.

Maximise your BEE Points

Most people know that the number of BEE points you earn measures BEE compliance. The more points you get, the higher the level, the better your compliance. This is just like sport – say rugby where if the Sharks had scored more points on Saturday they would have won. It’s only in golf where golfers try to get as few shots as possible! In BEE terms there are techniques to maximise those points earned, and various strategies than can help you.

Here are 15 quick ways to get more BEE points:

Are you ‘BEE’ Motivated?

Many companies fear BEE – they seem to think that it is a requirement to “give away” 51% of their businesses, or maybe even worse, close down and leave the country.

A member of ABVA put out an email advert yesterday explaining that Self Rating is not valid. They said “Spending money on suppliers who did self-assessment to compile their BBBEE scorecard does not count as BEE procurement spend on your scorecard”. This is totally wrong. They use as their source an article on the Mail and Guardian web site, which does not state that self-rating is not acceptable and which incidentally also quotes me. It is not the first time they have issued an advert that was incorrect – the previous time they were forced to issue a retraction and apology.

10-Step Process to BEE Compliance

EconoBEE, leading BEE innovators and compliance experts have created the ultimate step by step process for companies to become BEE Compliant. The 10-Step Process to BEE Compliance is the most efficient and cost effective way to get your BEE Certificate.

We identified the 10 most important steps a business needs to take to best implement Broad Based Black Economic Empowerment. These steps have been carefully developed and perfected to make absolutely sure that the BEE compliance journey is managed and more importantly, improved upon every year in an effective way.

Our 10-step process has a perfect balance of highly valuable information and detailed instruction on the appropriate route to BEE compliance and what that means to your business. There is an element of document collection, profile/strategy and various other document templates created on your behalf. Professional consulting time, to make sure BEE compliance works for your business.

EconoLog – Launch Breakfast

We are hosting launch breakfasts for our new BEE product EconoLog. Econolog is a web based system that allows you to track/document your BEE activities in building up your scorecard, and in this way provide proof in order to be able to claim the BEE points you deserve.

The dti has now announced that they will be extending the transitional period by 6 months to August. I do apologize for providing outdated information in my newsletter.

The dti has issued a proclamation extending this date which will be available in hard-copy from the government printer next week.

The affect is only to continue allowing enterprises to use a narrow based scorecard in its calcuation of points, if that enterprise so chooses. Nothing else regarding BEE or the codes will be affected, other than the dti having egg on its face for continuing to delay implementation of the codes, and we have to say, ourselves for providing you with this out of date information.

The Status of the Codes

February 9th should have been a big day in the life of the BEE codes, but it passed without comment from dti, or ABVA!

Transitional Period

The transitional period is now over. The codes had stated that there will be a transitional period where enterprises can still use the old narrow-based methods of recording their BEE status for exactly one year after the codes were launched on 9th February 2007. So, from 9th February 2008, there is only one way for any enterprise to record its BEE status – ie. by filling in a scorecard, using either the Generic scorecard/QSE scorecard or EME Exemption Status.

During the transitional period, enterprise could rely on their black ownership, and management to build up a scorecard. This is no longer available. Full broad-based black economic empowerment is the only legal route to go.

We have always liked the concept of broad-based, rather than the narrow based method:

• It has a better chance of reaching the broad-spectrum of people who it is intended to benefit.

• It is also a feasible method for business to achieve compliancy.

December  – a Time for Relaxing and Accounting

Accounting is something that has always been close to our hearts. When EconoServ started, we created EconoAccounting and shortly afterwards EconoAccounting Lite which are absolutely excellent tools for small businesses to use to keep their accounts up to date, with almost no work.

December tends to be a slow, relaxing time of the year. Companies close, but it is also a great time to catch up on some admin work that has been put off for the last 6 months. We all have those jobs that we don’t want to do, well December is a great month for catching up the accounts, filling in a tender, registering as a vendor with your customers and even preparing your BEE Scorecard.

EconoBEE Franchise Opportunity

EconoBEE is launching their latest business opportunity aiming at businesses who want to participate in the BEE industry. This opportunity is targeting professionals like accountants and consultants. These professions are ideally positioned to assist companies with both a verified scorecard and preparing a BEE Scorecard.

Visit our website for additional information or phone us to schedule a meeting to see if you qualify to be an EconoBEE Franchisee.

The CA Charter is Launched

The CA Charter (chartered accountancy profession charter) has been approved by the charter council and will be forwarded to the dti for gazetting in terms of section 12 of the act.

Congratulations to all concerned!

Enjoy the Benefits of Developing the Skills of your Employees

By Thapelo Motloung

The Skills Development Act provides employers the opportunity of deriving benefits for their organizations if they set up and maintain an integrated skills development programme. The benefits include claiming back up to 70% of the skills development levies paid up as well as, if properly aligned, enhancing the company’s skills development points on the organisation’s BEE scorecard.

These benefits are available to companies whose annual salary bill is over R500 000, pay their skills development levies (1% of monthly payroll) to SARS and who submit a Workplace Skills Development Plan and an Annual Training Report. Furthermore, the Skills Development Act requires the company to appoint either an internal or external Skills Development Facilitator to compile and submit the WSP and ATR to the relevant SETA.

Statistics indicate that currently, as much as R800million has not been claimed back by companies either as a result of non-compliance or perceptions that claiming presents too many hassles. These payments are then viewed as a form of taxation. All the monies that have not been claimed are paid into a Discretionary Grant Fund for use on SETA projects. Some of it is paid out as discretionary grants to companies who qualify.

On compiling the WSP, it is essential that cognisance be taken of the company’s strategic objectives, operational requirements, career pathing, transformation imperatives, productivity and/or the desired impact on employee morale.

EconoBEE on the Warpath

The only BEE consulting company that is fighting for your rights.

We at EconoBEE have always and will always continue to support the BEE act and codes of good practice. We like the way the dti has phrased them, and we have a 100% success rate in explaining true BEE and helping companies make the decision to embrace true BEE.

However far too many organisations, including government, tries not to implement true BEE.

Our aim is to ensure that all enterprises follow the codes, and we vehemently disagree with any organisation that tries to change the rules, as it only hurts true BEE and discourages enterprises from taking the first step in their BEE journey.

That is why we have submitted a complaint to the competition commission regarding ABVA and some “verification agencies” regarding their insistence that they will only accept a scorecard from a fellow ABVA member. This was also the reason we created the BEE Expert Group.

That is why we are creating a list of shame, which includes Telkom and Vodacom, who refuse to give us a scorecard because they say they are awaiting the release of the ICT charter – which is still 2 years away. ABSA is another on our list – they insist on their suppliers using only an accredited agency, while acknowledging there are no accredited agencies. Nedbank has given us a scorecard based on the 2005 Financial Services draft charter, not even the 2007 codes, which are still not sector codes.

Status of Verification Agencies – Don’t get a Rating now!

The rating agency accreditation process is still moving slowly. SANAS the accreditation body have not accredited any agencies as yet. SANAS also believe the process is still likely to take some time. They did not give any specific dates which could mean that the accreditation of Rating Agencies will only be finalised next year.

Fortunately for businesses this should not stop them from starting the rating process. In order for companies to get a rating they need to do a fair amount of preparation work. This work includes collecting documents and creating their own internal scorecard along with achievable targets.

Something we see far too often is a company that requires a rating, but has done no work on their scorecard gets a non compliant rating. Only after the rating do they realise how many points they have lost. Why ask an unaccredited agency to give them a scorecard showing they are non-compliant?

There is no point in getting a rating unless you have done the groundwork first. What can companies do to avoid a low BEE Scorecard Rating?

Follow the 10 step process including education, evaluation, calculation, collection of documentation.

Announcing the BEE Expert Group

One of the biggest challenges facing people trying to implement BEE in their organisations or for their clients is the lack of information available. Yes, the codes are out, but there is still a lot of confusion about how to interpret them.

Enterprise Development

Enterprise Development – (ED).
Enterprise development is worth 25 points on the QSE scorecard with a target of 2% of net profit after tax and 15 points on the generic scorecard with a target of 3% of net profit after tax.

You may contribute to two types of enterprises:
Category A: Enterprises that are more than 50% black owned and are QSE’s or EME’s.
Category B: All other enterprises that are 50% black owned or 25% black owned and have a BEE level of 1-6.
If you contribute to a Category A enterprise then you may multiply your spend by 120%.

The codes therefore are emphasising that you contribute to small (less than R35 million turnover per annum) majority black owned companies. If your target is R1.2 million, then you can reach target by spending R1 million on a category A enterprise. Your strategy should be clear!

Types of enterprise development.
The codes allow you to contribute to ED in various ways: Grants, loans, discounts on products, investments in the ED project – see annexure 600 for a full list.

We have this week received confirmation from the dti of an area of spend that is almost too good to be true – early repayment of invoices.

How to Speed up the Slow Pace of Transformation

There has been a fair amount of talk these days around speeding up BEE and how to improve BEE compliancy amongst businesses. A number of surveys have been done which all seem to have the same conclusion. 

The reason given in the survey for the slow pace is:

1. Confusion and lack of true knowledge around BEE

2. Fear of implementing BEE

3. Excessive costs and confusion around the verification process

1) The dti has been slow in explaining how BEE works, the benefits of BEE and how to implement it correctly. Companies have been using multiple excuses to not implement BEE – lack of clarity, the complication of charters, government’s own procurement polices to name a few.

The solution is to understand BEE properly.

2) BBBEE need not be an expensive long term project that is extremely difficult to participate in. The BEE Codes of Good Practice allows all companies the opportunity of becoming compliant and get additional business from government and many corporates.

The solution is to recognise that your company can become BEE compliant without re-engineering it completely. Start with the elements in your business that you are already doing – you may be pleasantly surprised to see how compliant you are already, and easily find ways to become more compliant.

3) Rating agencies are charging large sums of money for an “un-accredited” scorecard (no agencies have been accredited). SANAS have been slow in accrediting rating agencies, and this is causing unnecessary aggravation.

The solution is to start by doing your own self-rating to get an idea of where you stand, and continually refine your scorecard. Tell your customers what you are doing and how you are progressing. A simple certificate states only your score and tells your customer very little about your BEE status or where you are going towards true empowerment. When companies understand how BEE works they should prepare a self rating and collate all the required documentation that may be required if they choose to get a verified scorecard. By being prepared should also reduce fees of auditing your scorecard.

Therefore BEE is moving slowly because companies don’t know what is acceptable and they are basing their decisions on multiple contradictory standards. Un-accredited verification agencies are charging based on company size (not work done). Education around the BEE Scorecard is not done by the dti who prefers to let the market manage this important task. Fortunately we are in business!

What then should your business do? We have prepared a simple 10 step process which should help you start and finish in the right place and help you comply with BEE as per the best business practices.

EconoBEE’s 10 Steps to BEE Compliance

Implement BEE with Innovation and Business Sense

BEE as a new business environment has been solidly established and is causing some companies great stress. Some companies are threatening to stop buying from suppliers who do not have a BEE Scorecard. Companies are constantly being asked to become BEE compliant and may even risk losing big deals if they do not respond. This is obviously a tough environment in which to do business.

Fortunately some of the elements of the BEE Scorecard are being implemented in your business anyway – because it is required for to do so in order for you to continue running the business and also simply because it makes good business sense. We know that some managers are recognising the need for BEE, but are having trouble making the changes in their business and implementing BEE.

This is where we can help.

We have always been an innovative industry leading company that constantly develops more effective ways of implementing Black Economic Empowerment. We have assisted many companies with BEE and helped each one benefit from their BEE compliance.

EconoBEE will be presenting a range of full day seminars around the country starting with Cape Town. This seminar “Practical Implementation of BEE” is ideally suited for companies who have been asked for their BEE status by their customers and realise the need to respond in order to keep the business and for companies who want to expand their business by taking advantage of BEE.