EconoBEE Newsletter – February 2008
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!
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.
These have still not been accredited by SANAS. The 9th February would have been a good date to launch final accreditation, now that narrow-based BEE is no longer legal. There are still many issues around interpretation of the broad-based codes that make it difficult for enterprises to accurately assess their status. The organisation representing most verification agencies is ABVA. In our opinion ABVA would have done a better job interpreting the codes than lobbying their interests to have verification made mandatory. As a result the interpretation of codes have been delayed, accreditation does not currently exist, and BEE is getting an even worse name, due to what many people have called the “Bolshevik attitude” of rating agencies and in particular ABVA.
Self-Rating vs Verification Agencies
The codes, and the Competition Commission have declared that the DTI does not require an agency to verify your scorecard. In any event no agency has been accredited by SANAS.
Any agency or company that tells you to obtain a verification certificate from an accredited agency is going against dti policy, and risks being rejected by SANAS as an accredited rating agency (The first requirement of being an accredited agency is to know the law, and follow it!)
Where we stand in absolute full agreement with many of the rating agencies, is in the avoidance of fronting, and demanding proof of any of your BEE activities. The codes state that you must have/keep sufficient and suitable documentation in order to claim points. It is no good stating that you have spent 3% of your net profit after tax on enterprise development, and therefore are claiming the full 15 points. Similarly you cannot state that you think you have spent 3% of your payroll on skills development to claim another 6 points. Unless you can substantiate the money spent, or time spent, you cannot earn any points. You should be able to provide exact details of the date, the value (in money or time or professional effort etc) and the activities – training, enterprise development, socio-economic development.
We have launched EconoLog – a web-based tool that will help enterprises to record and document their BEE activities as they happen. For example as you train a person you will be encouraged to log that training onto the EconoLog system. The system asks for the employee name, the date, type of training and a small amount of extra information. The whole process takes seconds. It stores all your BEE information and allows you to extract all the documented evidence when you need to produce a scorecard. This will ensure you earn the BEE points you deserve.
How to get a Verification Certificate
Many clients ask us if we can supply them with a verification certificate and whether their client will accept our certificate. This short question usually involves a long answer!
Notwithstanding the fact that no agencies have been accredited , we do not “issue” verification certificates.
The process for producing a certificate is as follows:
Identify the scorecard to follow.
Gain knowledge and information about your own scorecard.
Identify what points you think you have earned, and what points you can earn.
There is no point in calling an agency and asking for a certificate. The only certificate you will get will be one showing zero or very low points. You have to earn the points before an agency can issue a good certificate.
Define a company policy and strategy for your BEE activities. Set your goals as to what points, and what level you can achieve in the next year, and thereafter.
Keep documentation: Unless you keep documentary proof of your activities you cannot claim points. It is a huge waste to lose points because you cannot prove that you have earned them. Use EconoLog for this task.
Calculate your final scorecard and ask a reputable company to confirm the score is correct.
EconoLog is a web-based system that helps you log or document all your BEE activities in an easy and fast manner.
EconoLog is monthly subscription service (12 months) – pricing depends on the size (turnover) of your business.
What you get for your subscription:
Econolog web-based system
Monthly reports and analysis
Training on BEE and using the system
A consultant assigned to you to handle support – via telephone or email
In short your entire BEE process.
Our first step to BEE compliance is to “Learn about BEE”, we are continuing with our popular full-day EconoBEE seminars in 2008. We have seminars scheduled in:
Cape Town – 19th March
Johannesburg – 27th March
Durban – April (date to be confirmed)
Additional details available online.