New BEE Codes, why hate it?

2015-05-01 15:14

Many BEE haters have said many things about new BEE Codes and all negative comments with some haters calling it a reverse apartheid and saying BEE is a racism. Some have gone to the extreme of taking legal actions to stop government from implementing the new codes. Some were busy praying that these BEE codes do not become effective today as a government plan. But why hate something that black people need so much in this country? Why hate something that seek to address the dirty past of our beloved country? Why the selfishness and hate of black man survival?.

Over the past years I have listen and read about many negative opinion on BEE and even myself I had some negative views on the BEE in the previous form. This was because BEE in its old form had lots of loopholes which most big companies used and they were seem to complying with BEE but not really meeting all BEE requirements. And that is why most black people think BEE never benefited them.

The Verification Agencies who many of them are experts in finding and utilising the loopholes in the BEE Act were cashing up big time and building empires just on BEE verification services. Despite that their estimated market being smaller compared to businesses that are exempted to BEE Verification (EMEs), verification agencies continue to make millions out of BEE verification work. That is because big entities are paying lots of money for the verification agencies (mostly who are white owned) to find loopholes in the BEE Act. Although there is nothing wrong about the experts using the existing loopholes but it means government BEE Act has been exposed to abuse and BEE objectives could not be achieved with the old BEE Codes.

Also the old BEE codes allowed firms and people who did not care about the transformation to pick only elements that have little impact on the transformation and leave out those elements of BEE codes that forced the transformation. This was through the help of the so called BEE Verification agencies experts. Government might have thought these big firms and BEE verification agencies will be religious and consider the South African "Ubuntu" when implementing these BEE elements but it shows that many were using any loopholes they can get to run away from the transformation goals. They do everything they do to protect their interest and the interest of their clients.

The fact the BEE Verification Agencies are mostly white owned and are in the private sector, it means a threat to self review. Some Verification agencies together with their clients can even fight against the transformation in the court of law. They do not want black economy to be shared and black people to be independent. They want to protect their interest and continue gaining from black men's power without sharing their wealth. Why? Because most large entities till today are against the transformation and they do not believe that a black man can lead their entities. Same as they did not believe that a black man can govern the country they believe was their own.

The SMMEs were suffering and made to pay higher fees for BEE certificates with some verification agencies charging R1 500 just for the start up to get the Exempted Micro Enterprise Certificate. Some government departments insisted on SANAS accredited certificates even though their own Preferential Procurement Policy Framework (PPPF) is very clear on the issuing of BEE EME Certificates.

According to PPPF, Auditors and Accountants can issue BEE EME certificates and certificate do not have to have SANAS logo. But the some Government Departments failed to understand this framework and still they have not understood it. Some Auditors and Accountants has been issuing the BEE EME Certificate to their client, with some issuing it for free and some charging as little as R500.00 which forced BEE Verification agencies to lower their fees which has been a big win for SMMEs. But this has received a egg in the face by some government departments and some SANAS verification Agencies who on their marketing campaigns have advocated that certificate without SANAS logo is not valid which is blatantly incorrect. This is another abuse of clear BEE Act as result of lack of control and guideline in the BEE industry.

Many startup business and exempted micro enterprises were paying thousands just for confirming that they are black South African Citizens , their business turnover was less than R5mln, that the owners were males or females and that their spending on payroll plus net profit is more than 25% of their turnover. This could be easily be confirmed by their auditors or their Accountants.

Despite the haters of the new BEE codes and despite the legal challenges against the radical new BEE Codes, A historical and radical new BEE codes became effective today on 1 May 2015. This marks the shift of focus from BEE being just a voluntary law to being a radical transformation tool.  These codes addresses some of the issues which some I have talked about in the above paragraphs. But what these new codes means to the black communities and business?, what do they mean to the haters of transformation?, what do they mean to Verification Agencies and all professionals in the business consulting?

Haters of BEE will never stop saying all sorts of negative things about BEE as long as BEE discriminate against them. They will never stop finding something on BEE to criticise the entire process and see no positive outcomes. That is because they want to protect their business interest and the interest of their clients. That is because BEE affect positively the black owned businesses and affect negatively the business that are owned by whites. That is because haters of the new BEE codes never liked any thing about BEE and they will never like it in any form government present it to them. That is because the haters hate creation of black industrialists and want white industrialist to remain on top and to continue controlling the economy in South Africa. They are busy drafting the papers trying to challenge the implementation of the BEE New codes. They are fighting against transformation. Why we must expect something to welcome new BEE codes if they have never been friends of transformation?

Verification Agencies which are estimated close to 70 who are registered with SANAS and those who are well business minded and not BEE opportunist do not have problems with the new BEE codes. They have long time changed the business model and positioned themselves better on other markets. They have diversified their businesses and changed their business focus. They did waste their time trying to defend BEE Verification business. That is because they understand that any business have risk and there is not business guaranteed to exist forever or even tomorrow.  Those within BEE verification and hate BEE are busy wasting their time and fighting with government because they only thinking about themselves and are opportunists.

Professionals playing in the BEE field, auditors, accountants, business advisers, etc. this is a opportunity to help businesses to comply and to ensure that business understand what is required of them to comply with BEE. Educating clients on the new BEE Codes so that they understand the benefits and they are not confused which can lead to many being misled.

As BEE is an essential to the SMMEs there is a need to support the initiative by government to have CIPC to issue the BEE Certificate. CIPC website already offer the option for business to register and get their BEE certificate when registering a new business or filing the annual return. Verification agencies will be downgraded to"empowerment advisers" and will no longer issue BEE certificates. This is a great move taking into account the abuse of the term verification agency by many including those who are not accredited and using false accreditation numbers or practice numbers. BEE certificate from CIPC will be free or less expensive to obtain and will be a great contribution to the transformation and building SMMEs which employ estimated 80% of the workforce in South Africa.

Government has reserved 30% of spending for SMMEs and this is a radical change and a good transformation tool.

According to the new BEE codes, there will now be 5 elements and all are compulsory for entities with a turnover from R50 Million up. For the business to achieve high BEE score business must have done well in Ownership, Management Control, Skills Development, Enterprise and Supplier Development and Socio Economic Development. Minimum of 40% must be achieved on the Ownership or BEE level may be dropped by 1 level. At least 6% of payroll spend must be spent on employee skills development. 75% socio economic programmes must benefit black people. Now I know why haters hate BEE. They never supported anything that seek to transfer economic power to the black people or anything that strengthen the black economic power.

Exempted Micro Enterprises will no longer need BEE certificate but just Affidavit to prove that they are black South African Citizens and the turnover is less than 10 Million. Affidavit is free from the police station and most commissioners of oaths.  On the new BEE codes companies with turnover less than R10 Million will fall under Exempted Micro Enterprises either owned by white or black and their BEE score will automatically be Level 4 with 100% recognition level. If company have 100% black ownership that company will be BEE level 1 with 135% recognition level and if company is 51% black owned that company will be BEE Level 2 with 125% recognition level.  Another reason to understand why haters hate new BEE Codes.

Small Qualifying Entities (SQEs) are now entities with turnover between R10 Million and R50 Million. Most haters fall in this category, most they are family owned and ran business, they are white owned who will now be forced to employ black staff, train them, buy from black owned businesses. And they hate that. These entities are forced to comply with all 5 elements of the BEE codes.

Despite having good white owned entities and verification agencies that supports BEE and fully support transformation, we can not ignore the fact that many white owned entities and verification agencies are bad potatoes in economic freedom struggle. They are pushing their own agenda to protect their evil earned wealth and want to keep economic boundaries that ensure that black people remain poor and poor. They hate Cyril Ramaphosa, Tokio Segwale and Patrice Mostepe but love Sol Kerzner, Raymond Ackerman, Johann Rupert and Nicky Oppenheimer. They say BEE created few black Millionaires, what about the white Billionaires that were created by apartheid.

Haters will continue to hate but we are moving South Africa forward and BEE New Codes are effective from today. While government is busy finalising Sectors codes many entities are immediately affected by these new BEE codes and in order to sustain their business these entities must comply and not hate. This is a real radical transformation.

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