We recently attended the DTI’s engagement on BUSA’s comments on the revised BBBEE Codes of Good Practice.
Please see notes from the meeting that we have compiled for you.
If you require any further information, please contact your nearest GBS office.
Issues highlighted by BUSA:
BUSA were of the opinion was that there has been some progress in terms of transformation, but the DTI have raised the bar too high with the proposed codes.
Below are the 6 main areas that the discussions were based around:
1. Ownership
BUSA felt that with the changes to this element, there will be a major impact on foreign direct investment.
- 2. Management control
Issue of junior management that’s no longer taken into account. BUSA feels that this is the aspect that needs focus. If this group grows, then you will see change further up the structure.
- 3. Skills Development
The Codes and SETA are grants not supportive according to BUSA. Companies will only train those individuals that can be absorbed by the company.
4
- . Enterprise Development
“Too much too soon”
Codes need to allow companies to embrace transformation and the new codes give the impression that everything is being forced on business.
5. Socio-economic Development
BUSA is happy with the withdrawal of Code 500.
- 6. Timelines
BUSA wanted to know when the framework be finalised.
DTI Comments
The DTI agreed that there were many blind spots they didn’t envisage. 550 submissions received and all were analysed. BUSA and DTI agree that there are areas of concern that need to be refined.
- 1. Value added suppliers
This is an area of concern for DTI. The definition of “value added suppliers” within the new codes is problematic and they are working on this aspect.
- 2. Junior management
Employment Equity seeks to improve this area. However, there is no upward mobility of Black people to the senior level of the leadership pipeline.
This paints a dim picture as people have been scoring high in this element but they are not moving the managers up to the leadership level. However, DTI can understand the point that BUSA are making in this regard and they will review it.
- 3. Ownership
The DTI want ownership to be broad-based as it was too narrow in the previous codes.
The purpose of ownership is to create power in hands of Black people. However, companies are coming up with sophisticated structures to avoid this.
- 4. Multinationals
DTI does want foreign investment in the country as we need their investment. However, they will be scored on the branch that is operating in SA.
- 5. Issue of skills
DTI are working on a system that tracks and monitors people that have been trained to ensure they are absorbed into the system.
- 6. Suppliers
There has not been enough transformation in the area of suppliers. The DTI felt that we need to shift focus from scores and levels and look at transformation.
Way forward
Need 2 months to finalise a framework.
By midyear there will be an announcement.