INTRODUCTION AND IMPLEMENTATION ON THE CODES OF GOOD PRACTICE FOR BROAD – BASED BLACK ECONOMIC EMPOWERMENT

ISSUES FOR CONSIDERATION WHEN ALIGNNINGRELEVANT POLICIES PROGRAMMES WITH COGP ISSUES FOR CONSIDERATION WHEN ALIGNNING RELEVANT POLICIES PROGRAMMES WITH COGP  Identification of all Policies that seek to address past imbalances and /or promote the economic advancement of black people.  Review provisions of those Policies and determine whether they address economic transformation.  Consult and liaise with the dti in this respect  In the event that any piece of Legislation is silent on transformation, the COGP to be applied when read in conjunction with Section 10;  If the are specific provisions in any piece of Legislation that seek to address transformation, consideration must be given whether the requirements are targeted at Broad Based Black Economic Empowerment;  Review, Amend and Align all affected Policies, Programmes.

Charters Gazetted under Section 12 since the Gazetting of the Codes on the 9 th February 2007 Financial Services Charter »To Apply for Section 9 before the end of the transitional period »Have requested to retain their scorecard until the alignment process has been completed Construction Charter »Awaiting alignment under Section 9 Property Charter »Application for gazetting under Section 12 approved by the dti »Gazetting underway CHARTERS

Charters currently being developed for Gazetting under Section 12 & Section 9 Transport Charter Agriculture Charter Forestry Charter Healthcare Charter Liquor Charter CHARTERS

Amendment / Alignment of the PPPFA –The Working Group has finalised the PPPF Amendment Bill –The “5 Core Principles” of Section 217 of the Constitution have been included in the Amendment Bill: »Transparency »Cost Effectiveness »Competitiveness »Fairness »Equitability PPPFA

The Amendment Bill proposes the following : The Recognition levels as embedded in the Codes would be a requirement for the evaluation of Tenders, Bids and Contracts Organs of State would determine the minimum recognition level for consideration of a Bid, Tender or Contract Targets will be determined by Accounting Officers for Sector Codes Gazetted under Section 9 of the BEE Act and Statement 003 of the Codes of Good Practice for B-BBEE Evaluation Criteria will be based on price submitted by Bidders Exempted Micro Enterprises will have to substantiate as per the requirements in the Codes ( Audited Certificate, SARS tax clearance certificate or an Accredited Verification Certificate) stating their status EME’s will qualify as Level 3 Contributors as detailed in the Codes Price and Functionality will be evaluated separately as opposed to current requirements Practice Notes will be issued by NT with regards to : »Black Owned or Black Women Owned businesses PPPFA

WAYFORWARD : Final draft of the PPPF Amendment Bill will be forwarded to all Cabinet Members by the Minister of Finance A Strategy for alignment with other pieces of Legislation is being formulated PPPFA

Two Pronged strategies identified, namely: »Short - term Marketing & Communication of BEE »Long - term Marketing & Communication of BEE  Short-Term Strategy:  Targeting Government Departments  All National Departments  Provincial & Local Government  KZN, WESTERN CAPE, MPUMALANGA, EASTERN CAPE, NORTHERN CAPE  Aimed at educating and training Procurement Officers, Supply Chain Managers and all parties influencing the implementation of the Codes of Good Practice for Broad-Based Black Economic Empowerment MARKETING & COMMUNICATION

–Long-Term Strategy: –Marketing Division has developed a Marketing and Communication Strategy for the entire dti which entails Public Relations, Radio, TV, Print, Exhibitions, Events, Launches, Conferences and Seminars –BEE to be located within the broader dti strategy –This will ensure that all Marketing and Communication undertaken by the dti includes Broad-Based Black Economic Empowerment MARKETING & COMMUNICATION

The EE Secretariat and Committee has been established Clear Guidelines have been provided on the dti website One EE programme has been approved for Hewlett Packard to the value of $ 13,5 million CONSIDERATIONS: Due to outcomes of the evaluations there is a change in mindset by Multinationals in re-opting to undertake the sale of Equity or Sale of Assets as prescribed in the Codes BEE Facilitators such as Private Equity Funds, to be considered and endorsed by the dti as per the Codes. CONCERN : That Parastals not giving due recognition to the principle of Equity Equivalents (e.g. Telkom’s insistence on ownership) EQUITY EQUIVALENTS

The Codes indicate that the dti will establish a publicly accessible Central Database containing the information underlying each Accredited Verification Certificate This Database will also provide a Self – Assessment tool for calculating the BEE Score CHALLENGE : Service Provider has been identified and appointed - in view of the dti’s indecisiveness we are currently in breach of the contract WAYFORWARD : Waiting for effecting contract between the dti and the Service Provider IT DATABASE

Appropriate measures need to be considered in order to address the serious impact of Fronting Fronting is fundamental to the Codes, and hinders transformation The Codes should provide gazetted guidance on dealing with Fronting Fronting is an impediment that hinders real meaningful participation by Black people in the economy FRONTING

CHALLENGE : Recorded Fronting Cases, excluding those reported through the Fraud hotline and to Law Enforcement Agencies –January 2006 – December 2006 = 22 –January 2007 – July 2007 = 15 WAYFORWARD : Fronting should be aligned with existing Legislation on fraud Technical Committee to be set up to deal with the process of legislating Fronting as a prosecutable offence The BEE Act should be amended to include Fronting as a prosecutable offence FRONTING

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