PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES Broad –Based BEE 31 AUGUST 2005

Table of Contents Introduction Policy instruments to achieve Broad-Based BEE Roles and objectives of the Department Broad- based BEE Past Transactions Performance Challenges and lessons learned Way forward

Introduction DPE’s vision is to ensure SOEs : Facilitate economic growth through locating them in an optimal industry structure and ensuring the efficiency of their operations and the economic effectiveness of their investment Programmes

Introduction continued Play a leadership role within the economy in the areas of corporate governance and national policy implementation; Catalyse sector and regional economic development opportunities.

Policy instruments to achieve BBBEE Policy framework : Accelerated Agenda towards the Restructuring of State Owned Enterprises ( 2000) Triple bottom line reporting ( TBL) in line with the King II Report on Corporate Governance. Broad-based Black Economic Empowerment Act of 2003

Policy instruments to achieve BBBEE continued As part of Governance the Department expect SOEs to lead in the following : Employment Equity Skills development Preferential Procurement Sectoral Charters and in the absence will be guided by the Code of Good Practice

Policy instruments to achieve BBBEE continued

Role & Objectives of DPE’s BBBEE Leverage the procurement spend to promote SMMEs, BEE and people with disability , youth and women empowerment . Enhance economic inclusion by HDIs.

Role & Objectives of DPE’s BBBEE continued To ensure accelerated progress in relation to skills development. I.e Spoornet Academy ( 2006), Transwerk Training and Eskom Up scaling Programme.

Role & Objectives of DPE’s BBBEE continued Departmental level Socio economic unit : Monitoring of socio economic performance of SOEs against government socio economic objectives. Lead in the identification of socio economic KPIs and targets .

Role & Objectives of DPE’s BBBEE continued Departmental level Report on quarterly and annual basis performances of SOEs in relation to empowerment. Provide inputs to shareholder compacts.

Going forward DPE will actively seek ways to bring in BBBEE players when : Entering into Public -Private Partnerships ( PPPs) Concession The disposal of non core business of SOEs In the execution of the above the Department will be guided by the following: The Broad-based Economic Empowerment Act The Preferential Procurement Policy

Restructuring transactions Past Performance Telkom IPO ( ESOPs, Ucingo BEE Consortia, Retail offers ( PDIs) 2003 Transnet Virtual Care ( MBO) 2003 ACSA ( BEE consortium ( 4%) and ESOP (1% ) 2000) Transnet, Connex ( SEP/ BEE 80 %) Transnet Production House 2001

Restructuring transactions continued Completed transaction under Forestry: Siyaqubeka ( BEE shareholding 10%) Singisi ( BEE shareholding 10%) Amatole ( BEE shareholding 25%) Mountain to Oceans ( BEE shareholding 50%) Komatiland ( BEE shareholding 30 % )

Challenges and lesson learnt Concentration of suppliers to SOEs Inadequate disclosure in the SOEs Annual reports Identification of real Economic Empowerment beneficiaries i.e Denel

Challenges & lesson learnt continued Lack of funding Skills development is not well targeted The SOEs Procurement policies regarding conflict of interest , fronting and Fraud Preventation Plans are not well spell out

Way forward Need to create a standard framework for SOEs reporting on socio economic issues SOEs should communicate their successes on Broad-base black economic empowerment Submission of the SOEs Broad-Based Black Economic Empowerment as part of their three corporate plan.

Way forward continued DPE to tightened oversight in relation to Broad- Based Black Economic Empowerment Need to create a standard framework for SOEs reporting on socio economic issues SOEs should communicate their successes on Broad-base black economic empowerment

Way forward continued Submission of the SOEs Broad-Based Black Economic Empowerment as part of their three corporate plan. DPE to tightened oversight in relation to Broad- Based Black Economic Empowerment The Publication of socio economic booklet ( September 2005)

Way forward continued The DPE is discussion with SOEs toward common framework in addressing the skills shortage of the country particularly in technical fields. Review procurement policies of SOEs to leverage investments spend to promote SMMEs, BEE and youth, people with disability and women empowerment

The end Thank you