PRESENTATION TO THE dti PORTFOLIO COMMITTEE LINDIWE MAEPA – EXECUTIVE 13 MARCH 2013

CONTENTS INTRODUCTION GENERAL COMMENTS SPECIFIC COMMENTS CONCLUSION © Telkom 2011 | Presentation Title |

INTRODUCTION Telkom is one of Africa's largest communication companies, providing integrated communications solutions to an entire range of customers. We believe that B- BBEE is an integral driver of economic and social transformation in South Africa and therefore an integral component of our business. We are committed to align our business in the workplace and in society, within the national transformation agenda. The Telkom approach to B- BBEE is based on the perspective that B –BBEE is a social, economic and business imperative. © Telkom 2011 | Presentation Title |

GENERAL COMMENTS In general, Telkom welcomes the dti’s amendment of the B-BBEE Act in particular in so far as the amendment, among others, seeks to align B-BBEE Act with other legislation that impacts on the B-BBEE and with the codes of good practice. Such alignment once achieved, will help to ensure that there is a degree of certainty on various critical concepts in this area thus leading to the attainment of the desired objectives behind the enactment of the B-BBEE Act. Whilst Telkom welcomes this amendment of the B-BBEE Act, Telkom would urge the dti to ensure that the concepts and definitions embodied in the amendment are properly explained and uniformly aligned with those that exist elsewhere in other legislation so that no wheel is reinvented as that can lead to uncertainty. Lastly, Telkom appreciates the establishment of the Broad-Based Black Economic Empowerment Commission through this amendment. However, its status seems vague even though its proposed functions seem fairly fine and consistent with most attributes of a regulatory entity. There is a need to elaborate on the status of the Commission proposed to be established. © Telkom 2011 | Presentation Title |

SPECIFIC COMMENTS

AMENDMENT OF SECTION 1 Clear definitions and guidelines should be published by the Department to ensure that the intentions of the Bill and its supporting policies are realised e.g. rural areas, workers etc. In order to realise the objectives of the policies and Acts, the definition of B-BBEE should refer to viable and sustainable economic empowerment of all black people. Fronting should be defined in the context of authenticity in the support of substance of form principle. It is suggested that the word ‘authentic” be inserted before the word “achievement” in the second sentence on the definition of the term ‘fronting practice’. © Telkom 2011 | Presentation Title |

AMENDMENT OF SECTION 2 In order to promote the establishment of black owned enterprises in the mainstream economy, the Department needs to be more specific to effective black owned and managed companies, in all references made to black owned companies. © Telkom 2011 | Presentation Title |

AMENDMENT OF SECTION 10 To ensure that the private sector participates actively and the objectives are achieved, the Department should include a clause on the exemption status of the private sector It should be made clear whether it is mandatory or voluntary to implement B-BBEE in the private sector Where sector councils have not been established or have ceased to function, it must be clear where reports for the specific sector must be submitted © Telkom 2011 | Presentation Title |

CANCELLATION OF CONTRACT OR AUTHORISATION The Department should specify whether the clause applies to private sector companies. We support that contracts awarded on account of false information furnished in respect of BBBEE status may be cancelled This will act as a driver for compliance and transformation in the private sector space as a penalty for breach of contract. © Telkom 2011 | Presentation Title |

ESTABLISHMENT AND STATUS OF B-BBEE COMMISSION It is not clear why the proposed B-BBEE Commission is sought to be established as a trading entity. Also, there is no definition of what trading entity means in the context of the proposed Commission. Telkom’s understanding, especially taking into account the proposed functions of the Commission at 13F, is that the proposed Commission should ideally be a government or a state agency that is essentially charged to investigate and monitor compliance with the B-BBEE legislation and meting out prescribed penalties whenever instances of established transgression of the law occur. The Commission should be designated to operate independently from the Ministry with the Minister being able to consult and ask the proposed Commission to carry out any work falling under the B-BBEE legislation as contemplated under the B-BBEE Acts. One form of affirming or giving teeth to this arrangement could be giving an option of issuing regulations to the Minister for this purpose © Telkom 2011 | Presentation Title |

APPOINTMENT OF COMMISSIONER It is suggested that the re-appointment should be limited only to one more term and not beyond that except in exceptional circumstances where a suitable candidate cannot be found. © Telkom 2011 | Presentation Title |

APPOINTMENT OF DEPUTY COMMISSIONER AND STAFF OF COMMISSION The issue of the term of re-appointment of the Deputy Commissioner is not provided for here. It is suggested that it should be provided for along the similar suggestions made in respect of re-appointment of the Commissioner above, namely re-appointment but for one more term and no longer except if no suitable candidate is found. © Telkom 2011 | Presentation Title |

FUNCTIONS OF B-BBEE COMMISSION The Department of Trade and Industry should consider working in collaboration with the Department of Labour to integrate reporting requirements to minimise the reporting requirements for small businesses. Reports of the Commission should be publicly made available similar to those of the Commission for Employment Equity All interpretations should be considered for release by the Department to avoid circumvention as a result of information received from the Commission © Telkom 2011 | Presentation Title |

REPORTING A national report on the status and progress on B-BBEE should be published similar to that published by the Commission for Employment Equity. The prescribed manner of reporting should not be vastly different from the scorecard requirements of the generic or sector codes. © Telkom 2011 | Presentation Title |

OTHER OFFENCES AND PENALTIES Accountability should be clarified in the instance of an individual within a company The penalties must also be calculated on the specified Turnover relating to a particular period © Telkom 2011 | Presentation Title |

CONCLUSION Telkom SA SOC Limited acknowledges the proposed amendments to the B-BBEE Act and notes the intentions set to introduce a commission which will be responsible for monitoring and evaluating the status of B-BBEE in South Africa as this will assist with the monitoring of progress. Telkom also acknowledges the alignment of the B-BBEE Act with the B-BBEE Amended Codes and other relevant legislation and the introduction of penalties for offences that seek to undermine the principles and objectives of the Act. Telkom SA SOC Limited supports this amendment and urges the dti to consider the status it seeks to accord to the proposed Commission. Telkom SA SOC Limited supports the national transformation agenda and is committed to assisting the government to achieve its transformation objectives and targets where possible. © Telkom 2011 | Presentation Title |

Thank You! LINDIWE MAEPA - EXECUTIVE