UNDERSTANDING TRANSFORMATION & OUR ROLE AS GOVERNMENT

DEVELOPMENT OF SECTOR CODES Petroleum sector charter Defence Sector Charter Chartered Accountants Sector Code MAC sector Code Property Sector Code Construction Sector Code Tourism Sector Code Forestry Sector Code Agrii Sector Code Financial Sector Code The Broad-Based Black economic Empowerment Act 53 of 2003 (“BBBEE Act) provides the legislative framework for broad based black economic empowerment in SA. The “Generic” Codes of Good Practice and Sector Codes are issued under the B-BBEE This legislation has brought the sector codes into being Sector codes and PSC are dictated and guided by BBBEE Act 53 2003 What can not be changed Principles Methodology Definitions Beneficiaries What can be changed Target Weighting QSE threshold Additional Elements Transport Sector Code ICT Sector Code BBBEE ACT- Codes of Good Practice

DEVELOPMENT OF SECTOR CODES Petroleum sector charter Defence Sector Charter Chartered Accountants Sector Code MAC sector Code Property Sector Code Construction Sector Code Tourism Sector Code Forestry Sector Code Agrii Sector Code Financial Sector Code Department of Defence Department of Energy Department of communication Transport Sector Code ICT Sector Code Department of Transport Department of Public Works Treasury Department Department of Public Works Department of Agriculture GCIS Department of Forestry Treasury Department Department of Tourism BBBEE ACT- Codes of Good Practice

AMENDED PROPERTY SECTOR CODE Amended PSC gazetted on 9th June 2017 Gazette No.40910

DEVELOPMENT OF SECTOR CODES MAIN PURPOSE OF sector council office (Reason for Existence): ENHANCE TRANSFORMATION by factoring UNIQUE KNOWLEDGE AND CHARACTERISTICS in order to DEEPEN MEANINGFUL PARTICIPATION of property participants in the main stream of SA Economy; TRANSFORM THE PROPERTY SECTOR

SCOPE OF THE PROPERTY SECTOR Commercial Property Industry Office Property Industry Industrial Property industry Retail Property Industry Leisure Property Industry Residential Property Industry Houses Community schemes Flats, Clusters, Town Houses etc Zoned land Organs of state

RESEARCH AIM: is to create a consolidated body of knowledge which fosters consistent understanding of the Property sector. IN SCOPE: Research covers all other various sub-industries in the property sector.

Property Economic Contribution State of Transformation 2108 PSCC RESEARCH Measured amount of existing stock by key industry in the property sector at R5.8 Trillion Property Market Size 2016 Economic Contribution of the Property Sector to the Economy measure by expenditure, GDP, Taxes and Employment Property Economic Contribution 2018 Analysing Transformation against the Property Sector Code 7+1 elements State of Transformation 2108

PSCC RESEARCH REPORTS The Impact of the South African Property Sector on the National Economy 2014

The Size of the South African Property Sector R5.8 Trillion Commercial R1.3 Trillion Residential R3.9 Trillion Public R237 Billion Zoned urban land R520 Billion Retail R534 billion Office R357 billion Industrial R281 billion Hospitality & other R94 billion R3.9 trillion Informal Industry SOE R66 Billion Metros & selected Municipalities R69 Billion NDPW R102 Billion Zoned Urban land

Relative size: Capital Stock RESIDENTIAL PROPERTY MARKET Relative size: Capital Stock Based on R5.8T Market Size Property 76% of Capital Stock

South African Property Sector Economic Contribution Based on R5.8T Market Size R43.8 Billion Direct Expenditure R132.8 Billion SOUTH AFRICAN PROPERTY SECTOR Economic Contribution Residential Property Industry Contribution GDP R135.2 Total Jobs R278 Thousands R30.2 Billion 148 Thousands Total Taxes R62.4 R22.5 Billion 116 Thousands 14 Thousands Non- Residential Property Industry End of Cycle R83.5 Billion R5.5 Billion R38.2 Billion R1.6 Billion DIRECT INDIRECT R38.6 Billion R27.4 Billion R35.3 Billion R1.4 Billion R1.8 Billion Note: In the Origination Phase we cannot distinguish between Other Commercial and Public Sector properties, so the amount inserted in the tables is a total for both these property types.

South African Property Sector Economic Contribution R63.5 Billion DIRECT EXPENDITURE R132.8 BILLION SOUTH AFRICAN PROPERTY SECTOR Economic Contribution Residential Property Industry CONTRIBUTION GDP R135.2 TOTAL JOBS R278 THOUSANDS 148.3 Thousands TOTAL TAXES R62.4 R69.8 Billion 97.0 Thousands 18.5 Thousands Commercial End of Cycle R51.3 Billion R5.5 Billion R49.3 Billion R9.6 Billion Based on R5.8T Market Size Residential Property Industry R22.5 Billion R13.3 Billion Non- Residential Property Industry Public Sector R11.0 Billion R2.7 Billion 0 Thousands Zoned land R1.5 Billion R0 Billion R1.6 Billion End of Cycle R6.5 Billion R0.2 Billion 14.2 Thousands

STATE OF TRANSFORMATION REPORT Annually on the state of PROPERTY SECTOR Mandated to report Annually on the state of Transformation BBBEE Level 4

PROPERTY SECTOR CODE ELEMENTS Ownership Management Control Employment Equity Development Skill Enterprise & Supplier Development Socio-Economic Development

SUMMARY STATE OF TRANSFORMATION IN THE PROPERTY SECTOR

SUMMARY STATE OF TRANSFORMATION IN THE PROPERTY SECTOR

SUMMARY STATE OF TRANSFORMATION IN THE PROPERTY SECTOR

SUMMARY STATE OF TRANSFORMATION IN THE PROPERTY SECTOR

CHANGES TO THE AMENDED PROPERTY SECTOR CODE PSCC Company classifications AMENDED PSC THRESHOLD DEFINITIONS   APPLICATION SCORECARD REQUIREMENTS ESTATE AGENTS LARGE ENTITIES  Large Companies  full scorecard requirement  Above R35M QSE Medium Sized Companies Limited scorecard requirement R2.5M – R35M EME  Small Companies  Exempted  Less than R2.5M

BACKGROUND & BASIC OF BBBEE Most government entities have never had a verification conducted Government needs to take an ACTIVE LEAD in transformation at all its spheres and entities. Government can not promote transformation to others when its not aware of its transformation status of its internal state organs

BBBEE & ORGANS OF STATE The entire SA Economy including - has to be measured against the Amended Codes of Good Practice (2013 Government Departments (National and Provinces) Municipalities State-Owned Entities All State Organs – measure against Specialised Scorecard Specialised Scorecard (does not measure ownership) but measures: Management Control, Skills Development Enterprise & Supplier Development Socio Economic

BBBEE & ORGANS OF STATE

BBBEE & ORGANS OF STATE BEE Ac t 13G.   Reporting.—(1)  All spheres of government, public entities and organs of state must report on their compliance with broad- based black economic empowerment in their audited annual financial statements and annual reports required under the Public Finance Management Act, 1999 (Act No. 1 of 1999). (2)  All public companies listed on the Johannesburg Stock Exchange must provide to the Commission, in such manner as may be prescribed, a report on their compliance with broad-based black economic empowerment. (3)  All Sectoral Education and Training Authorities contemplated in the Skills Development Act, 1998 (Act No. 97 of 1998), must report on skills development spending and programmes to the Commission.

BBBEE & ORGANS OF STATE

BBBEE & ORGANS OF STATE All state organs must implement BBBEE It is not an option to implement but a must and no one is exempted to implement this Act None compliance of this Act is gross high level of non compliance that undermines transformation To ensure that BBBEE is a reality for Black people, section 10 of BBBEE Act requires all organs of state to integrate BBBEE requirement to awarding of contracts, grants, licenses concessions to companies that are BBBEE compliant.

BBBEE & ORGANS OF STATE Role of BBBEE commission Oversee and supervise compliance to the B-BBEE Act Investigate complaints Maintain a register of BBBEE transaction of specific threshold Deal with “Fronting Practices” Defined as act/conduct that directly or indirectly undermines or frustrate the achievement of the B- BBEE objectives or the implementation of any provision of the BBBEE Act; Misrepresentation of information or engaging in Fronting Practices may result in: A fine and/or up to 10 Years imprisonment for individual or both; and A company may be fined up to 10% of its annual turnover; Any person convicted of an offence is banned from contracting with any organ of state for 10 years.

BBBEE & ORGANS OF STATE

BBBEE & ORGANS OF STATE Amendment of section 9 of Act 53 of 2003 Guidelines for stakeholders in the relevant sectors of the economy to draw up transformation charters and codes of good practice for their sector; and Poverty alleviation By the addition of the following subsections: If requested to do so, the Minister may by notice in the Gazette permit organs of state or public entities to specify qualification criteria for procurement and other economic activities which exceed those set by the Minister in terms of subsection (1). A code of good practice remains in effect until amended, replaced or repealed.’’ Amendment of section 10 of Act 53 of 2003 ‘‘Status of codes of good practice Every organ of state and public entity must apply any relevant code of good practice issued in terms of this Act in: (a) determining qualification criteria for the issuing of licences, concessions or other authorisations in respect of economic activity in terms of any law; (b) developing and implementing a preferential procurement policy; (c) determining qualification criteria for the sale of state-owned enterprises; [and] (d) developing criteria for entering into partnerships with the private sector; and (e) determining criteria for the awarding of incentives, grants and investment schemes in support of broad- based black economic empowerment. (a) The Minister may, after consultation with the relevant organ of state or public entity, exempt the organ of state or public entity from a requirement contained in subsection (1) or allow a deviation there from if particular objectively verifiable facts or circumstances applicable to the organ of state or public entity necessitate an exemption or deviation. (b) The Minister must publish the notice of exemption or deviation in the Gazette. Subject to section 9(6), an enterprise in a sector in respect of which the Minister has issued a sector code of good practice in terms of section 9, may only be measured for compliance with the requirements of broadbased black economic empowerment in accordance with that code. Enterprises operating in a sector in respect of which the Minister has issued a sector code of good practice in terms of section 9, must report annually on their compliance with broad-based black economic empowerment to the sector council which may have been established for that sector.’’.

PURPOSE OF THE POLICY Department pf Public Works through this policy, demonstrate its commitment to implementing an integrated comprehensive framework that seeks to mobilize and co-ordinate collective efforts to deliver on the Government’s Black Economic Empowerment agenda with respect to the transformation of the Property Sector.

COMMITMENT TO TRANSFORMATION Department of Public Works is deliberate about transformation and its economic empowerment goals and is committed to empowerment agenda as an integral part to nation building.

SCOPE OF THE POLICY Applies to all DPW with its mandate of responsibility of: custodianship, ownership, administration and/or management of government owned land and/or properties: Covering areas of responsibility incl: Acquisition Disposals Facilities Management Leasehold/Leased Portfolio Municipal Accounts Management 3rd Party Contracts/Surplus Portfolio Property Professionals Will also apply to all private and public sector institutions, doing business with the government as it pertains to the mandates and functions covered by the policy Scope of the Empowerment Policy and alignment to other policies and strategies Supersedes all other government policies and strategies on black economic empowerment, as they pertain to the all activities and functions covered in this policy and/or are within the scope of the property sector codes, except in instances where the scoped activities and functions are governed by specific legislation practical solution to apply this policy is being sought.

OPERATIONAL AIMS Operational Aims An improved strategic direction and coordination of the transformation initiatives by the department; A focused and deliberate effort to identify, attract, retain and confirm qualifying black-owned enterprises to do business with the government; Direct the structural transformation of the property sector, in as far as doing business with the Department, in order Planned and direct interventions aimed at increasing participation and growing pool of Black owned enterprises. from doing business and transacting with the Department To create an enabling, conducive and equitable environment for black-owned enterprises to economically thrive and continually improve skills and capabilities.

POLICY APPROACH & INTENT Assist government to attain its priorities & Radical Economic transformation goals: Job creation; skill development, localisation and black industrialisation; Align all the transformation interventions and the initiatives of the Department; Provide inclusive economic growth by addressing skewed patterns of ownership and inequitable access Remove structural barriers & create enabling environment for new & emerging property participants Actively encourage preference towards direct & active participation of Black people in ownership, management and control

Do you Understand the policy? What is the state of readiness to implement the Policy?

Are We There Yet?

Property Sector Charter Council Contact person : Portia Tau-Sekati Tel: 011 880 9918 Cell: 082 619 2507 Direct email: portia@propertycharter.co.za Admi email: admin@propertycharter.co.za www.propertycharter.co.za

THANK YOU