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FOREST SECTOR CHARTER COUNCIL B-BBEE Progress Report to the Portfolio Committee of Agriculture, Forestry and Fisheries 23 JUNE 2015 Mr Simangaliso Mkhwanazi (Executive Director) 1
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PRESENTATION OUTLINE Purpose Forest Sector Profile Forest Sector Charter Forest Sector Charter Council B-BBEE Transformation Status report -Medium & Large Enterprises (MLE) analysis -Qualifying & Small Enterprises (QSE) analysis -Exempted Micro Enterprises (EME) analysis Challenges Conclusion 2
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PURPOSE The presentation provides information on the progress and performance towards the implementation of B-BBEE (Broad based Black Economic Empowerment) in the Forestry sector and related industries. The presentation also provides challenges in the implementation of B-BBEE in the Forestry sector and related industries. 3
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Forest Sector Profile Uses 1% of total land (1 273 357ha) Employs about 146 000 in sawmilling, pulp & paper, timber boards, mining timber etc., (22.5% employment in Agriculture) Provides about 850 000 livelihood support Contributes 1% National GDP & 7.7% of manufacturing GDP Production mainly on pulp & paper and sawmilling products Derives 70%of revenue from exports (Reference: FSA Facts 2011/12) 4
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Forest Sector Charter Originates from the B-BBEE Act, No 53 of 2003 (now Amendment Act) Launched in 2005, established a Steering Committee 2005-2008 draft Charter developed by working groups & Steering Committee FB-BBEE draft Charter gazetted for public comments in May 2008 Published as a Sector Code in June 2009 Revised in 2014, still awaiting gazetting 5
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Forest Sector Charter (Continuation) Main objective: “To extend the economic opportunities and benefits of the Forest Sector to the previously disadvantaged black groups”. Scope of application -Growers -Contracting -Fibre -Sawmilling -Pole & -Charcoal 6
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FSCC known as “Council”, launched in May 2008 & operating as a section 21 Company. Main responsibilities: - To facilitate, oversee, encourage implementation of Charter - To monitor & report on the Charter Undertakings - To monitor & report on the Transformation Status - To publicize the Charter & Participates in Government, Industry & Council forums & member of the Joint Technical Team (Dti initiative) Forest Sector Charter Council (FSCC) 7
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3 strategic sessions, highlighting strategic objectives Foresight exercise in 2011 to craft preferred future for the sector 4 Quarterly meetings on a annual basis. Reporting: -The President’s B-BBEE Advisory Council, -Minister of Trade & Industry & -Minister of Agriculture, Forestry & Fisheries. Composition – 20 Board members & an Independent Chairperson Forest Sector Charter Council (Continuation) 8
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B-BBEE Status of Transformation B-BBEE Status report: An annual report on scorecard implementation & performance Objective: Assess the status of transformation in the Forest sector Scorecard seven (7) elements -Ownership (O) -Management Control (MC) -Employment Equity (EE) -Skills Development (SD) -Preferential procurement (PP) -Enterprise Development (ED) -Socio-economic Development (SED) 9
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B-BBEE Status of Transformation Measured entities are: -Medium & Large Enterprises (MLE, ˃ R35M turnover), -Qualifying Small Enterprises (QSE, R5M-R35M turnover), & -Exempted Micro Enterprises (EME ˂ R5M) Medium and Large enterprises (MLE) scored on 7 elements Qualifying Small Enterprises (QSE) scored on any 4 element Exempted Micro Enterprises (EME) automatically level 4 status (level three if compliance with Codes of Good conduct) Fifth (5 th ) Transformation status report completed 10
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B-BBEE Status of Transformation Certificates with underlying information collected Information gathered analysed Analysis based on size of enterprise -Medium & Large Enterprises (MLE, ˃ R35M turnover), -Qualifying Small Enterprises (QSE, R5M-R35M turnover), & -Exempted Micro Enterprises (EME ˂ R5M) Further Sub-sector analysis: Results compared to KPMG report (NB:KPMG report- an annual survey which aims to provide a tool to benchmark B-BBEE implementation progress) 11
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B-BBEE Status of Transformation MLE analysis: Ownership 12
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B-BBEE Status of Transformation MLE analysis: Management Control 13
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B-BBEE Status of Transformation MLE analysis: Employment Equity 14
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B-BBEE Status of Transformation MLE analysis: Skills Development 15
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B-BBEE Status of Transformation MLE analysis: Preferential Procurement 16
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B-BBEE Status of Transformation MLE analysis: Enterprise Development 17
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B-BBEE Status of Transformation MLE analysis: Socio-Economic Development 18
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B-BBEE Status of Transformation QSE analysis: Ownership 19
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B-BBEE Status of Transformation QSE analysis: Management Control & Employment Equity 20
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B-BBEE Status of Transformation QSE analysis: Skills Development & Preferential Procurement 21
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B-BBEE Status of Transformation QSE analysis: Enterprise Development & Socio- economic Development 22
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B-BBEE Status of Transformation 23
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B-BBEE Transformation Status Sector achieved a level four (4, 66.5 points ) status, (a level increase from previous year, level 5) Four of the seven scorecard elements recorded an improvement, Ownership (61%), Employment Equity (40%), Skills Development ( 51%) & Enterprise Development (98%) Low performance on the Ownership element’s designated groups Management Control & Employment Equity struggle to move beyond 50% of target 24
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B-BBEE Transformation Status Black women representation as directors and executives limited Skills Development performance above KPMG target but still needs to improve Consistent & excellent performance in Enterprise development (98%), Preferential Procurement (77%) & Socio- Economic Development (156%) QSE’s achieved 80%+ of target, except in Skills Development QSE’s maintained level 3 status EME’s maintained level 4 status (65% of EME white managed) 25
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B-BBEE Transformation Status Challenges -Verification using generic scorecard - matter to be addressed through Joint Technical Committee- Dti and New Codes, all enterprises falling within a sector that has sector code must be verified under Sector Code -Inaccurate database - addressed through organised sub sector associations and updating database -Level of awareness- an intensified awareness programme to be undertaken -Some entities without B-BBEE certificates - addressed in the new Codes, all enterprises falling within a sector that has sector code must be verified under a Sector Code 26
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Conclusion -Reporting entities numbers improved from 26 in 2010 to 77 in 2014 -Average performance in Ownership -Sector performing well in Enterprise development, Socio- economic Development and Preferential Procurement (though sector specific guidelines need to be developed) -More improvement required in Employment Equity & Management Control 27
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Conclusion (Continuation) -More efforts to be channelled on under represented sub sectors, Qualifying Small Enterprises & Exempted Micro Enterprises (Better enforcement measures) -Delivery on industry and government undertakings necessary to enhance transformation in Forest Sector -Mandate of Council to be strengthen (such as actual visits to enterprises, monitoring and audits) 28
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29 THANK YOU
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