A season of unintended consequences a time to harvest?

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     IMAGE: MEDIACLUBSOUTHAFRICA




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                                   R   ecent developments in the area of Broad-Based Black Economic
                                       Empowerment (B-bBEE) suggest that corporate South Africa
                                   is currently facing a season of unintended consequences in terms
                                                                                                             Although there has been a fair amount of public discussion about
                                                                                                             BEE benefiting only an elite few, this has actually been somewhat
                                                                                                             fallacious, as it only looks at one element of the legislation, which
                                   of compliance and adaptability with respect to existing regulations.      is ownership. This brings the debate to a further unintended
                                   The ensuing complexities impacting business range across a                consequence. Ironically, the current financial contraction is likely
                                   number of areas covering the global economic landscape to the             to see a shift of focus away from ownership, towards the other
                                   local obligations for B-bBEE compliance. But the current economic         broad-based elements. As a number of the BEE deals were
                                   uncertainty may also point to areas of enhanced compliance in local       financed during the SA economic upsurge, we have seen a few of
                                   business activity. To understand the full picture, it is useful to step   them falter in the current economic climate. This should compel
                                   back and map the recent terrain.                                          companies to move away from capital-intensive ownership
                                                                                                             activities and focus on elements such as preferential procurement
                                   Since 2006, KPMG in South Africa has undertaken annual surveys            and enterprise development, as well as employment equity and
                                   to benchmark and monitor the implementation of B-bBEE and                 skills development. In other words, a clearer emphasis on indirect
                                   the levels of compliance attained by participating companies.             empowerment elements and human resources empowerment
                                   Broadly speaking, initial findings displayed a fair amount of denial,     issues should emerge. There are some compelling reasons for this.
                                   confusion, uncertainty and resistance around BEE legislation. This
                                   is understandable, given a human reluctance to change in what             South Africa needs to create more jobs in order to sustain
                                   has been perceived as an emotive process of transformation.               historic levels of growth. Enterprise development and preferential
                                   By 2007, however, there was a marked improvement in terms of              procurement should receive particular attention because of their
                                   compliance with the requirements of regulation and a willingness          job-creation consequences in the current economic environment.
                                   to accept the introduction of the new modes of business practice.         In addition, they do not require as much financial effort as
                                   While nowhere near the intended targets, there has been a clear           ownership, and can be achieved relatively quicker than skills
                                   improvement since 2006.                                                   development and employment equity, which are normally achieved
                                                                                                             through medium to longer term planning. Smartly done, a company
                                   The formalisation of the Codes of Good Practice (gazetted in              could still earn compliance points, create jobs and empowerment
                                   February 2007) saw a significant reversal of the progress made            through its intensification of focus in these areas.
                                   up to 2008, and represents the first phase of the unintended
                                   consequences. With the Codes came new measures, particularly              Furthermore, these elements could improve the value chain
                                   around the empowerment of women. The introduction of the                  of a company by identifying and supporting dependable, high
                                   adjusted recognition for gender principle, stipulates that it is no       quality and competitively-priced suppliers. Companies that want
                                   longer sufficient just to empower black people, but that there has        to accelerate their compliance activities could focus on these
                                   to be a specific focus on the empowerment of black women and              two elements. Given that companies have moved very slowly
                                   other designated groups. Those compani
				
DOCUMENT INFO
Description: According to recent developments in the area of Broad-Based Black Economic Empowerment (B-bBEE), corporate South Africa is currently facing a season of unintended consequences in terms of compliance and adaptability with respect to existing regulations. Since 2006, KPMG in South Africa has undertaken annual surveys to benchmark and monitor the implementation of B-bBEE and the levels of compliance attained by participating companies. Broadly speaking, initial findings displayed a fair amount of denial, confusion, uncertainty and resistance around BEE legislation. The formalization of the Codes of Good Practice saw a significant reversal of the progress made up to 2008, and represents the first phase of the unintended consequences. With the Codes came new measures, particularly around the empowerment of women. The introduction of the adjusted recognition for gender principle, stipulates that it is no longer sufficient just to empower black people, but that there has to be a specific focus on the empowerment of black women and other designated groups. Those companies that had reached some level of BEE compliance suddenly found themselves lacking on the issue of designated groups.
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