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Dieketseng Maleke | 8 December 2024 Life companies and asset managers have reported significant growth in black shareholding over the past six years, surpassing key Broad-Based Black Economic Empowerment (B-BBEE) targets, according to the latest transformation progress update from the Association for Savings and Investment South Africa (Asisa). In 2023, black shareholders owned 38% of asset managers, up from 22% in 2018. Asset managers had already reached the 25% net value target in 2020. In life offices, black South African shareholders owned 27% of the companies in 2023, exceeding the B-BBEE target of 25% net value for the first time. The unencumbered black ownership of life offices was just 14% in 2018. The net value target measures the debt-free shareholding of black shareholders and is a key indicator of the ownership element of the B-BBEE scorecard. The data, collected from members representing 98% of assets under management (AUM) for life offices and 87% of AUM for asset managers, was part of Asisa's third transformation progress update, which provides a six-year trend analysis since the Amended Financial Sector Code (FSC) was implemented in December 2017. Kaizer Moyane, CEO of Asisa, said the progress made by members over the past six years is significant, especially given the country’s challenging economic climate. "The numbers for 2023 reveal that life offices and asset managers met or exceeded all B-BBEE ownership targets," Moyane said. "This confirms the financial sector’s commitment to transformation." In addition to ownership gains, Asisa members have supported small, medium, and micro enterprises (SMMEs) with an average of R772 million in loans, investments, and grants annually over the past six years. Between 2018 and 2023, socio-economic development initiatives received R2.4 billion in funding, with R644 million dedicated to consumer financial education. Moyane said the efforts of the Asisa Academy, Asisa Foundation, and Asisa’s Enterprise and Supplier Development (ESD) initiative in driving sector transformation. Despite the progress, the Asisa Board acknowledged that there are still areas requiring more focus. "While our industry does not yet fully reflect the demographics of the people it serves, our members are fully committed to transformation," said the Board. According to Asisa, while black ownership in the sector has seen remarkable growth, black representation in executive leadership roles remains a key challenge. Lister Saungweme, Asisa’s senior policy advisor for transformation, skills development, and education, said that although black ownership has increased, the representation of black people in executive director roles has not kept pace. "This is true for life companies and asset managers," Saungweme said. However, there has been encouraging progress in executive management. Black people’s representation in executive management at life companies rose from 29% in 2018 to 46% in 2023, though still short of the 60% target. The number of black women in executive positions more than doubled over the same period, from 8% to 22%, though still below the 30% target. Similarly, asset managers saw black executive representation increase from 39% in 2018 to 59% in 2023, nearly reaching the 60% target for the first time. The number of black women in executive roles grew from 15% to 26%, against a 30% target, the group said. Saungweme also said that while there was a slight decline in the number of black people in junior management positions at asset managers, black representation in middle management has increased, particularly in critical skills areas. This shift is supported by increased investment in skills development, with life companies and asset managers collectively spending R12 billion over the past six years on workforce capacity building. "The momentum towards investment in skills development spans various employment levels and reflects a comprehensive approach to workforce development," Saungweme said. Looking Ahead, Asisa said the 2024 Transformation Report paints a picture of consistent progress but also underscores the ongoing challenges in achieving full transformation in the financial sector. "While the 2024 Transformation Report reflects consistent progress over the past six years, we must also acknowledge the ongoing challenges," Moyane said. "The targeted goal has not yet been fully achieved, and there is still work to be done." ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.iol.co.za/personal-finance/financial-planning/black-shareholding-surges-in-south-africas-financial-sector-yet-leadership-gaps-persist-75e1bc8f-29d2-47f8-8a00-c45995b4e765

Tasneem Bulbulia | 9 December 2024 The National Empowerment Fund (NEF) and the Broad-Based Black Economic Empowerment (BBBEE) Commission have formalised a partnership with the signing of a memorandum of agreement (MoA) at the NEF’s head office, in Sandton, on December 9. This agreement sets the foundation for enhanced collaboration between the two organisations, focusing on implementing and enforcing the BBBEE Act and promoting economic inclusion. The MoA outlines a framework of cooperation, including capacity building , wherein the NEF will recruit and second employees or interns to assist the BBBEE Commission in fulfilling its compliance, monitoring, and educational mandates under the BBBEE Act. It also entails information sharing to support the monitoring and advocacy work of the two organisations. The partners will also share resources , with both organisations to leverage their expertise and resources to drive the objectives of the BBBEE Act, aimed at engendering greater operational efficiency . “This agreement is a powerful step forward in our collective efforts to transform South Africa ’s economy. By combining our strengths, we can ensure that black economic empowerment becomes more impactful and sustainable ,” says BBBEE Commissioner Tshediso Matona. “The NEF and BBBEE Commission share a critical mission to drive transformation across South Africa ’s economic landscape. This partnership enhances our ability collectively to support black-owned businesses and enforce meaningful compliance with the BBBEE Act,” says NEF CEO Mziwabantu Dayimani. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.engineeringnews.co.za/article/nef-bbbee-commission-sign-moa-to-strengthen-economic-transformation-2024-12-09

Thapelo Molefe | 8 December 2024 The Auditor-General has raised significant concerns about Manufacturing, Engineering and Related Services Seta’s (Merseta) governance and financial management. A presentation at the Portfolio Committee on Higher Education this week revealed that the entity, tasked with driving skills development in South Africa, received a qualified audit opinion for the second consecutive year due to ongoing financial mismanagement, systemic inefficiencies and repeated compliance failures. “Merseta’s audit outcome is a clear indication that the necessary corrective measures are not being implemented effectively,” said AG senior audit manager Zamahlangu Mditshwa.  “The entity failed to resolve discrepancies in its financial reporting, particularly regarding discretionary grant expenditures from prior years. This, coupled with material misstatements in financial statements and irregular expenditure of R2.9 million, points to a worrying regression.” The AG highlighted key operational shortcomings, including a lack of coordination between Merseta’s operational and financial units.  This disconnect led to repeated errors in financial reporting and undermined the credibility of its performance information.  “The root cause is the absence of a structured and functional relationship between operations and finance. Without this, we will continue to see a ripple effect of mismanagement and non-compliance,” added Mditshwa. AG senior manager Desmond Phungula provided further details, explaining that the audit identified payments made outside contract periods, exceeded contract values, and unsupported performance achievements in certain programs.  “For Programme 3, we found that one reported achievement was not backed by evidence, and several targets were not met. Additionally, irregular expenditure occurred because payments were made without adhering to proper controls,” Phungula said. The AG also pointed to broader systemic issues affecting Merseta and other Sector Education and Training Authorities.  A lack of an integrated system for data sharing among Setas has led to duplicated learner funding and instances where deceased individuals are still listed as beneficiaries.  “We identified cases where Merseta funded learners multiple times or learners were recorded in multiple Setas. This is a glaring inefficiency,” Mditshwa said. “An integrated system is critical to eliminate these costly errors.” Another concern raised was the significant interest retained by Setas instead of being utilised for their core mandate of skills development.  “We need to revisit the legislation to ensure that funds are not misdirected. Skills development is too critical for South Africa’s future to allow for these inefficiencies,” Mditshwa urged. The AG recommended a series of interventions, including strengthening project management, improving internal controls and ensuring proper accountability through consequence management.  “It is essential that we create a culture of accountability. Action plans must address root causes, not just symptoms, and there must be consequences for those responsible for repeated failures,” Mditshwa emphasised. Phungula also underscored the urgency of timely reporting, noting that late submissions compromised oversight and corrective actions.  “We finalised Merseta’s audit in October, halfway through the next financial year. This delay limits the time available to address identified issues before the next audit cycle,” he said. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://insideeducation.co.za/ag-flags-persistent-governance-issues-at-merseta/

SA Government | 5 December 2024 Boon for small employers as Employment Equity (EE) amendment act comes into operation on 1 January 2025 . The Minister of the Department of Employment and Labour, Ms. Nomakhosazana Meth, is pleased to announce that the Employment Equity Amendment Act, aimed at reducing the regulatory burden for small employers to allow them to focus on job creation, will come into effect on 1 January 2025.  President Cyril Ramaphosa signed the proclamation notice giving effect to the start date of implementation of the Employment Equity (EE) Amendment Act, No. 4 of 2022. In terms of the notice gazetted on 28 November 2024, small businesses that employ less than 50 employees are no longer bound to comply with Chapter III of the Employment Equity Act, 1998 (EEA) for example, in relation to the submission of their EE reports starting from 2025 EE Reporting period. In terms of the 2024 EE report submission, which closes on 15 January 2025, employers must use the current legislation (EEA) to comply with the reporting requirements as per section 21 of the EEA. The latest EE amendments draw their genesis in 2019 when the Department and Commission for Employment Equity (CEE) initiated sector engagements with the intention of the setting of sector EE targets to give workplace transformation impetus.  The main objectives of the Employment Equity Amendment legislation are as follows:  • To reduce the regulatory burden for small employers (employers employing between 1 to 49 employees) – will be excluded from complying with the provisions of Chapter III of the EE Act; • To empower the Minister to regulate the sector specific numerical EE targets; • To promulgate Section 53; and • To strengthen compliance, including the issuing of EE compliance certificates. Minister Meth is positive that the regulatory flexibility will enable small businesses to now focus on growing their businesses and create jobs. “In the next 2025 EE reporting cycle starting on 1 September 2025, employers will have to use the published EE amended legislation to submit their EE reports. We are excited by the latest developments that small businesses will no longer have to go around spending their money on consultancy fees to source legal assistance to develop EE plans and submission of EE Reports. We hope that the new amendments to Employment Equity, will impact positively on job creation and the unemployment rate,” said Minister Meth.  The EE Amendment Bill was assented into law on 6 April 2023 by President Cyril Ramaphosa. The new legislation will allow employers to comply with their own set annual EE targets towards the achievement of the five-year sector EE targets.  Media enquiries:Thobeka Magcai, Ministry Spokesperson. Email: Thobeka.Magcai@Labour.gov.za | Mobile: 072 737 2205 ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.gov.za/news/media-statements/minister-nomakhosazana-meth-announces-employment-equity-amendment-act-will

Staff reporters | 4 December 2024 The WinField United South Africa (WUSA) has been applauded for its efforts to recruit nine deaf learners in a groundbreaking initiative aimed at promoting disability inclusion in the workplace, coinciding with Disability Awareness Month. Disabled People South Africa (DPSA) chairperson, Patrick Mahlakoane, commended WUSA for taking proactive steps to promote disability inclusion, setting a positive example for other organisations to follow. DPSA said the initiative comes at a fitting time, as South Africa closes out Disability Awareness Month, held annually in November, under the theme "Empowering Persons with Disabilities through Inclusive and Accessible Communities." At least nine deaf learners, aged between 20 and 29, have been recruited to participate in a learnership programme at Villa Crop Protection (Villa), a subsidiary of WUSA. The programme, which is accredited by the Wholesale and Retail Operations qualification, will equip the learners with practical skills and knowledge to enhance their employability. The learners, according to Villa, will spend one week of every month studying academic theory and three weeks acquiring on-the-job experience. The practical experience will greatly enhance their chances of finding employment upon completion of the learnership. WUSA plans to provide the learners with extra-curricular training on various projects and sites over the next year. Human resource manager of WUSA, Malanie Brits, said: "The sensitisation sessions were a huge success. They provided a fun and interesting approach to removing any stigmas staff may have had. Attendees became more relaxed around communicating and engaging with the learners, which has benefited the learners as well as the organisation.” WUSA hosted six employee sensitisation sessions to ensure a smooth integration of the deaf learners into the organisation. The sessions were facilitated by Employ and Empower Deaf (eDeaf) with the aim to create awareness about the world of the deaf and deaf culture. WUSA plans to continue its partnership with eDeaf and explore opportunities to repeat the program in the future, fostering a greater sense of integration and diversity in the organisation. Established in 2007, eDeaf is the leading provider of Deaf skills development training in South Africa, which provides recruitment, training, support, and interpreter services. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.iol.co.za/pretoria-news/news/winfield-united-south-africa-recruits-nine-deaf-learners-to-promote-workplace-inclusion-ab4df107-69ef-40cc-8a97-eb2b76baf627

Bongani Mdakane | 3rd December 2024 The Black Business Council (BBC) is demanding harsh sanctions be taken against the six white male former Dimension Data executives for being implicated in black economic empowerment fronting. The BBC also demanded that the former bosses of Dimension Data be declared delinquent directors. They are Jeremy John Ord, Steven Jeffery Nathan, Grant Martin Campbell Bodley, Athanasios Missaikos, Bruce Watson and Jason Mathew Goodall. The men were found guilty by Johannesburg High court judge Denise Fisher of subverting black economic empowerment legislation for their own benefit. B-BBEE transaction This comes after Nippon Telegraph and Telephone Corporation (NTT) Holdings, a Japanese company that owns Dimension Data, won a case against several white executives. NNT blew the lid on one of the country’s most complex fronting schemes. The elaborate scheme was designed for them to benefit from a broad-based black economic empowerment (B-BBEE) transaction. BBC CEO Kganki Matabane said: “In our view, this is a classic case of fronting, a very serious offence. These white males should be convicted of fronting. And  they must face a fine of up to 10% of their annual turnover, or up to 10 years in prison.” The judgment comes after the company owned by a prominent black businesswoman Sonja de Bruyn, was implicated. Her company was unwittingly used by white executives in the Dimension Data BEE fronting. De Bruyn’s name and her company popped up in the court judgment relating to the  fronting scandal. She is the daughter of ANC stalwart and former member of parliament Sophie de Bruyn. De Bruyn is the principal partner of investment firm Identity Partners. She is also a shareholder and director of IFM. Black female company named in court judgment Her company, which is one of the entities that were used in BEE fronting, was named in the court matter by NTT. According to the judgment, both companies were run by “De Bruyn with the assistance of Janice Johnston. The latter handled the direct negotiations and setting up of the private equity vehicles. She did so on behalf of IFM and, to the extent relevant, Identity Partners”. NTT alleged that the six men conspired to unlawfully benefit from the transaction. They conspired to gain surreptitious control over and beneficial ownership of the Dimension Data Campus. The latter which is a flagship Johannesburg property in Bryanston. Ord and Watson were the founders of Dimension Data as a brand. The two, with three of their co-executors in the group are referred to as the protagonists in the judgment. The three co-executors are Goodall, Bodley and Missaikos. Nathan is a close business associate of all five men. He was employed as an independent contractor to provide management and advisory services to the group. Evidence presented to the court shows that the protagonist investors hid their identities from De Bruyn and Johnston. In August 2018, Nathan was roped into the group to identify an opportunity and negotiate a transaction. This was to allow for the improvement of the score of, at least, the South African holdings. And this was under the B-BBEE Act. Nathan paid huge commission for the deal Nathan was ultimately paid a commission of R18-million. He also received an additional commission in the form of the art collection. The art collection was part of the assets sold in the BEE transaction. “It is alleged by the applicants that the acquisition of the campus was achieved through a conspiracy. [The acquisition] employed the mechanisms of en commandite (also known as silent or limited) partnerships. And …it allowed the interests of these ultimate beneficiaries. This in what was intended by the applicants to be an empowerment transaction. It was to be concealed … from the public and the empowerment control structures and auditors. And  also from the applicants and their Japanese Holding structures.” According to the judgment, De Bruyn’s company was invited to the transaction by Nathan. He put together a presentation relating to the part that it could play in a BEE transaction. The said transaction would be involving the acquisition of the campus. “Importantly from Nathan’s perspective, IFM was 100% owned by De Bruyn, a black woman. And it was assisted by Johnston. Nathan met with IFM with the objective of securing its assistance in the context of the BEE project. “Nathan instructed Pearson as financial advisor on the project in no uncertain terms that he ‘wanted to go with’ IFM as the buyer entity. This having set about verifying that IFM would cooperate to achieve the aims of the protagonists. NTT Data brought civil case against the six executives “The next step indicated by IFM was confirmation that they were the selected partner. This on the transaction and agreement regarding broad terms. On 13 June, De Bruyn met with Ord and was directed to Nathan in relation to ‘the consortium’ of investors. Dimension Data, now known as NTT Data, brought the civil case against its former six executives. This was following the sale of Dimension Data headquarters in South Africa, The Campus, in Bryanston. There the property was sold for R1.4-billion. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://sundayworld.co.za/news/bbc-wants-dimension-data-ex-bosses-sanctioned-for-fronting/

Some time ago, the B-BBEE Policy Unit published a FAQ document online which assisted the implementation of B-BBEE Legislation. One of the FAQs included the rules around a Commissioner of Oaths which stated:   Q -  Can a B-BBEE affidavit (Sworn Affidavit) be commissioned by a Commissioner of Oaths connected to the deponent that is an EME or QSE with more than 51% ‘Black’ Ownership? For example, ABC Traders’ Financial Director is a Commissioner of Oaths; can that person commission its Sworn Affidavit?   A -  Commissioner of Oaths must be independent as per the Justices of the Peace and Commissioners of Oath Act. Therefore, ABC Traders may not have its Financial Director commission their Sworn Affidavit   Technical Services  are available to assist Members in further understanding the above.

Some time ago, the B-BBEE Policy Unit published a FAQ document online which assisted the implementation of B-BBEE Legislation. One of the FAQs included the evidence necessary for Absorption which was stated as follows:   Q -   What evidence is necessary for Absorption at a B-BBEE verification?   A -  The following evidence will confirm a claim for Absorption at a B-BBEE verification: A learnership completion certificate or agreement; An affidavit by the learner; An interview; An offer and acceptance of employment; A permanent employment contract or confirmation letter and payslip.   The permanent employment contract needs to meet the definition of “Absorption” under Schedule 1 of the Amended General B-BBEE Codes of Good Practice or relevant B-BBEE Sector Codes of Good Practice.   Human Capital Services  are available to assist members in understanding Absorption requirements.

On 25 November 2024, judgement was handed down regarding a matter involving Dimension Data Facilities (Pty), Dimension Data Investments South Africa (Pty) Ltd, NTT Limited and others. The matter pertained to the element of Ownership and how certain structures circumvent the objectives of Broad-Based Black Economic Empowerment.   A part of the Summary of the High Court Case Judgement  stated the following:   Broad-based Black Economic Empowerment Act 53 of 2003 - Conspiracy by senior executives of a group of companies to use en comandante / Limited Partnerships and Private Equity Fund Management structures to circumvent the objects of the Broad-based Black Economic Empowerment Act 53 of 2003 and the codes of good practice.   Ownership Services  are available to assist members in understanding Ownership requirements as well as Fronting Practices.

Cyril Ramaphosa | 02 December 2024 Cyril Ramaphosa says approximately 3.3 million people in our country live with some form of physical or intellectual impairment. Dear Fellow South African,  Tomorrow, 3 December, marks the International Day of Persons with Disabilities. It is an opportunity to reflect on the progress we have made with respect to advancing the rights of persons with disabilities. It is also an opportunity to consider what we still need to do to implement inclusive policies and to elevate the representation of persons with disabilities in our society. Our Constitution and Bill of Rights enshrines the right to equality for all. It prohibits discrimination on the grounds of disability.  Approximately 3.3 million people in our country live with some form of physical or intellectual impairment. Many of them have to contend with stigma, stereotyping, prejudice and other forms of social exclusion. A lack of proper understanding about disability continues in some communities.  Some people see having a disability as a ‘curse’ or the result of witchcraft. This sometimes has horrific consequences. People with albinism, for example, have been victims of violence and even murder. Persons with disabilities of face an ‘invisible barrier’ in access to public spaces, amenities and facilities. The lack of wheelchair ramps, braille signage, suitable toilet facilities and devices that cater for the hearing impaired pose a challenge for persons with disabilities. Most South Africans rely on public transportation, and this too can be a frustrating experience for disabled persons. Minibus taxis, for example, have limited capacity for accommodating wheelchairs and other mobility aids. As a result of these serious challenges, many in the disabled community find themselves poor, unemployed and excluded. They suffer ill-health and poor quality of life.  Under democracy we have been steadfast in our determination to ensure that persons with disabilities are supported to lead lives of dignity. The Constitution obliges the state to take legislative and other measures to promote the achievement of such equality, and to protect persons disadvantaged by unfair discrimination. We introduced employment equity laws to promote equal opportunity in the workplace. By law, employers have to ensure that at least 2% of their workforce comprises persons with disabilities.  We amended labour legislation to broaden the scope under which persons who sustain a temporary or permanent disability at work can apply for compensation. The Department of Employment and Labour has labour desks to provide specialist employment advice services for persons with disabilities. One of the most far-reaching legislative reforms is the Compensation for Occupational Injuries and Diseases Act. Among other things, this makes mineworkers and former mineworkers eligible for compensation if they sustained permanent disability in the course of their employment.  To ensure that measures to advance the empowerment of disabled persons receive attention at the highest levels of government, a Presidential Working Group on Disability was established in 2016. It brings together government departments and about 45 civil society organisations from the disability sector. It is tasked with guiding the implementation of policy to advance the rights of the disabled. One of the key issues the Working Group has been lobbying for since its inception was the recognition of South Africa Sign Language as an official language. This was achieved in 2022 with a constitutional amendment. Another issue occupying the Working Group is gender-based violence. Women and girls with disabilities are often vulnerable to sexual and other forms of abuse. As part of strengthening the fight against gender-based violence, the previous administration passed a series of laws that, among others, provide for harsher penalties for sex crimes against persons with a mental disability. The Presidential Working Group continues to support government-wide efforts to ensure that programmes to support people with disabilities are adequately resourced and, importantly, that they are informed and guided by representatives of the disability sector.  We have always sought to promote the principle of ‘nothing about us without us’. We continue to make progress in education. The network of special needs public schools across the country has been expanded. the Department of Basic Education continues to take steps to ensure the public school environment is more inclusive. The Working Group has been advocating for Early Childhood Development facilities for children with disabilities to receive equal attention and resources. At this year’s Transport Summit on Universal Mobility, I underscored the  need for public transport to be made more accessible for persons with disabilities.  Cities like Johannesburg and Cape Town offer specialised transportation services for people who have physical disabilities. The rejuvenation of passenger rail will also go a long way, with many of the new urban commuter trains able to accommodate the needs of passengers with disabilities. Though we have made progress with respect to legislative and policy frameworks, realising the rights of the disabled is a society-wide effort.  The civil society organisations doing commendable work in advocating for the rights of persons with disabilities in communities deserve our full endorsement and support. As communities, we must educate ourselves about disability. We must be part of education and awareness-raising to counter myths about disability. Employers must make a greater effort to employ persons with disabilities. According to the Commission on Employment Equity, most employers are below the 2% target, and are only achieving around 1.2%.  Employers are also urged to comply with the Code of Good Practice on the Employment of Persons with Disabilities by taking measures to remove physical barriers preventing disabled persons from working in safety and comfort. Unions need to ensure that persons with disabilities are protected from discrimination and that their rights are upheld. Business is called upon to lend corporate support to endeavours to advance excellence in the disability community. This includes providing more study scholarships to persons with disabilities. A positive example in this regard is the corporate support for our Paralympic Team. These stellar athletes took glory in this year’s Games in Paris – bringing home two gold and four bronze medals at the Games. The success of our Paralympians bears witness to their personal courage, their resilience and their perseverance against considerable odds.  As a country we should be proud of the progress we have made on disability rights, but we need to do more to ensure persons with disabilities enjoy equal rights. As we observe the International Day of Persons with Disabilities, I call on all South Africans to build a country in which everyone is included, represented, accommodated and able to achieve their dreams. With best regards, Cyril Ramaphosa ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.politicsweb.co.za/opinion/we-will-continue-to-work-together-to-improve-the-l

Daan Steenkamp | 2 December 2024 The private sector needs to be unleashed to deal with the country’s many societal challenges. SA stands out among major economies for how few businesses are started and how hard it is to keep a business alive. There is growing optimism that the government of national unity (GNU) will initiate some economic reforms that might address this. But there is a lot of misunderstanding about what the underlying causes of these challenges are and therefore what to prioritise. It is worth looking at the data for guidance.   SA is ranked near the bottom globally in terms of our entrepreneurship rate, according to the Global Entrepreneurship Monitor. The Organisation for Economic Co-operation & Development benchmarks of regulatory best practice puts SA’s regulatory frameworks as one of the least conducive to global competitiveness. By its assessment SA stands out among major developed and emerging markets for regulations that create barriers to market entry, expansion, and the difficulty of obtaining licences and permits. It is not just that our regulations are not aligned with our peers: the stringency of SA regulations has also tightened over the past decade.   Business owners know exactly what the obstacles are that make things difficult for local entrepreneurs and foreign investors. Yet somehow our problems are still not well defined. This means we cannot quantify the relative importance of factors that are throttling private enterprise in SA. We have no statistics on things such as business failure rates, the number of compliance officers at large enterprises, how many documents and emails are required for the average foreign currency transaction, the proportion of government certification institutions that do not respond to client queries, or how much it costs to achieve higher broad-based BEE scores.   This undermines efforts to galvanise public support for reforms. It took 17 years for the government to allow private participation in electricity generation because the causes of Eskom’s problems were poorly understood, and private sector involvement ideologically opposed.  The same is true of SA’s labour market. The country stands out globally for its high rate of unemployment. Apart from apartheid policies, this is a symptom of labour market regulations that increase the cost of employment and incentivise firms to avoid formalisation. Yet there is little political momentum pushing for reforms to address jobless growth.   SA’s underlying problem is government insistence on intervening in many parts of the economy. The government’s share of the economy, measured as tax revenues to GDP, has been higher than in other major Brics economy since 2010 and continues to rise.   Another good example is SA’s trade policy. The country stands out for its high levels of tariff protection, the extent of government support, and our woeful export performance. For example, export volumes have been flat over more than two decades. Import-substituting policies have not only failed to promote competitiveness or raise the sophistication of exports, they have also made it difficult for new firms to compete with well-supported competitors and created a lobby that opposes trade reform.   The government’s poor provision of services also makes it challenging to run a business. About 70% of SA firms had generators in 2020, with as many as 50% of manufacturing firms’ electricity being generated by generator, according to the World Bank. The Reserve Bank estimates that load-shedding reduced economic growth in 2023 by almost two percentage points.   The SA Reserve Bank’s load-shedding growth impact estimates do not incorporate the contributions from other service-delivery-related challenges, such as SA’s failing water infrastructure, declining rail and port capability or crime. Regarding the latter, the World Bank estimates that crime costs SA 10% of GDP annually. That is huge. For 2023, this cost is almost three times the government’s total expenditure on healthcare. It is more than implementing a basic income grant would cost.   Policy uncertainty is another important reason for SA’s anaemic investment and low business start-up rates. Exchange controls and approval requirements for cross-border transfer of intellectual property (IP) make it difficult for start-ups to raise capital from foreign investors and discourage even small cross-border transactions. This limits integration with the global economy and creation of networks to other economies. The SA Startup Act movement argues that uncertainty about the treatment of IP and exchange controls is behind an increase in emigration by SA entrepreneurs.  The Employment Equity Amendment Act of April 2023 implies that entities with more than 50 employees will in future need to meet sectoral ministerial equity targets and require detailed annual reporting. Substantial fines for noncompliance are also being considered. These regulations not only create large compliance costs but incentivise firms to stay small. Discouraging growth weighs on productivity and efficiency by reducing economies of scale and inhibiting job creation. Small and medium-sized businesses account for more than two thirds of employment, so the growth of small business is crucial to raising welfare and dealing with SA’s socioeconomic challenges. The National Development Plan recognises this but has been short on tangible reforms to cut red tape.   Operation Vulindlela is a praiseworthy initiative between the presidency and National Treasury that is seeking to improve regulatory efficiency and reduce compliance costs. Its focus is on addressing electricity supply constraints, fixing water and rail infrastructure improvements, improving our visa system and accelerating licence processing. There are signs of progress in many of these areas. But this is still focused on treating the symptoms of SA’s antigrowth disease. A more ambitious set of structural reforms is needed to align SA with global regulatory best practice.    The lifting of restrictions on private sector participation in electricity production has been tremendously successful in helping to resolve our electricity crisis. It is time that the GNU unleashes the private sector to deal with other societal challenges. At the same time, it is time to leash the parts of government and state-owned enterprises that are making things actively worse. Nonperforming state institutions need to be restructured and wages tied to productivity. Last year’s Harvard Growth Lab report argued that a shift to merit-based employment in the public sector and relaxation of preferential procurement rules, were key to removing barriers to growth. Something else that is well overdue is a comprehensive set of regulatory impact assessments across the areas where SA ranks poorly globally. Policy decisions and prioritisation of structural reform plans must be empirically based.   The underlying reason for SA’s poor growth and high unemployment is interventionism. Many businesses that are recipients of state largesse are complicit in perpetuating this. The government needs to shift to evidence-based regulations and commit to getting the basics right.   ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.businesslive.co.za/bd/opinion/2024-12-02-daan-steenkamp-the-many-and-varied-impediments-to-starting-a-business-in-sa/

Staff Writer | 2 December 2024 The date has been set for when the amendments to the Employment Equity Act (EEA) become effective, which have significant implications for larger employers or those who seek to do business with the State. President Cyril Ramaphosa proclaimed the effective date of amendments as 1 January 2025. Melissa Cogger, a Partner at Bowmans, explained that once sectoral targets are finalised, designated employers must review their employment equity plans to ensure their goals align with these targets or provide A reasonable justification if they do not. “The most controversial of all the amendments by far, is the introduction of sectoral targets, and it remains to be seen what the final version of the sectoral targets will look like,” said Cogger. The Department of Employment and Labour (DoEL) released draft regulations for public comment on sector identification and sectoral targets for designated groups on 12 May 2023 and again on 1 February 2024. Cogger said that it is unclear whether the February 2024 draft will be finalized or if another version will be issued for further comment. However, once the changes to the law come into effect, the Minister will have the authority to identify different sectors by publishing them in the official government notice. The Minister will then consult with those sectors, issue a draft version of the sector targets for public comment, and after considering feedback, publish the final rules. The DoEL said that there will be a transitional period that will apply in relation to the sectoral targets. Notable amendments Cogger said that the most notable amendments include (among others) : The deletion of part of the definition of a ‘designated employer’ This will mean that, with effect from 1 January 2025 an employer will only be considered a designated employer for purposes of the affirmative action provisions of the EEA if it employs 50 or more employees. There will no longer be any consideration given to an employer’s total annual turnover. The amendment to the definition of ‘disabilities’ The amended is broader than the previous definition. It will include people with intellectual or sensory impairments which may substantially limit their entry into or advancement in employment. An amendment to psychological testing To address the capacity constraints of the Health Professions Council, their previous role in certifying psychological assessments will fall away. Clarification on the consultation obligations with representative trade unions  A designated employer is only required to consult with the representative trade union and not the members of the representative trade union individually. The ability of the Minister to identify national economic sectors and set numerical targets for any such sectors The numerical goals set by designated employers in their employment equity plans must comply with the sectoral targets set by the Minister. In determining whether a designated employer is implementing its employment equity plan in compliance with the EEA, the Director-General or any other person applying the EEA will take into account whether the designated employer has complied with a sectoral target. Submission of the annual employment equity report  Previously, the law set a strict deadline of 1 October for submitting the employment equity report, and employers also had to notify the Director-General by August if they were unable to meet the deadline. This caused practical issues for employers who found it difficult to comply with this timing. The amendments now remove the fixed 1 October deadline. Instead, the report will be submitted according to new guidelines that will be established later (referred to as “in such manner as may be prescribed”). This gives more flexibility to employers. Additionally, if an employer cannot meet the new submission deadlines, they will be allowed to notify the Director-General and explain why they could not submit the report on time. Income differentials statement will no longer be submitted to the Employment Conditions Commission   Instead, the income differentials statement will be submitted to the National Minimum Wage Commission. Labour inspector’s powers are broadened The amendment includes the power to request and obtain a written undertaking to comply with obligations including the failure to prepare an employment equity plan (which was not previously included) ,  and to ‘serve’ compliance orders rather than to ‘issue’ such orders. Introduction of criteria to be met by an employer in order for a certificate of compliance to be issued by the DoEL . This applies to all employers—whether designated or not—who wish to supply goods, services, or lease items to government bodies. To obtain the certificate, the Minister must be satisfied that: The employer has met sectoral numerical targets or provided a reasonable explanation for not doing so. The employer has submitted its annual employment equity report. There have been no findings of unfair discrimination against the employer by the Commission for Conciliation, Mediation, and Arbitration (CCMA) or a court in the past 12 months. The CCMA has not issued an award against the employer for failing to pay the national minimum wage in the past year. Going forward Cogger said that employers would be premature in amending their employment equity plans at this stage. “Only once the final sectoral targets are published should designated employers consult with their employees (or representative trade unions), conduct an analysis of the workforce and prepare either a new or amended employment equity plan in line with the sectoral targets,” said Cogger. “Once this is done, designated employers can report on their plans,” she added. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://businesstech.co.za/news/business/802157/big-changes-for-businesses-in-2025-what-you-need-to-know/