Author Archives: demi

How to stand out in South Africa’s competitive job market

The B-BBEE Codes need to change to protect and enable SME growth

Three million people lost their jobs in South Africa between February and April as a result of the Covid-19 pandemic 1 and recent forecasting predicts that by December, 35% 2 of South African’s will be unemployed and more than 70% of our youth will be unable to find jobs.

Entering this highly competitive job market is daunting. So, what can South African’s do – especially our youth – to make themselves more attractive to perspective employers?

According to Rajan Naidoo, Director of EduPower Skills Academy, job seekers need to ensure they have all the skills companies are looking for to stand out: “Employers want the total package; education, experience and skills – including soft skills,” he says. “Soft skills are practical, interpersonal skills such as time management and communication. Unfortunately, these are not part of the school curriculum, but it is possible for job seekers to develop these skills and enhance their employability.”

He offers his top five tips for improving your work readiness and employability:

 

1. Manage your time

Time management is a basic and valued skill that you can work on by simply establishing a routine and sticking to it. When you don’t have school or work, make sure you are up by 7am. Before you start your day, sit, think and plan a list of activities. Challenge yourself by setting deadlines and track your progress in a diary. Though it may be difficult at first, you are establishing a pattern and it will help you to use your time more effectively.

 

2. Communication Skills

Communication skills are fundamental to most jobs. Text messaging is great for connecting with friends but you need to practice your phone and video conferencing skills, as both are important for business communications. Speaking and listening on the phone are skills that you can practice but think about what you want to say and communicate clearly. Do the same with video conferencing practicing your conference and interviewing skills using platforms such as Microsoft Teams, Skype and Zoom.

 

3. Body Language

Body language is as important as the words you speak. In fact, studies show that 65% of all communication is non-verbal. Again, practice this whenever you can and whether you are speaking to a group or one-on-one, maintain eye contact and watch for visual cues that your listener understands. Be aware that your body is sending signals too. At EduPower, we encourage our learners to sit up straight and widen their shoulders, even when they are on the phone. These simple actions improve your ability to communicate and boosts your confidence.

Sources; Source:
1. https://www.news24.com/fin24/economy/covid-19-cuts-sa-employment-figures-by-three-million-women-worst-affected-study-20200715
2. https://www.ceicdata.com/en/indicator/south-africa/forecast-unemployment-rate

 

4. Problem Solving

Everyone can solve problems. You just need practice. Focus on solutions as this will shift your brain into a positive space. To build this skill with our learners, we ask them to define a problem – such as I am always late – and ask them “why” five times. By giving a different answer each time, they eventually get to the root cause. Or you can list as many solutions as possible. While some answers may be ridiculous, crazy ideas trigger viable solutions. Keep practicing and you will start moving into solutions mode more quickly.

 

5. Gain Experience

Work experience is generally a prerequisite for most jobs. If you are not currently working, consider part-time work, work experience placements, learnerships or internships. For instance, EduPower’s 12-month learnerships provide accredited skills training combined with work experience – invaluable for securing future employment. Another suggestion is to volunteer for community service. This will strengthen your skills and make you more marketable as it shows your character
and integrity.

“By developing soft skills and gaining experience you are adding to your employability and work readiness. How you use these assets and present them to perspective employers could make all the difference to landing your dream job,” Rajan concludes.

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South Africa is in trouble – here’s how we can fix it

The B-BBEE Codes need to change to protect and enable SME growth

South Africa is in trouble. Before Covid-19, the economy was already teetering at the edge of a fiscal cliff with two consecutive quarters of negative GDP growth and the expanded unemployment rate at a frightening 42%. Then Covid turned South Africa and the world on its head, fast-tracking an unprecedented global slow-down that infiltrated every crevice of economic activity.

The harsh reality is that South Africa was dealt a severe blow – and it’s going to take years to restore our struggling economy and reduce our national debt burden.

But Rajan Naidoo, the Managing Director of EduPower Skills Academy, believes there is hope. He says the tenets of B-BBEE are a catalyst that can be used to guide and co-ordinate South Africa’s economic recovery.

“Government cannot legislate our economy out of the recession but through B-BBEE it can create conditions that allow for growth to occur in the private sector,” Rajan explains. “The solution lies with the large corporates that have within their power and resources huge reserves in their balance sheets, some of which now needs to be invested in stimulating small businesses and essential job creation.”

Much of this SME development is already being facilitated by B-BBEE through mechanisms such as Preferential Procurement, but Rajan says that efforts need to be multiplied exponentially:

 

“Prior to Covid, SMEs accounted for 98% of the businesses in South Africa providing 25% of all jobs and contributing 39% of the national GDP. But 40% of these businesses have been forced to close their doors and many people have lost their jobs as a result,” he says.

 

“Boosting SMEs is a crucial step towards growing the South African economy. Corporate human solidarity should instinctively and voluntarily drive the private sector to support smaller businesses, assisting the nation to rise out of this economic quagmire and in doing so, strengthen our market and economy.”

The natural starting point for this recovery begins with another B-BBEE priority element, Skills Development. South Africa’s extended youth unemployment rate is over 65% but most of these 18 to 34 year olds have stopped looking for jobs as they don’t have skills the market requires. Rajan’s believes the solution for upskilling the youth is learnerships.

“Job creation starts with skills development so let’s get as many unemployed youth into learnerships as soon as possible so that we can start building the skills our country needs,” Rajan explains. “These learnerships can culminate in options for absorption into long term employment. This is something that we are already doing at EduPower and we have a proven model that works. As a nation, we just need to start applying this on a much wider basis.”

EduPower’s innovative absorption model ensures that when unemployed learners complete their qualification, they are placed into permanent jobs in small companies. Instead of adding this salary burden for the SME though, these jobs are funded in the short-term by large companies through their enterprise or supplier development budgets.

“This is a great example of a co-ordinated process that culminates in permanent empowerment and thus delivers on the true intent of B-BBEE,” says Rajan. “The learners receive long term employment (and experience); the SME owner gains a skilled labour force that helps his business grow so that he can hire even more unemployed learners; and the corporates gain invaluable points for their B-BBEE scorecard.”

Rolling this out exponentially on a nationwide basis would be straightforward as the mechanisms are already in place. Rajan believes the economy could benefit even more if industry specific strategies were applied as the impact of Covid has been different across market sectors.

Rajan concludes with a call to action:

“The stimulation of the private sector and the declaration of certain supply chains as national strategic imperatives will force and support development of the sectors of the economy that will provide jobs and growth. This development needs to happen immediately, and it starts with skills development and absorption. Let’s use B-BBEE to get our nation and our economy working.”

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Changes to the B-BBEE landscape in 2021

The B-BBEE Codes need to change to protect and enable SME growth

The lifeblood of our economy, South Africa’s Small and Medium sized enterprises (SMEs) are in trouble. Already suffering in a contracting economy, the ongoing shocks from Covid-19 has analysts predicting that 60% of SMEs will close before the crisis is over. Vital for job creation and growth, protecting SMEs during this period of economic turbulence is critical, but how do we do it?

Rajan Naidoo, Managing Director or EduPower Skills Academy believes that B-BBEE is the ideal vehicle to address South Africa’s Covid-19 related economic challenges.

“B-BBEE is a powerful and important mechanism for empowerment, transformation and change and the ideal mechanism to help SMEs. Changes to the B-BBEE Codes will help resuscitate SMEs in the industries that have been severely punished by Covid-19 and ensure the sustainability of this critical sector,” he explains.

A vital engine in driving growth and creating employment, SMEs account for 98% of the total number of businesses in South Africa, employ 25% of the private sector workforce and contribute 39% to the national GDP. Reports however show that 40% of South Africa’s small businesses have already closed, contributing to the three million job losses recorded since March 2020.

 

“Covid-19 has caused huge job losses in an already job-deficient economy. Most of these have been through the collapse of small businesses or the scaling back of larger companies,” says Rajan.

 

This shedding of jobs by South Africa’s corporates is an indication of the impact Covid-19 has had on larger businesses. Due to their resources and reserves, most of these companies have weathered the storm with minimal damage. To preserve their established ecosystems, Rajan says these companies need to help the smaller businesses in their supply chains.

“Experts are predicting that over the next 12 months, B-BBEE will focus on strengthening the codes that request large corporates to “protect” the SMEs in their supply chains,” Rajan explains.

This protection may include early invoice payment, training, upskilling, consulting, loans or loan guarantee, wage or overhead support, assisting SMEs with cash flow. “Much of this protection is already in place but to provide the stimulation that SMEs need, we are expecting that the weighting of points under Preferential Procurement and Skills Development will change to further incentivise larger corporates to action,” Rajan explains.

But what about those SME’s that are not part of a larger company supply chain? Rajan is confident that B-BBEE will also support these companies with the main focus being on training and consulting. “These interventions will help small business owners assess their sustainability options, leading to more prudent business decisions,” he says.

Rajan believes that B-BBEE’s role in the development of SMEs will also help establish an environment that’s conducive for the local provision of medical supplies.

“One of our lessons from Covid-19 is that we were overly reliant on external supply chains for the provision of medical supplies including PPE, medication, ventilators and vaccines. We have the intellectual and skills capacity to develop our own, but we haven’t had the economic and government support for this to flourish,” Rajan explains.

“Government support is key to galvanising SMEs to develop in this sector. B-BBEE can and should therefore be used as a mechanism to create an environment that’s conducive for the local manufacture and supply of these items,” he adds.

While the creation of this sector will take time, it is critical that Government move quickly to help SMEs and Rajan expects that an announcement is imminent. He says the major focus of the code changes in the next few months will relate to job creation, skills development and SME support with more weight being added to these priority elements.

Rajan concludes:

“When the pandemic will peak in South Africa is still uncertain. It is therefore imperative that efforts to protect SMEs through changes to the B-BBEE Codes move with speed and decisiveness, not only to cushion the worst of the impacts of the crisis on livelihoods but to ensure a swifter recovery for the broader economy.”

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B-BBEE must be used to unlock job creation

Human solidarity is critical for South Africa’s economic recovery

As the second wave of Covid-19 scours South Africa, it is more evident than ever that even the most astute financial modelling will not be able to predict the long-term economic and social effects of the pandemic. The pandemic and the extended lockdown have resulted in massive disruption with devasting numbers of small businesses shutting shop, pushing hundreds of thousands of workers into unemployment while millions more may be working, but for fewer hours and lower wages.

Rajan Naidoo, the Managing Director of EduPower Skills Academy says the economic outlook for South Africa has never been worse. “The pandemic has caused huge income loss for previously stable income earners. Without a doubt, the resultant poverty and misery will extend to the broader social context over coming months and if it continues unchecked, this could threaten our nation’s democratic and economic stability,” he cautions.

There is however a mechanism that can be used to quell this coming storm. Rajan says that alongside other enabling legislation, the B-BBEE Codes of Good Practice are a key mechanism that can and should be used to guide and co-ordinate South Africa’s economic recovery.

“B-BBEE has always been about empowerment and therefore hope. In the current economic environment though, it can be so much more,” Rajan explains. “It is a legislative mechanism for the expression of human solidarity that is not a hand-out or charity, but rather an act of broader self-preservation.”

Rajan is referring to the fact that B-BBEE is often a tick-box expense for large corporates that want to ensure their compliance in order to secure public contracts. He is however encouraging business to look beyond this and see B-BBEE is an enabler that is heavily focused on job creation through skills development, job opportunities and small business development and support. Rajan says, “These mechanisms were very important in a pre-Covid world but as the pandemic rages on and our unemployment rates reach critical levels, these B-BBEE drivers are now essential to our economic recovery.”

B-BBEE is intended to stimulate economic transformation and the process of participation of previously disadvantaged groups in the economy, creating value for companies whilst driving job creation. Of the five priority elements of the B-BBEE scorecard, skills development is one of the most important as it provides life-changing training for employed and unemployed individuals.

Rajan points out that the economy is dependent on the variety and type of skills that individuals can offer and skills development facilitates this. He believes that an investment in skills development is therefore not only an opportunity to improve business performance, it will develop the skills needed right now to stimulate economic recovery.

“If South Africa’s businesses invest in skills development as well as the other priority elements on the B-BBEE scorecard, we will see the establishment of more black-owned businesses and an increase in disability inclusion and overall employment. Yes, this is asking a lot in the current economic climate but by acting through human solidarity now, large corporates will be able to protect their long-term interest in a sustainable, stable democracy and economy,” Rajan explains.

This human solidarity is currently evident throughout the world and Rajan believes one of the best examples can be found in India:

“Despite its own massive disease burden, India is willing to supply South Africa with vaccines. It’s this type of solidarity that is needed of all humanity, especially corporates from an economic perspective.”

Rajan concludes by saying that if Covid has taught us anything, it is that South Africa cannot afford to focus on narrow self-interest or isolate itself from the rest of the world; we cannot turn a blind eye to the misery being inflicted by the pandemic both here and on a global scale. Instead, the virus should be viewed as an opportunity to show our humanity and solidarity for the benefit of all.

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Raising B-BBEE to a higher standard

B-BBEE and the development of sustainable employment creation

The Covid-19 Lockdown has exacerbated South Africa’s unprecedented unemployment crisis and its resultant impact on inequality and poverty will impede efforts to rebuild the nation’s economy. The significance of Broad Based Black Economic Empowerment (B-BBEE) as an employment creation facilitator has therefore never been more important.

This is the opinion of Rajan Naidoo, Managing Director at Edupower Skills Development Academy.

Rajan believes unemployment, inequality and poverty are a legacy of the economic polarisation brought about by colonialism and apartheid. B-BBEE is one of the mechanisms chosen by government to address this – but corporates “ticking the box compliance” – needs to be replaced by true transformation for B-BBEE to achieve its full potential.

“Transformation is no longer a luxury but an absolute non-negotiable. B-BBEE is a vehicle for transformation but not through redistribution as many believe, through empowerment,” Rajan explains. “Empowerment is the expansion of national wealth using pools of existing resources as a catalyst. When this is achieved through B-BBEE, empowerment benefits both the beneficiary and the benefactor.”

Rajan says that while B-BBEE is not perfect, this win-win will only be realised when all South Africans are committed to maximising the opportunities afforded by B-BBEE. These are his five reasons why B-BBEE should be a priority for businesses and civil society:

Using Skills Development to build a corporate legacy

The Skills Development element within B-BBEE has a strong learnership component for the unemployed. Learnerships are a limited duration contract of employment for a year or longer during which the learner earns and income, obtains a formal qualification and gains valuable work experience.

Learnerships are a great way to provide inexperienced, unemployed individuals access to the job market and upon completion, the learner is three times more employable.

Companies sponsoring learnerships are incentivised through valuable points to absorb their learners into permanent employment upon completion. Skills Development on the B-BBEE scorecard is therefore as much about educational development as job creation – which is the end game.

Skills Development as a catalyst for Entrepreneurship and Enterprise Development

Developing small business and entrepreneurship is the most important mechanism for creating the millions of jobs required. Business simply cannot grow fast enough to create these.

B-BBEE Enterprise Development is a brilliant support mechanism for talented entrepreneurs to start new businesses and through their innovation and technological advancement, create jobs for others. In fact, corporate support for small business through Enterprise Development is a form of corporate Ubuntu.

And B-BBEE takes this a step further. It encourages the migration of these small businesses to become suppliers to the very corporates that supported their development. These emerging enterprises in the supply chain of large corporates are recognised in the form of B-BBEE Supplier Development support. And as these small companies grow, they create even more employment.

Real socio-economic value from corporate citizens

Socio-Economic Development is another element of the B-BBEE scorecard that provides a mechanism to create employment. Indeed, socio economic development that focuses on job creation rather than charity builds sustainability, dignity and self-sufficiency, though charity remains an important tool in addressing South Africa’s social challenges.

B-BBEE Procurement

The broader Procurement Element of the B-BBEE scorecard also provides for corporates to support small business through the procurement of products or services.

This element encourages our society’s vulnerable groups such as people with disabilities, our youth and women. Through economic development they are empowered to contribute to building a stronger, more equitable society where more people have a sense of dignity and self-sufficiency.

B-BBEE builds Brands

Today, many corporates have expanded their definition of a return on investment beyond the narrow dividend return based on investors capital. Companies also focus on building value through social capital, through the goodwill they attract by applying the various elements and mechanisms of the B-BBEE transformational agenda. In this way, corporate altruism delivers long term interest for the future through brand recognition and loyalty.

“B-BBEE, in all its detail, should be embraced as a powerful transformative mechanism giving corporates the opportunity to be on the right side of history when being judged for their contribution toward building an empowered society with multiple equal voices all enjoying their place in the sun,” Rajan concludes.

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Are B-BBEE consultants leaders or followers?

B-BBEE Consulting and its role in Transformation and Empowerment

B-BBEE consulting is becoming a profession sometimes practiced on its own or as an item in a broader consulting service. Either way since the B-BBEE legislation amendment of 2013 became more technically complex it required some level of expertise which was initially not present within most businesses.

Are B-BBEE Consultants Empowered to carry out their Transformation Responsibility?

Business has invested in B-BBEE expertise internally especially in very large corporates. However, many businesses still utilise the services of external consultants to advise them on the legislative compliance. 

While B-BBEE verification is regulated and controlled B-BBEE consulting is not. This is a current weakness in the evolution of the B-BBEE consulting profession. The prevailing widespread corporate practice demands technical compliance advice from B-BBEE consultants but control the agenda to suit its own cultural and business agenda. 

This manner of consulting does not suit empowerment and transformation forcing the deepening of the provisions of the legislation which is a desperate act that further polarises our nation and entrenches our historic divisions.

B-BBEE Consulting: A Vanguard Against Unsavoury or Illegal Practices

B-BBEE compliance is voluntary but for many businesses it is a non-negotiable requirement for doing business with other companies or government and sometimes it brings out the worst practices where compliance through any means is undertaken. 

The B-BBEE “Management Control” element now requires the management levels of a business to reflect the population demographic i.e. African, Indian and Coloured demographically aligned ratios are part of the scorecard requirement. Many companies struggle with this requirement and fall back on tired worn out excuses relating to skills and experience or alternatively devise illegal or unsavoury plans to become compliant. 

Sometimes a company may place a willing but vulnerable black person in a management post without the commensurate remuneration or authority for that post and compounds this injustice by creating a fictitious paper trail to meet B-BBEE verification scrutiny. This is obviously against the letter and spirit of the legislation and is punishable. 

However, some companies use B-BBEE as a reason to restructure their business and organisational design to avoid making the necessary black appointments into management positions but nevertheless demonstrate B-BBEE verification compliance. 

This is a perfectly legitimate practice but is this not undermining the spirit of transformation and empowerment? I do not believe that companies must create superfluous management posts with black incumbents, to meet B-BBEE management compliance but when natural attrition processes occur, creating vacancies, this presents great opportunities to make merit worthy appointments of black people through fair, transparent and just processes. 

The B-BBEE consulting profession needs a collective base and charter from which its members find their voice through standardised practises. This voice unifies and galvanises the practitioners to stand firm when corporate practice may choose to defy them and undermine their legitimacy by pitting one against the other. 

Standardisation also allows for the development of a common agenda through which the spirit of the legislation being empowerment and transformation is held as its highest goal, and technical compliance advice services this single goal. 

In the “Management Control” element of the B-BBEE scorecard many companies perform poorly with little or no improvement in successive years despite having a natural turnover of management staff. A B-BBEE consultant witnessing this long-term trend must be emboldened and supported by their professional body to question the recruitment practices and advise human resources on a long-term plan to rectify this trend.

Certification to Practice as a B-BBEE Practitioner

Members of the self-regulating B-BBEE professional consulting body must be required to be trained and certified on both technical and aesthetic value of the legislation and their membership must be dependent on them upholding this training and certification failing which should result in their exclusion. 

Business must be required to have a certified consultant as its advisor be it internal or external. This B-BBEE consultant must be directly involved in drafting B-BBEE transformation policy within business. The B-BBEE consultant must have a voice at the highest level of decision making in benefactor businesses. The B-BBEE consulting body can also make recommendations around consulting pricing for the varying services.

B-BBEE Professional Consultants Body and their Partners

Technical advice on B-BBEE cannot be the summum bonum of B-BBEE consultants’ role and responsibility. The B-BBEE consultant role is to also ensure the advice they are providing has the best chance of a transformation and empowerment outcome. 

The B-BBEE consultant is like a conductor in an orchestra with multiple contributions toward a harmonious symphony.

The orchestra is composed of big benefactor business, NGO’s, Training providers, woman/youth/people with disability in business, workers, unemployed people, small beneficiary businesses, business consultants, B-BBEE verifiers and government. 

The B-BBEE professional body can vet some members of the orchestra according to their accreditations, values and principles and create panels of delivery partners which they can confidently recommend to their corporate benefactor clients. 

The vetting of these partners must be rigorous, transparent, and fair. The values of the partners must also be enhanced by relevant and innovative transformational products and services with verifiable outcomes. 

A typical scenario is skills development which we intuitively know is a major catalyst for employability and economic development and if done right it holds the key to alleviating many of the socio-economic ills that plagues our society. 

We know that many corporate benefactors use B-BBEE Skills Development to expand employability among the vulnerable groups, particularly youth, woman, and people with disability. Therefore if a corporate benefactor wants to contribute to employability of unemployed people through learnerships they could get a recommendation from their B-BBEE consultant for a vetted skills development partner from their professional body panel which is not only accredited to conduct learnership training but add real value to employability by offering a workplace experience that improves the learners employment chances at least threefold.

B-BBEE Project Tracking and Research

Many B-BBEE projects continue well after the corporate benefactor has undergone verification and awarded a B-BBEE status level. The empowerment and transformational value of the project may only be known closer to its conclusion which is often beyond the scope of narrow compliance. 

The B-BBEE consultant and their professional body could take on the role of tracking projects and recording its outcomes and perhaps partnering with research institutions such as Universities to produce research based on these records.

This will make the professional body a powerful lobby and interest group in terms of influencing the direction of the B-BBEE legislation. 

A scenario where a corporate benefactor wishes to undertake development of small black business through the Enterprise Development or Supplier Development mechanism of the scorecard must be careful to ensure their intervention has lasting positive impact. 

The solution devised has to be thorough and comprehensive and over a duration of at least 24 months. The Enterprise Development solution must incorporate three success components of Capital support, Skills transfer, and long-term mentoring. 

History informs us that fledgling business fail despite securing the precious capital support because of imprudent business decisions or inexperience. A great way to conduct Enterprise Development is through the partner recommendations from the B-BBEE consultant professional body. Partners could assist the corporate benefactor to ensure all three success components are in place and the B-BBEE consultant can track the progress for at least 12 to 18 months to assess its impact.

B-BBEE Consultants Advocacy and Promotion

Ignorance of the content and intent of the B-BBEE legislation often causes more resistance so knowledge can go some way in gaining support and dispelling untruths and fear pedalled by narrow self-interest. 

Promotion and advocacy need to be undertaken in the form of open communication with the public and specific interest groups to make B-BBEE legislative content more accessible and understandable.

Promotion and advocacy need to be undertaken in the form of open communication with the public and specific interest groups to make B-BBEE legislative content more accessible and understandable. B-BBEE verification is an important measure of compliance to the letter of the law but it leaves gaps in terms of recording the true value of the spirit of transformation fostered by the legislation. 

B-BBEE consultants can close those gaps in their project tracking and they could celebrate, promote, and showcase those projects and corporates that best exemplify the transformation and empowerment ideals and perhaps highlight the shortcoming as well. Corporates can sponsor this advocacy and promotion.

The Future of B-BBEE

In any democracy legislation that is race biased is not ideal, but our history requires a balancing mechanism which should have occurred naturally but unfortunately it required change through legislation. 

B-BBEE in its present form is untenable if it continues without a sunset in sight. The sunset is dependent on the rate of transformation and empowerment of black people. Provisions of the legislation could slowly become irrelevant in a more just and equitable society or conversely it can become more pervasive in a desperate attempt to legislatively reinforce change. 

Even if B-BBEE legislation is no longer required in the present form the role of B-BBEE consultants could morph into a more general empowerment of vulnerable groups as society will always needs its champions. 

 

It is therefore in all our interest to ensure that the spirit of the B-BBEE legislation is as important as its words when we undertake implementation and for this we need the B-BBEE consultant profession to take on a more central role.

 

Authored by Sivarajan Naidoo

Sivarajan is Managing Director of Edupower Skills development academy, a level 2 BEE contributor. Edupower’s aim is to address the socio-economic issues of young South Africans by providing fully hosted learnerships and innovative solutions to absorption, enterprise & supplier development. Edupower is trusted by companies such as Unilever and Safair to address their corporate legacy in South Africa.

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B-BBEE through the backdoor, is this the end of transformation ‘work-arounds’

The changing face of B-BBEE practices

Black Economic Empowerment legislation has been with us since 2003 but initially it was narrow in its transformation focus with a few black people, particularly the politically connected, taking advantage and becoming very wealthy, but the majority of black people did not benefit at all.

Is Broad- Based Black Economic Empowerment effective in its transformation agenda?

There was always a focus of trying to include ownership in business by black people as a method of empowerment. Unfortunately, fronting became a pernicious practice, as many historically privileged business elites tried to circumvent the legislation by trying to place figure heads into “fake” positions as window dressing, but this was neither empowerment nor transformation.

This failure to embrace true empowerment and transformation was because many with historic privilege were not willing to admit or acknowledge this fact and felt victimised by the legislation and they had willing co-conspirators in desperate black people looking for their place in the sun.

Did Black Business ownership improve as a result of Broad-Based Black Economic Empowerment (B-BBEE)?

The BEE legislation was then amended in 2013 to include a broader base to try and positively impact a larger number of people disadvantaged by our history and there were also attempts at addressing fronting through punitive measures. 

Arguably this change, though more onerous, on corporates is more beneficial to a broader base. Fronting is now less pervasive, but it is indeed an indictment on our society that it took legislative amendments and punitive measures rather voluntary social change to achieve this result. However, we remain hopeful because the abolition of slavery, colonialism and apartheid was a long and difficult struggle for human rights and dignity before its perpetrators either found their moral compass or were forced by those who had. 

More black people own or are in legitimate ownership of business and B-BBEE had a role in this growth. However, when one considers our population demographic and the prevailing structure of our economy there is a lot more work that needs to be done to level the playing field.

B-BBEE and Black Management in Corporate South Africa

B-BBEE included empowerment of black people across management positions in large corporates. This implies that corporates must not only have black ownership but black representation across all levels in management. 

The amendment on management went further in that it specified demographically aligned ratios of African, Indian and Coloured people as well as people with disabilities and woman. However, many businesses are finding it difficult to meet the demographic management ratios often falling back on tired worn out excuses of lack of skills or experience.

 The actual problem is recruitment practices within corporates as a function of total corporate culture. While many large corporates have consciously embraced a deracialised culture where through natural processes, demographically based racial realignment in business management will occur organically, others have not. 

A practice in some businesses is to appoint people into key positions from within a private network or closed circle and if this network or circle is monochromatic or lacks diversity we tend to perpetuate the imbalances of our past by repeating its mistakes. The implication being that if the corporate culture allows for natural processes to occur unimpeded by personal biased agendas, racial demographic alignment at all levels in the organogram will occur more naturally and there will not have to be contrived efforts to force transformation. 

Ironically, many B-BBEE detractors argue for merit-based appointments but in their minds, this means people from a specific racial background, which is the antitheses of merit.

Demographic ratios can be organically and naturally achieved when pure merit is applied without contrivance or bias.

The longer B-BBEE detractors hold onto bias in their appointments the more the need for contrived demographic ratios to force redress. More often than not the bias is unconscious or subtle, but pervasive, nonetheless. Corporate, strategy and policy without cultural reinforcement is empty. Broadly across business, social and corporate culture, need conscious re-alignment. 

How does B-BBEE Skills Development aid in Transformation?

The B-BBEE legislation focuses heavily of Skills development as being an agent of transformation and empowerment. Intuitively everyone would agree with this notion as human development and civilisation has benefited by standing on the shoulders of giants of collective knowledge and wisdom from our past.  

However, the implementation of Skills development is extremely important in reconciling with the B-BBEE Skills Development legislative intent and our collective intuition.

B-BBEE addresses funding of post school education which include all levels of education on the National Qualification Framework. This is encouraging because it is broadly focussed.  

However, I do believe that the funding must be more conditional so that it addresses critically needed skills in our economy so that we do not output more unemployed graduates with qualifications that are irrelevant to our prevailing job market. There needs to be more advocacy and promotion around demand in the job market and the skills required. 

Government, institutions of higher learning and organised business and labour should be at the vanguard of this communication and provision of career information. We also need social dialogue to realign societies notion of prestige when it comes to choosing the pathways of higher learning. 

Society in South Africa have come to view a University qualification as being of greater prestige as compared to TVET colleges, yet the latter may be more in demand by the job market. TVET and similar institutions should not be the institution of last resort, chosen only if University access is not possible.

People with relevant qualification and skills in a developing and growing economy are harder to marginalise or exclude and in fact aid in the very same growth and development of the economy and by extension transformation and empowerment.

IS B-BBEE Skills Development promoting Employability and Employment?

Many young people having completed grade 12 choose not to enter higher education but rather attempt to enter the job market. Unfortunately, basic education does little to prepare young people to access job opportunities that may be available.

Learnership for the unemployed and vulnerable groups such a people with disabilities, youth and women are a brilliant way of bridging the gap between basic education and the job market and this is a strong focus of B-BBEE. 

Ironically, many graduates from Universities and other institutions of higher learning also find learnerships a very useful way to obtain job experience and skills to access the job market. Learnerships have occupied a huge part of the B-BBEE skills development strategy and offer learners a wide-ranging list of choices and opportunities, and well run learnerships improve employability threefold. 

At least 70% of a learnership is about valuable job experience which convert education into skills provided the learner is exposed to proper work experience opportunities during the learnership. In some instances, some B-BBEE corporate benefactors will provide the work experience for unemployed learners or outsource it to a skills development partner. 

Both options can be extremely valid forms of work experience. However, B-BBEE benefactors that choose to outsource the work experience opportunity must ensure that their funding is having the desired job experience impact on the learner by ensuring their choice of skills development partners is employability and employment oriented. 

Some poorly run learnerships with low quality, irrelevant or worst of all, non-existent work experience is conducted for the sake of compliance as opposed to employability, which is fundamental. Potential employers offering job opportunities focus hugely on work experience, references and work history during their recruitment process so a learnership qualification obtained with questionable work experience renders the learners inadequate to take up employment opportunities. 

B-BBEE learnership benefactors should also seek out skills development partners that go beyond just education and work experience but also partners that actively assist learners to become employed or economically active post the learnership.

Is Prevailing business adequate to provide the required job opportunities?

The unemployment crisis in South Africa has proven intractable and endemic over the last two decades and the lockdown has poured fuel onto a raging fire of unemployment, inequality and poverty. Statistics South Africa has confirmed a further 2.2 million jobs were lost between April and June 2020. 

I am of the firm conviction like many other South Africans that prevailing business or government cannot solve the unemployment crisis alone. Prevailing business would have to embark on a rapid growth trajectory through huge local investment to create the jobs required to ameliorate the unemployment conundrum. 

This is only possible in the private sector through massive local and foreign investment in our economy but for various reasons this level of investment has been slow in materialising despite government led investment summits. 

We know that government cannot bloat its workforce any further because it is unaffordable, especially that its revenue collection has fallen quite dramatically. Public works programmes which is very essential to improve infrastructure will provide some short-term jobs, but not enough long-term jobs required by our economy.

This leaves small business growth and development as the only major viable solution for South Africa’s jobs and economic crisis. B-BBEE has recognised this fact by incentivising Enterprise and Supplier development under its procurement element and declaring it a priority. 

To significantly grow, small business development requires a triumvirate of entrepreneurship, capital and technical support. Even though the B-BBEE Supplier and Enterprise development element provides for mentoring, skills transfer and capital support, the former two tend to be less available in practical terms. 

Some large corporates do embrace the transformative need for capital but rely on the small business owner to find their own technical support and skills to operate their own business. Learned experience ably informs us that without skills and mentoring many small businesses fail due to inexperience or imprudent business practice, even after securing the precious capital. 

There are ways for large corporate to improve survival and sustainability chances of their B-BBEE Enterprise and Supplier development small business beneficiaries. The key is to package the capital, Skills transfer and mentorship into a single solution of conditional support. 

Corporate benefactors can sponsor business mentorship or consultants to guide the fledgling entrepreneur or alternatively they can fund learnerships in, for example “New Venture Creation” which comes with skills and mentoring for a prolonged period to ensure the new enterprise is sustainable. In addition, the corporate benefactor must also try for an outcome where the learnership establishes an actual sustainable business that may eventually become part of their supply chain which improves sustainability. 

In this way B-BBEE corporate benefactor can combine their skills development, enterprise and supplier development investment into a complete, coordinated packaged solution that leads to sustainable employment and growth.

Parting Words on B-BBEE

The B-BBEE legislation is not ideal in any democracy which aims to de-emphasize race or any other bias but in South Africa our history and continued economic structure forces us to seek empowerment redress and balance. B-BBEE legislation will have a sunset sooner rather than later if we spend less time and energy trying to oppose it or cleverly circumvent the intent of the legislation.

Circumvention and opposition to B-BBEE will only further entrench our historic imbalances and keep B-BBEE perpetually as a sunrise legislation with ever more demanding provisions. Embrace B-BBEE wholeheartedly through moral rather than legal compulsion and our society will be better for all.

Authored by Sivarajan Naidoo

Sivarajan is Managing Director of Edupower Skills development academy, a level 2 BEE contributor. Edupower’s aim is to address the socio-economic issues of young South Africans by providing fully hosted learnerships and innovative solutions to absorption, enterprise & supplier development. Edupower is trusted by companies such as Unilever and Safair to address their corporate legacy in South Africa.

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How do we know we are really doing the right thing?

The Morality of Broad-Based Black Economic Empowerment (B-BBEE) Practices

B-BBEE has become a political football being booted about the playing field of our collective political and moral conscience.  

Is B-BBEE legislative intent about narrow scorecard compliance or is there some deeper moral obligation incumbent on all of society to build a more just, equitable and balanced society where economic participation is a commonly exercised right? 

Some political protagonists argue that the racialised nature of the legislation makes it immoral but even they accept that transformation of our society is paramount. Other political protagonists point to our race-based history to justify B-BBEE as being restorative in addressing the imbalances. 

The fact is that the majority of the economically disenfranchised are black and directly reflect the legacy of our history. The structure of our economy even though more racially representative than 1994 is still very reflective of our historic imbalances.

Is B-BBEE Empowerment or Redistribution?

 B-BBEE is about empowerment and not redistribution. Empowerment is about bringing the majority of our population into the mainstream economy where the quality and dignity of their lives is addressed in a sustainable way. 

Simple redistribution is taking from the rich and giving to the poor which is not sustainable or transformative. 

The prevailing pockets of economic resources in the country must be the catalysing sources of empowerment, redress and transformation. 

A more economically equitable society has lower levels of social challenges such as crime and violence which impact the entire society. More economically stable societies develop more rapidly in the science, arts and overall well-being of all its members. Therefore, empowerment is for the benefit of the benefactor and the beneficiary whereas redistribution only addresses the beneficiary in an unsustainable way.

Where points the moral compass of B-BBEE Champions?

B-BBEE champions are the consultants, the verifiers and the employees within corporates appointed to guide and administer B-BBEE. 

I would argue that it is an obligation of all the B-BBEE champions to uphold the legislative intent being one of transformation which holds that B-BBEE is about a vision of a future society where all its members stand a fair chance of participating on equal terms in economic activity. 

If B-BBEE champions don’t advocate for transformation, then B-BBEE is doomed to a soulless compliance mentality without the desired transformational impact on our society. This provides ammunition to the detractors of B-BBEE who fire salvos of the failure narrative taking aim at the equality and the just economic development of our entire society. 

If any B-BBEE champion does not believe or support transformation, then these champions must recuse themselves from its ranks. It is unacceptable, unethical and hypocritical for a B-BBEE champion to provide technical advice on B-BBEE to corporates without embracing transformation or worse still, opposing it. 

It is imperative that the B-BBEE champions are its strongest advocates whose primary role is aligning the hearts and minds of boards and executives in the corporate world with transformation, with technical advice being secondary.

Is Transformation and Corporate Profitability Mutually Exclusive?

The first point is that participating in economic transformation is not a luxury but an absolute necessity as it is in the best interest of corporates to develop their market so that domestic consumption of their products and services also increases over time and hence profitability is positively impacted. 

The growing market is likely to reward brands who contributed to their growth and development. 

This is building social value into your brand and therefore B-BBEE champions must ensure that corporate brands are firmly associated with their B-BBEE transformational projects from the perspective of the market and beneficiaries. These B-BBEE transformational projects therefore require well managed involvement and oversight from the B-BBEE corporate donor where beneficiaries receive sustainable value toward their economic development. 

A narrow compliance that only mentality focussing solely on B-BBEE points can work against the brand if beneficiaries and the market perceive it as disinterested and solely compliance driven. 

Secondly, there may be a natural tendency for B-BBEE consultants to advise their clients to spend the least in achieving the most amount of credit on the B-BBEE scorecard. 

This is not necessarily a negative practice as long as the funds being spent is implemented to obtain maximum value for the beneficiary while achieving maximum B-BBEE credit for the corporate. 

Spending more funds does necessarily equate to more value for the beneficiary. Beneficiary value is a function of the transformational intent of the corporate donor. 

How does B-BBEE Compliance and Transformation align?

The B-BBEE consultant, be it internal or external to corporates must advocate for B-BBEE to be placed high on the agenda at board and executive level within corporates and integrated into core strategy and culture. 

B-BBEE transformation needs the support of the highest-level decision makers for it to be a success in terms of transformation. Many corporate cultures have slowly embraced B-BBEE transformation but there are those that adopt B-BBEE begrudgingly only because they need to be considered in both private and public sector procurement. 

Much of the B-BBEE scorecard points to the corporate financial year end to finalise calculations for spend and other important factors. This leads to an unfortunate practice where many businesses wait for the period just prior to financial year end before they implement hurriedly constructed plans to achieve narrow compliance. 

In Corporates this narrow compliance practice must be replaced through the development and approval of B-BBEE transformation policy with high level responsibility and accountability in achieving its outcomes. If B-BBEE transformation is given the appropriate high-level support, then it should be an ongoing year-round practice which removes the urgency at financial year end. 

The beneficiaries tend to be placed in a position that is more advantageous than if this initiative was hurriedly implemented for a compliance only outcome. 

Why do B-BBEE consultants need organised self-regulation? 

As B-BBEE has become more pervasive in business relationships, with each other, and with government, more companies are investing in building internal resource capacity to guide B-BBEE policy. However, there are still many companies choosing the services of external B-BBEE consultants. 

It does not matter whether companies choose internal or external consulting services to guide B-BBEE implementation, only that the relationship must be guided by a charter whose ideals must address the interest of the corporate client and the beneficiary in equal measure. In any event both the Corporate benefactor and their beneficiaries are complimentary and not mutually exclusive in terms of benefit. 

I believe that both internal and external B-BBEE consultant should be anchored by a self-regulatory ethical framework whose principles guide their profession and allows for a uniform application of the legislation.

Standardisation of consulting practices also guides corporates in their B-BBEE policy development and the expectation of service from their consultant be it, internal or external. In this way B-BBEE consultants fall back on their charter to guide the relationship with corporate decision makers empowering them to be bolder in pushing the transformation agenda. 

B-BBEE consultants that undermine the charter should be removed by their peers so as to maintain the ethical transformational standard  The B-BBEE charter can also go as far as defining the guideline for choosing quality partners that may be recommended to corporates to choose when implementing B-BBEE projects. 

The quality partners could be vetted databases of NGO’s, Skills development providers, Enterprise development candidates, candidates from vulnerable group i.e. small developing companies run by woman, youth and people with disabilities. 

This structured approach increases the value and sustainability of B-BBEE projects funded by corporate donors. The charter could contribute to research that collectively tracks the success of B-BBEE funded development projects and this may guide the amendment of legislation over time.

Conclusion

I do realise that this is asking a great deal of this profession but B-BBEE is more than just legislation, it is the continuation of the project of economic freedom that commenced in 1994 with political freedom. B-BBEE Consultants are veritable transformation activists that should be important drivers for South Africa’s project of economic freedom.

 

Authored by Sivarajan Naidoo

Sivarajan is Managing Director of Edupower Skills development academy, a level 2 BEE contributor. Edupower’s aim is to address the socio-economic issues of young South Africans by providing fully hosted learnerships and innovative solutions to absorption, enterprise & supplier development. Edupower is trusted by companies such as Unilever and Safair to address their corporate legacy in South Africa.

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Raising B-BBEE to a higher standard

Broad-Based Black Economic Empowerment(B-BBEE) and the Development of Sustainable Employment Creation

Unemployment is one of the triumvirate of scourges that plagues our nation together with inequality and poverty. The lockdown has just contributed to a massive deterioration in all three scourges.  

We know that if we address unemployment effectively, inequality and poverty also decline. Broad- Based Black Economic Empowerment (B-BBEE) was one of the mechanisms chosen by the government to address this suffocating triumvirate, and now toward the end of the lockdown B-BBEE has become even more significant as an employment creation facilitator than ever before. B-BBEE has several mechanisms to address unemployment in the short and long term.  

Why is B-BBEE actually important?

We know that we need to transform our society that was economically polarised by colonialism and apartheid, leaving the majority economically deprived. 

This unfortunate legacy has not left us and is in fact deeply entrenched in the structure of our economy. Transformation is therefore not a luxury but an absolute non-negotiable in the interest of everyone irrespective of personal origin or background. 

B-BBEE may have its detractors and claimed it has failed but failure is only plausible if an attitude of ticking the box compliance is adopted rather than a transformational one. 

All South Africans must understand that B-BBEE is not about redistribution but rather empowerment.

Redistribution is simply the sharing of existing resources in an equitable way. However, empowerment is about the expansion of national wealth and resources using pools of existing resources as a catalyst. Empowerment benefits the beneficiary and the benefactor. 

B-BBEE is good for your corporate brand

In the 21st century many corporates have expanded their definition of a return on investment beyond the narrow dividend return based on investors capital, toward building value on their balance sheet through social capital. 

Corporate citizens of our democracy can choose to grow social capital through the goodwill they attract by the application of the elements and mechanisms of the B-BBEE transformational agenda. 

In developing economies growth of market share is often stifled by the socio-economic state of the market. Corporates market share benefit in the long term by contributing to the development of their market especially in developing nations with huge youth capital. 

Socially developing the society, especially its youth, could earn corporates great social credit and in the long term inspire brand loyalty and respect for the contribution they have made. In summary, corporate altruism now results in long term self-interest for the future through brand recognition and loyalty. 

Using skills development to build your corporate legacy

The Skills Development element within B-BBEE transformation has a strong learnership component for the unemployed. A learnership has a limited duration contract of employment for a year or longer and make the learners three times more employable after the learnership compared to before. 

Learners earn an income, obtain a formal qualification and valuable work experience. For example my company, EduPower Skills Academy has 25% of its own workforce comprising learners that graduated from its own learnership for the unemployed and were offered permanent employment thereafter. 

This type of employment occurs quite often, provided learners invest their effort into the process. So learnerships are a great way to get inexperienced unemployed learners’ access into the job market. 

The B-BBEE skills development element provides a useful incentive of additional valuable points to absorb unemployed learners into permanent employment after a learnership. So Skills Development on the B-BBEE scorecard is as much about educational development as job creation which is the actual end game. 

Skills development as a catalyst for entrepreneurship and Enterprise development

New small business and entrepreneurship is the single most important mechanism for creating the millions of jobs required in the South African Economy. Government cannot and should not create these jobs within the state as governments role is that of enablement. 

Government does not produce technology and innovation and in fact is a net consumer of technology. Current business just cannot grow fast enough to create the required jobs. Innovation, creativity and technological advancement often comes from talented small business owners who create jobs for others, through the production of their unique goods and services. 

B-BBEE Enterprise Development is a brilliant support mechanism for entrepreneurs to express themselves and start new businesses thus creating this most valued employment. 

Large corporate support for small business through Enterprise Development is a form of corporate Ubuntu. 

A further, even better development is the migration of some of these small businesses to becoming suppliers to the very corporate that supported their development as a small enterprise. These growing small suppliers in the supply chain of large corporates also get assistance in the form of B-BBEE Supplier Development support. As these small enterprises grow to becoming suppliers, they create further employment opportunities.  

The Enterprise and Supplier development element within B-BBEE transformation allows corporate donors a rich variety of creative options to express their support for small business development. 

The COVID crisis has focussed attention on the vulnerability of international supply chains and its concentration mainly in the Chinese economy, and large corporates investing in the development of local supply chains may have a great risk mitigation strategy and a competitive advantage. Corporates investing in small start up enterprises is also a way to diversify if they become minor partners to the business. 

Real socio-economic value from corporate citizens

Socio-Economic development, which is another element of the B-BBEE scorecard, provides yet another mechanism to create employment. This element allows a much broader interpretation thus inspiring corporates to be creative in adding value to society. 

A powerful way for corporates to express creativity is to facilitate the establishment, creation or support of jobs in a variety of options. 

Socio economic development focussing on job creation rather than charity builds sustainability, dignity and self-sufficiency, though charity remains an important tool in addressing our social challenges. 

How sustainable employment can be used for B-BBEE Procurement

The broader Procurement Element of the B-BBEE scorecard also provides for corporates to support small business through procurement of products and services. 

This element also empowers our society’s vulnerable groups such as people with disability, youth and women. Economic development of vulnerable groups empowers them, building a stronger more equitable society where all voices are heard, and more people have a sense of dignity and self-sufficiency. 

The broader Procurement Element of the B-BBEE scorecard also provides for corporates to support small business through procurement of products and services. 

This element also empowers our society’s vulnerable groups such as people with disability, youth and women. Economic development of vulnerable groups empowers them, building a stronger more equitable society where all voices are heard, and more people have a sense of dignity and self-sufficiency. 

This leads to a lowering of dependence on charity and the state to support the vulnerable and in-fact contributes toward the growth in the tax revenue base. 

Conclusion

B-BBEE, in all its detail, should be embraced as a powerful transformative mechanism giving large corporates the opportunity to be on the right side of history when being judged for their contribution toward building an empowered society with multiple equal voices all enjoying their place in the sunlight. 

B-BBEE is not politics though it may be used by political protagonists for their own aims. B-BBEE is not perfect and I am sure analysts can point to weaknesses, but it must only be replaced by a better vehicle for transformation because transformation is itself a non-negotiable imperative, a fact that most of those same analysts will agree upon.

 

Authored by Sivarajan Naidoo

Sivarajan is Managing Director of Edupower Skills development academy, a level 2 BEE contributor. Edupower’s aim is to address the socio-economic issues of young South Africans by providing fully hosted learnerships and innovative solutions to absorption, enterprise & supplier development. Edupower is trusted by companies such as Unilever and Safair to address their corporate legacy in South Africa.

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Need help with your Bursary Programme?

Under the amended B-BBEE Codes which came into effect on 1 December, generic companies are required to spend 2,5% of their payroll on funding higher education by means of bursaries for black students. 

In order to continue delivering comprehensive B-BBEE skills development for our clients, EduPower offers a bursary management programme that can be aligned to your business requirements. This includes:

  • sourcing and selecting the students to suit the company criteria 
  • working within the client’s selected study fields
  • the collection and compilation of the required student documentation
  • monitoring and reporting on the student’s progress
  • maintaining individual contact with the student
  • managing the financial outlay and payments for the Bursary spend

If you would like more information on EduPower’s bursary solutions, please email Scott Barker at scott@edupowersa.co.za or give him a call on 060 925 3202.