LOOKING TO THE FUTURE: WHAT NEEDS TO BE DONE NOW

1
BEE CONFERENCE WESTERN CAPE PROVINCIAL
GOVERNMENT

• LOOKING TO THE FUTURE WHAT NEEDS TO BE DONE NOW
• LOYISO MBABANE

2
BEE CONFERENCE WESTERN CAPE PROVINCIAL
GOVERNMENT

• SOME OF THE KEY CHALLENGES
• Paradigm shift and growing the cake
• Definition-related issues (Black)
• Underlying principles of BEE
• Scope of BEE and beneficiaries
• Overall economic development framework (Ikapa
  elihlumayo)
• Sectoral approach and need to target
• Roles of various stakeholders and
  responsibilities
• Financing and support mechanisms
• LOYISO MBABANE

3
PROBLEMS WITH PAST BEE INITIATIVES
SHARE-OWNERSHIP TYPES

• Failure of stock market approach (1998 crash)
• Poor performance of black chips, (discount to
  NAV)
• Difficulty in raising capital (SPV model) heavy
  gearing
• Narrow focus on deals and very limited number
  of participants (35 black-influenced companies
  (JSE) in April 1999, 21 in 2003)
• Continued dilution of BEE component in most of
  the black-influenced companies divestment by
  black shareholders and delisting of many.
• None or little operational involvement by
  shareholders and no impact on control and
  management of companies SD, or procurement.

4
OTHER BEE CHALLENGES

• Abuse of Affirmative Procurement facility poor
  monitoring of service providers by clients (paper
  partners)
• Little or no skills transfer business training
  or mentorship for blacks in partnerships and
  JVs
• Non-strategic partnerships/ JVs focus on
  non-core
• No involvement and/or buy-in by unions and
  employees
• Ill-prepared communities and low entrepreneurial
  culture
• Continuing barriers to business start up and high
  failure
• Continuing problems with access to capital

5
SOME RECOMMENDATIONS FOR BEE, GOING FOWARD

• Must adopt the integrated broad-based approach
  of the Scorecard
• Adopt an inclusive approach to Blackness and
  avoid Darker than thou
• Ownership still important but to be accompanied
  by operational control and robust EE and SD
  strategies (an integrated strategy)
• Broaden BEE, as in Mining Scorecard, and make it
  relevant to all stakeholders (internally
  externally) also consider bottom up
  interventions SMEs
• Make BEE (in its broad sense) an integral part of
  the Vision and Business Strategy of every
  company/ institution/ Department
• Each component of company/ institution to have
  BEE objectives and to be measured on performance
  (from CEOs KPAs to top management)
• To have support systems for BEE Business
  Development Units financial support mechanisms
  entrepreneurship education auditing of BEE
  partnerships and ventures appropriate internal
  structures

6
- SOME RECOMMENDATIONS FOR BEE-

• Need to focus on green field operations
  (expansion of the cake and new job creation in
  successful areas), not just partnerships in
  existing businesses
• Also target specific sectors based on growth
  prospects and significance to economic growth
  (six sectors identified) develop provincial BEE
  charters
• Ensure value added and skills transfer for BEE
  initiatives
• Effective use of R10 bn (Finance Ministry) to
  finance new ventures in key sectors, and new DFI
  regime of DTI (NEF, etc)
• Explore Provincial and Sectoral Financing and
  Venture Capital Schemes
• Deal with the continued problem of education
  system and skills (need to focus on EST at high
  school level) SETAs role is vital
  Departments Municipalities (Entrepreneurship and
  business training to be part of SD)
• Encourage entrepreneurship education and culture
  among school children communities and employees
  (Need for constructive and pro-active campaigns,
  not just re-active disaster management
  programmes)

7
ROLE OF GOVERNMENT IN BEE

• Provide overall guidance and framework (policy
  guidelines targets) As in Ikapa Elihlumayo at
  the provincial level and link to national
• Assist with benchmarking and good practice across
  sectors
• Conduct effective monitoring to stem out BEE
  abuse
• Help with financing of BEE and lower cost of
  capital (SMEs)
• Transform the education system and ensure
  production of appropriately skilled population in
  the relevant fields (R1,09 extra on education and
  focusing on key subjects)
• Monitor implementation of Skills Development
  Programmes and the HRD strategy to align them to
  the development needs of the country
• Aggressively enforce BEE requirements and targets
  in procurement privatisation of state assets
  licensing (mining, gambling, etc) PPPs SDIs
  rural and urban nodes and other
  government-related initiatives

8
ROLE OF (WHITE) BUSINESS IN BEE

• Must understand importance of sharing the
  countrys resources and commit themselves to the
  BEE project
• Participate actively in the redressing of past
  imbalances and contribute with the skills and the
  resources in their control, be a partner
• Be involved in the mentorship and development of
  black business as well as the skills transfer
  within institutions (must get measured and
  rewarded for succeeding in this regard)
• Get involved in meaningful partnerships with
  black businesses joint ventures and champion
  other empowerment initiatives
• Review and adjust past policies and practices
  where necessary in order to further BEE (e.g.
  financing procurement, etc)
• Allow for failure
• Provide the necessary support mechanisms for
  black businesses

9
ROLE OF BLACKS IN BEE

• Must acquire the necessary skills and experience
• Refrain from being procurement prostitutes
• Ensure operational involvement in the ventures
  they are in
• Use their shareholding and control to effect
  positive changes
• Make a pro-BEE and EE difference in their
  companies
• Seek new business opportunities and better ways
  of running business (add value and positively
  transform past and present business ways)
• Enter into meaningful partnerships with white
  business (value added)
• Be good role models to their communities and
  abide by legislation
• Be prepared to fail and learn
• Not seek mere personal enrichment

10
OTHER CHALLENGES IDENTIFIED

• Building a conducive overall economic framework
• Sustainable economic growth
• Geographic equity
• Inclusion of Youth women and people with
  disabilities
• Focus on downstream operations (e.g.
  beneficiation in marine sector)
• Creation of ready-to-occupy enterprises and
  financing
• Proper planning around the R10 m loan and
  partnership