Rural and Community Development Africa Indaba July 2015 Rural Development as a means to achieve Broad-Based Black Economic Empowerment

The Central Strategy:  Industrial Policy Action Plan (IPAP V)  New Growth Path  National Skills Development Strategy  National Development Plan  Companies Act  Agricultural Policy Action Plan (APAP)  King III (People, Prosperity, Planet)  Employment Equity Act  Gender Equality Bill  Disability Charter SA Business Environment - Central Strategy

Localisation  New Growth Path investment underpinned by National Development Plan and Industrial Policy Action Plan created a framework for localisation and economic Development.  Job Creation  Direct jobs  Indirect jobs  Job preservation  Capacity Building  Staff  Suppliers  Customer  Local Content  South Africa, Provincial, Municipal/District  Taxation, salaries, percentage e.g.. material, goods, components sourced in South Africa Development for South Africa

Enterprise and Supplier Development: Priority Element B-BBEE for the South African Business PREFERENTIAL PROCUREMENTWeightingTarget Procurement BEE Procurement Spend from all Empowering Suppliers based on the BEE Procurement Recognition Levels 580% BEE Procurement Spend from Qualifying Small Enterprises based on the applicable BEE Procurement Recognition Levels 315% BEE Procurement Spend from EME based on applicable BEE procurement recognition level 415% BEE Procurement spend from Empowering Suppliers who are 51% or more black owned entities 940% BEE Procurement Spend from Empowering Suppliers who are more than 30% black female owned 412% Bonus Point BEE procurement spend from designated group suppliers that are at least 51% black owned 22%

Enterprise and Supplier Development: Priority Element B-BBEE for the South African Business WeightingTarget Supplier Development Annual value of all Supplier Development Contributions made by the Measured Entity 102% NPAT Enterprise Development Annual value of all Enterprise Development Contributions made by the Measured Entity 51% NPAT BonusGraduation from ED to SD1 Creation of 1 or more jobs1 ESD TOTAL44

Enterprise and Supplier Development Where else will Skills play a role?  2% of Net Profit After Tax (NPAT) must be invested in Supplier Development Programmes  1% of NPAT must be invested in Enterprise Development Programmes  Businesses should develop a structured plan which includes  Clear objectives  Priority interventions  Key performance indicators  A concise implementation plan with clearly articulated milestones

Enterprise and Supplier Development  Beneficiaries are EME’s and QSE’s who are 51% black owned  Award of 3 year contracts, has a procurement multiplier of 1.2  Award of contracts to ED beneficiaries or SD beneficiaries has a procurement multiplier of 1.2 Enterprises are encouraged to align their ED and SD programmes to the sectors identified in Government’s Localisation programme Contributions are recognized annually unless a large scale project requires the total contribution to be spread over more than one year B-BBEE for the South African Business

Enterprise and Supplier Development B-BBEE for the South African Business  Businesses should develop a structured plan which includes  Clear objectives  Priority interventions  Key performance indicators  A concise implementation plan with clearly articulated milestones  Imports Where a business claims import exclusion they will be required to develop and evidence a plan, to implement a supplier transition as above

Using legislative requirements to make development happen B-BBEE for the South African Business  Example One  Mining : Waste Management  Waste Management machines address waste  The output is activated carbon  The process produces electricity  The carbon cleans the water and restores the soil PH balance

Using legislative requirements to make development happen B-BBEE for the South African Business  Example One  Community benefit  Jobs created to manage the waste process  Water is cleaned  Soil is restored for agricultural activity  Company benefit  Electricity is produced creating a cost savings  Carbon tax project produces carbon credits  Compliance with ESD (B-BBEE)  Mine rehabilitation criteria  Mine Community Development

Enterprise and Supplier Development Example Two FMCG company : Sustainable Oils  Farmers of canola and sunflower oil are identified  Development programmes are put in place to develop their capacity, accreditation and quality  Production of oil is phase II to produce a final product ready for market consumption B-BBEE for the South African Business

Enterprise and Supplier Development Example Two Community Benefit  Farmer Development  Uptake agreements  Accreditation and export-readiness Company Benefit  Local access to a core ingredient  Greater control over quality  ESD points (BEE compliance)  Carbon tax offset  Reduction in logistics time B-BBEE for the South African Business

Government Policy Private Sector Public Sector Market Food Security Export Food Products Rural Development Land Reform Production Environmental Energy Job Creation Labour Education Localisation Transformation Co-operation Monitoring and Evaluation; Impact; Environment for Success; Facilitation

Making Development Happen Collaboration within the market should achieve Access centralised information regarding the state of Transformation in the sector Provide access to information, support and understanding of the sectoral objectives Positively influence challenges for sectoral participants to reduce the barriers to growth; sustainability or empowerment Facilitate greater response from senior officials and industry to encourage collaboration in sectoral transformation SA Business Environment - Central Strategy

Making Development Happen Collaboration within the market should achieve Access centralised information regarding the state of Transformation in the sector Provide access to information, support and understanding of the sectoral objectives Positively influence challenges for sectoral participants to reduce the barriers to growth; sustainability or empowerment Facilitate greater response from senior officials and industry to encourage collaboration in sectoral transformation SA Business Environment - Central Strategy

Identification of issues to date  Need to grow export opportunities  Need to share information on market demand and growth opportunities so that the sector is more likely to achieve longer- term success  Need to link the market to the customer more effectively  Need to monitor and evaluate transformation programmes to ensure impact-focused approach  Need to define an applicable model to graduate micro and small participants to mid and large scale participants  Need to introduce a stronger education platform to development applicable skills  Need to introduce a communications strategy that allows for consultation and engagement by industry stakeholders

Empowerment vs Transformation Transformation of the sector includes many facets, not least of which include Sectoral Growth Green, Organic, Sustainability and environmental programmes to support growth, make the sector market relevant and offset Carbon Tax obligations for South Africa Technology as a means to attract Youth and improve efficiencies Localisation : decrease in imported products, equipment and services Growth of existing black enterprise to move from micro to large commercial enterprises Increase in exports All of the above, are intended to result in Food Security Empowerment Inclusion of marginalised groups in sectoral growth Job creation 17

Empowerment vs Transformation  Empowerment of the sector includes those elements defined by the B-BBEE framework of the dti The priority is ensuring that black South African’s own, manage and control sustainable assets; that black South Africans are represented at each occupational level of every entity operating within the sector; that companies within the sector develop skills and capacity; and that they participate actively in developing black, localised enterprises to buy goods and services from; as well as ensuring that all industry participants re-invest in social development programmes

Empowerment vs Transformation Transformation Sectoral Growth Green and secondary industries Technology Localisation Market Transition Growth in exports Empowerment Job creation; food security & inclusion of marginalised groups

Critical Success Factors  As opposed to request-led responses; the market needs to strategically identify the gaps and invest its resources, funding, time and money into achieving strategic programmes that are critical to the impact of the sector  Localisation imperatives need to be identified and responsible, transitional programmes put in place to achieve growth in high value, programmatic products, services and commodities  This needs to be balanced with a strong export drive to use the need for international food security as an opportunity to secure direct and indirect markets  Effectiveness of support programmes needs to be monitored and customised to achieve higher impact  Education is imperative  Access to information underpins all transformation

QUESTIONS……. Dionne Kerr “Government alone cannot solve the challenges faced by the country, but working together, solutions are possible.” Jacob Zuma (State of the Nation 2012)