BROAD-BASED BLACK ECONOMIC EMPOWERMENT PRESENTATION FOR EMERGING-CONTRACTORS CONFERENCE MAY 2010 SIXTUS SIBETA

B-BBEE CODES OF GOOD PRACTICE B-BBEE ELEMENTS :  Ownership  Management control  Employment equity  Skills development  Preferential procurement  Enterprise development  Socio-economic development

B-BBEE CODES OF GOOD PRACTICE As per section 10 of the B-BBEE Act, government must apply the codes when entering into decision affecting the following areas:  Procurement  Licensing and concessions  Public private partnership (PPPs)  The sale of state-owned entities

CONSTRUCTION TRANSFORMATION CHARTER On section 9 of B-BBEE ACT 53 of 2003 Aims and objectives are, to:  Change in racial, gender composition of ownership, management and control in the sector  To advance the employment equity in the sector.  To provide monitoring & evaluation to end malpractices (Fronting)  To implement skills development to empower women and black people in general: learnership, and technical and management skills  Increase procurement of goods and services from B-BBEE enterprises  Promote the sustainable of micro, medium and small B-BBEE enterprises HOW?

Micro Enterprises (Turnover R 5m and below) Qualifying Small Enterprise (Turnover btw R5m – R35m ) Other Companies (Exceed Revenue R35m) Generic Scorecard, with all seven elements Small Enterprise Scorecard, Select four of the seven elements All elements weigh 25% Indicators adapted to small enterprises Micro Exemption, Automatic Level 4 Recognition B-BBEE CODES OF GOOD PRACTICE

B-BBEE CODES: GENERIC SCORECARD ELEMENTWEIGHTINGCOMPLIANCE TARGETS OWNERSHIP20 POINTS25% +1 MANAGEMENT CONTROL10 POINTS(40% TO 50%) EMPLOYMENT EQUITY15 POINTS(42% TO 80%) SKILLS DEVELOPMENT15 POINTS3% PAYROLL PREFERENTIAL PROCUREMENT20 POINTS70% ENTERPRISE DEVELOPMENT15 POINTS3% (NPAT) SOCIO-ECONOMIC DEVELOPMENT5 POINTS1%(NPAT) TOTAL100 POINTS

Construction-generic scorecard Element WeightingB-BBEE Codes ContractorsBuilt Environment Professionals OWNERSHIP MANAGEMENT CONTROL 10 EMPLOYMENT EQUITY SKILLS DEVELOPMENT PREFERENTIAL PROCUREMENT 20 ENTERPRISE DEVELOPMENT SOCIO-ECONOMIC DEVELOPMENT 555

CODE 000: BEE STATUS LEVELBEE SCOREBEE RECOGNITION LEVEL %(E.G. R1=R1.35) 285~ % 375~85 110% 465~75 100%(E.G.R1=R1) 555~65 80% 645~55 60% 740~45 50% 830~40 10% NOT COMPLIANT30 0%(R1=R0)

Why the need for B-BBEE?  For B-BBEE to work properly: consistency, visibility and clearer direction.  B-BBEE to date have been characterized by: Stagnation, no growth from EMEs to QSEs, ultimately Large Entities. Playing ‘locally’ with high B-BBEE activities in big cities, leaving out rural areas and townships Lack of understanding leading to inconsistent application and appreciation of B-BBEE Lack of implementation guidelines resulting in ‘most going to few’, fronting or ‘sham’ transactions Lack of underlying economic substance to many BEE transactions Deafening silence of the target group ‘voices’ on BEE issues, no organized approach.

Thank you