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Navigating The Tricky Path Towards BEE Compliance

All organs of state, public entities and any private enterprise that undertakes business with a public entity must implement the BEE codes.

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BEE On the National Agenda

Navigating complex BEE requirements to ensure compliancy can be a tricky process for many businesses. Since the implementation of BEE in 2003, there have been many high-profile cases of companies found to have faked their BEE credentials and many who have failed their verification audits for other reasons.

The unfortunate reality is that faked credentials is not a victimless crime. Any company awarded a government tender through the use of fake credentials is taking business away from another that has worked hard to achieve transformation through compliance.

The Government has been particularly verbal in highlighting the need for BEE compliance. At last year’s State of the Nation Address, President Cyril Ramaphosa stated that “We [South Africa] will improve our capacity to support black professionals, deal decisively with companies that resist transformation and use competition policy to open markets up to new black entrants.”  Thus, all organs of state, public entities and any private enterprise that undertakes business with a public entity must implement the BEE codes.

Finding the Right Supplier For Your Business Needs

According to LFP Group CEO, Louis Pulzone as the demand for BEE suppliers grows, the market becomes more saturated with suppliers offering all sorts of prices and all sorts of offers. “The industry is attractive – particularly in our current economy. We’ve heard of a lot of devastating cases where clients look to low priced suppliers who cannot deliver on their promises due to a lack of infrastructure and resources. This ultimately leads to failed BEE verification audits and projects that never get off the ground”.

Your training providers must commit to providing a compliant service by meeting various pieces of legislation. This ensures a defensible service offering and ultimately, the desired BEE scorecard result.

When implementing skills development initiatives specifically, Louis says that there are a few key things to keep in mind:

  • Ask your supplier for provide you with factual proof of compliance – they are obligated to share this with you.
  • Ensure that your training provider complies with the Basic Conditions of Employment Act and Unemployment Insurance Act when it comes to caring for your learners.
  • Suppliers must act in accordance with the provisions of the Employment Equity Act when providing learnerships to disabled learners, all learners must be covered by COIDA and UIF provisions must be made.

The size of your business determines the required levels of BEE compliance. “The Codes provide for three levels of compliance based on the size of your business”:

  • Exempted Micro Enterprises (EMEs), which are businesses with an annual turnover of less than R10 million.
  • Qualifying Small Enterprises (QSEs), which are businesses with an annual turnover of between R10 to R50 million.
  • Medium to large enterprises (M&Ls), which are businesses with an annual turnover of more than R50 million.

BEE Shortcuts Lead to a Dead-End

Whilst some companies create fraudulent compliance certificates in order to avoid having to comply with the BEE codes, others simply altered the dates on their out-of-date legitimate BEE certificates to avoid the costs involved in having to renew a certificate. In one case, a billion Rand corporation reported their annual turnover to be less than R5 million in order to secure BEE exemption. Fraudulent practices like these have caused experts to estimate that ‘up to 5%’ of all BEE certificates are invalid.

The penalties for a business being found not BEE compliant are hefty. These penalties, enshrined in the Employment Equity Act, can be anywhere between R1.5 million and up to 10% of an employer’s annual turnover, depending on the nature and frequency of the non-compliance. Ultimately, if a business fails their annual BEE Compliance Audit due to substandard BEE suppliers, the large financial investment made in order to ensure compliance is lost.

LFP Makes BEE Hassle-Free

Louis explains that the LFP Group was born out of exactly this. “Our brand is built on credibility and a clear understanding of the industry”.

As an easy way to determine your businesses required level of BEE compliance in accordance with these Codes, LFP recently launched SA’s first free BEE Management Tool. “This user-friendly service allows you to analyse your company’s scorecard, calculate your current points and plan your company’s BEE requirements going forward” says Louis.

Contact LFP:

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Inspiring A New Generation Of Learning – Education As A Basic Human Right

Access to education isn’t a privilege, it’s a basic human right – Mzwandile inspires a new generation of learners.

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Raised by his aunt and uncle after his parents passed away at a young age, Mzwandile Harmans attended a poor school in Cala, the heart of the rural Eastern Cape.  It was his matric year; but with limited resources at Masikhuthale Public Secondary school, the pass rate was low and the learning environment less than ideal for conscientious learners.

Then one day a teacher came round to talk about Engen’s Maths and Science Schools (EMSS) programme, and everything changed for this talented young man who was determined to realise his full potential.

“We were given a chance to take a test to qualify for the EMSS Cala programme. The programme offered supplementary classes in maths, science and English, which ran every Saturday morning, but was 25 kilometres away,” remembers Mzwandile. “Fortunately, I took it seriously and I got in.”

Making the long round trip every weekend to attend the programme saw a steady improvement in Mzwandile’s  maths, chemistry, and physics marks, so much so that he was awarded a full Engen scholarship to study Chemical Engineering at the Cape Peninsula University of Technology (CPUT).

Mzwandile later impressed with his tertiary studies and after two-years was offered a one-year internship at the Engen Refinery in Durban, which he passed with distinction. On graduating from CPUT, he landed a two-year employment contract with Engen, as part of the company’s graduate development programme.

Today, Mzwandile is permanently employed as an Environmental Technician at the Engen Refinery.  “I am so grateful to Engen for all of this,” says Mzwandile. “I never thought it could happen to me.”

Engen’s Head of Transformation and Stakeholder Engagement, Unathi Magida says access to education is a fundamental human right.  “This resonates particularly with Engen as a company, as we believe in the value of education and know how important it is to ensure that young people have the opportunity to realise their full potential.”

Chwayita Mareka, Engen’s Head of Human Resources, says the company’s investment in young talent has focused on the Maths and Science Saturday Schools because they understand the bigger country agenda.

“As Engen, we try and play our part in helping to develop South African’s talent pool, as there is a scarcity of Science, Maths and Engineering skills. We offer bursaries for students to go to universities in these fields and we look after them, especially if they are from disadvantaged communities,” says Mareka.

“Later, they come into Engen as graduate trainees as part of our graduate development programme wherein we assign them a mentor that exposes them to the real business,” she adds.

Mzwandile’s journey is just one of many inspirational Engen stories that will be shared as part of a new TV series that aims to create a positive narrative around South Africa’s success stories.  The SA INC. TV series which launches on 7 April is a partnership between Business Leadership South Africa (BLSA), Brand South Africa and producers, Regency Global.

“At Engen, we strongly believe that a country which is educated is a country that will prosper. We are pleased to play a part in helping to develop South Africa talent, especially our young learners based in rural areas,” says Magida

To watch Mzwandile’s story please visit the website: https://regency.global/engen/ and the following hashtags: #JourneyWithEngen #BusinessBelieves #SAINC #humanrightsday #awesomesouthafrica #sustainability #livesouthafrica #weheartsa.

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How SMEs Can Stand Out From The Crowd

A recently released SME Landscape Report: An Assessment of South Africa’s SME Landscape: Challenges, Opportunities, Risks & Next Steps’ 2018/2019, revealed that 40 percent of small and medium enterprises (SMEs) find that the industry that they operate in is extremely competitive. It also states that considering the low growth environment, this is likely to continue further into the future.

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To assist struggling entrepreneurs, Byron Jeacocks, Regional General Manager at Business Partners Limited (BUSINESS/PARTNERS), says that it is imperative for SME owners who find themselves in this predicament to determine and implement tactics to remain competitive in saturated industries. “A good example of how to do this, is Business Partners Limited’s client, Prashun Sharma, owner-manager of glass and aluminium company, Aluminium Doctor, who was faced with an overtraded industry teeming with informal operators when he started his business seven years ago.”

“This was because the glass and aluminium industry suffered a contraction following the Soccer World Cup construction boom in 2010, and as a result, many tradespeople were retrenched and subsequently started up their own informal glass and aluminium installation operations to make ends meet,” Jeacocks adds.

Explaining how he ensured a competitive edge in his business, Sharma, who was also retrenched from his senior management position at a large aluminium company, says that when he started his company he decided to make it formal, compliant and professional. “I wanted to incorporate my corporate and managerial experience to differentiate my business, and to elevate this, I enrolled in a business management degree.”

“My degree covered everything from strategic management, supply management, first-line management to directorship and it touched on everything from listing on the stock exchange down to conflict management and change management. This really prepared me for business and I believe it was a key ingredient to my business’s success,” he points out.

However, Sharma says that when starting their businesses in a saturated industry, entrepreneurs should not feel despondent if the process is slow at the beginning. “At first in my journey, there seemed to be no difference between Aluminium Doctor and the rest of the informal businesses in the industry, but I continued to lay a formal foundation, whilst consulting with my lawyer and accountant to make sure these foundations were sound. I also started to develop professionally made marketing material, a website, formal email addresses and a fixed phone line.”

Aluminium Doctor’s breakthrough came a year and a half into the business, when it won a substantial contract with the building of the Durban ice rink, says Sharma. “This is when I knew that it was time to formalise my business premises and I found a 1000 square metre factory in Brairdene, Durban.”

However, in order to purchase the building, I needed to obtain funding and I believed that it was clear from the financials that the company could afford to buy the building, but the banks were not sure whether our fast growth was sustainable. “I was then introduced to Business Partners Limited which considers finance applications based on the potential of the business, and also on the capabilities of the entrepreneur rather than just on the balance sheet and age of the business.”

Commenting on this, Jeacocks says that Sharma’s management style and his commitment to furthering himself as an entrepreneur by studying business management was also a contributing factor to the approval of his business’s property finance loan,” comments Jeacocks.

“Today, seven years since he started, Sharma’s careful attention to his business’s formal foundations is still paying off. Just in the last twelve months, in an extremely challenging economy, Aluminium Doctor grew by 35 percent, and the business now has a presence in KwaZulu Natal, the Eastern Cape and Gauteng where it will soon establish a permanent sales office in an expansion that is only possible for a formal, well run organisation,” Jeacocks concludes.

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Celebrating The Best Of The Best In Black Business

The 2019 Black Business Quarterly (BBQ) Awards, held at Emperor’s Palace on Friday, 15 March 2019, celebrated the champions of transformation of the South African economy.

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Established in 2002, the BBQ Awards 2019 honoured the best of the best in black business. South Africa’s top black business owners and rising stars arrived to the red carpet for a night full of glitz and glamour. Celebrity TV presenter, socialite, radio personality and Idols SA judge Somizi Mhlongo led the festivities as the evening’s programme director. He was joined on stage by A-list celebrities and prominent politicians.

Jeff Radebe, Minister of the Department of Energy, celebrated 25 years of South Africa’s democracy in his opening keynote address and emphasised the importance of transformation.

“Transformation is well recognised as a change management strategy, which aligns people, which aligns processes and technology initiatives, irrespective of the industry you come from, in order to survive and evolve in this business environment. Changing the structure of the South African economy will result in it being more inclusive, more sustainable… with opportunities for all, integrated value chains, and less barriers to entry. In South Africa, the transformation agenda is very critical in all our endeavours and all our decisions.”

Radebe congratulated the winners of the 15 transformation categories on this recognition of their inspiring dedication:

  • Platinum Award: Dr Nobuhle Judy Dlamini, founding chairman of Mbekani Group, is an entrepreneur, author, and philanthropist. Her passion for creating and adding value to society and humanity provided her with the overall platinum award for the evening, as well as the Comair Outstanding Woman of the Year Award.
  • Hennessy XO Businessman of the Year Award: Sthembiso Elton Nkomo, CEO of Abalandi Risk Management, was recognised as a professionally qualified, dedicated, and respected professional in the forensic investigation and security services environment.
  • The Innovation Hub New and Innovative Business Award: AET Africa, a manufacturer and supplier of energy efficient and clean technology products, developed various products targeting the commercial and residential sectors.
  • Emperors Palace Community Builder of the Year Award: Emmanel Bonoko, Founder of EBonoko Holdings and a social entrepreneur. He founded EBonoko at the age of 21 with the aim of serving others and fostering leadership, youth empowerment, and entrepreneurship.
  • Dormehl Phalane Property Group Transformation Champion of the Year Award: ICT-Works, an organisation that provides innovative technology solutions. At its core it also enhances the lives of millions of people.
  • Best Employer of the Year Award: Maredi Technologies CC, an 100% black owned ICT infrastructure solutions provider for the private and public sector.
  • Trade & Investment KZN Young Business Achiever Award: Pravashen Naidoo, Founder and CEO of e-Waste Africa, established Africa’s first light bulb recycling business at the age of 30.
  • Bentley South Africa Public Sector Visionary Award: Dr Ayanda Vilakazi, CEO of Lama Marketing and Advertising (Pty) Ltd. He published numerous articles on how to improve services and operations in South Africa. As a seasoned Executive he has expertise in corporate governance, financial management and budgeting, enterprise risk management and strategic development.
  • BET New Entrepreneur Award: Ms Thobile Nyawo, Director of Nyawo Civil construction. The 19-year-old construction entrepreneur founded her company in 2015 with no start-up capital.
  • CSI Ubuntu Award: Vukani-Ubuntu Community Development Projects, a non-profit organisation that is the largest mineral-beneficiation organisation in the jewellery sector in South Africa and a network off grassroots development projects across the country.
  • NHBRC Iqhawe Mentorship Award: Musa Zulu, Creative Director of Valhalla Arts, as well as published author, international artist, celebrated motivational speaker, and prominent disability activist in South Africa.
  • NYDA Outstanding Young Entrepreneur of the Year Award: Muhammad Simjee, Founder and CEO of A2D24 with a passion for building gadgets and writing software.
  • Nedbank Group Individual Transformation in Leadership Award: Karen Rademeyer, Fundraiser and Communications Manager at Go for Gold, having worked in the non-profit sector for 17 years She is passionate about education: Go for Gold as a dynamic Education-to-Employment programme that recruits school students from some of South Africa’s poorest communities and transforms them into technically qualified graduates.
  • LTE Holdings Best Established Black Business Award: Thata uBeke Manufacturing (Pty) Ltd, which offers turnkey solutions by designing, developing, manufacturing and assembling electronic and electro mechanical components for a variety of applications including aerospace, telecommunications, mining, commercial, and military specifications.

The BBQ Awards continue to be South Africa’s most prestigious transformation awards. For more information on the 2019 BBQ Awards, visit http://www.bbqawards.co.za/ or follow them on Facebook (@BBQAwards) and Twitter (@BBQ_Awards).

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