Are Your Suppliers In Line With BEE?
by Deon Oberholzer on 05/07/12 at 8:11 am
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The face of business in South Africa severely changed over the last few years. Companies are more aware of social responsibility and the need for BEE compliance. Perceptions about BEE is changing and business managers are understanding that BEE is there to create economic growth that will, in turn, create a better business environment for all South Africans.
According to Deon Oberholzer, CEO of Veri-Com – a SANAS accredited BEE verification company – BEE can be seen as part of a company’s corporate responsibility. “The tables are already turning – many clients are looking at the scorecards of their suppliers, because of corporate governance pressures and the need to do business with BEE compliant suppliers in order to gain BEE certification as soon as possible. If companies refuse to comply with BEE codes business might be lost because of it.”
BEE compliance is creating a circle of corporate responsibility. Oberholzer reiterates this statement: “Clients are looking at suppliers’ scorecards. Business owners need to accept the necessity of transformation – they should look at the pros rather than the cons.”
The repercussions of non-compliance or dealing with non-compliant suppliers can be severe. Businesses can lose their contracts and clients if they do not comply with BEE codes. If they are already using BEE-compliant suppliers, they will not even consider a business that is non-compliant. The windows of business opportunity will pass you by, and that is a great risk for any business.
One question remains, whether government is following the rules. Oberholzer says that: “They are creating the rules and the codes but the laws are not yet changed. Local governments need to follow the law but in some instances the law is in contradiction with the code. If a financial manager in a municipality does not follow the law it could lead to imprisonment, but certain codes, in terms of how the money is spent, can be directly in contrast with the law. This creates a difficult situation for the financial manager. Implementing the rules and regulations of BEE into the law will take time and it can take even longer to implement it in practice. Currently there are grey areas creating loopholes, and confusion. There is also no form of punishment for non-compliance. Government has not yet perfected the BEE system, but that does not mean that they are deliberately trying not to comply or implement it.”
The codes are complicated and Oberholzer believes that business owners cannot merely read the codes and then expect to completely understand them. “The codes need to be dissected, peeled off piece-by-piece like an onion. Every level of understanding is based on a previous level of understanding. Therefore, it is advised that business owners consult with BEE verification agencies that can give the correct advice and direction towards getting a good BEE scorecard”.
A key problem with BEE implementation is the interpretation thereof. Veri-Com, having been the first company that went through the accreditation process for all the sectors created a structure for interpretation. “When you look at BEE, the ultimate goal is to get a positive scorecard,” says Oberholzer. “The scorecard has credibility. As soon as you have your scorecard, businesses will immediately know that you have done your work. They would want to do business with you.”
It is important that a verification agency measures, evaluates and assesses the situation in your company before issuing a certificate. When an agency issued a certificate it is not allowed to give advice or consult on how to get a better scorecard as this would result in a problem with independence. Each assessor has to follow the rules or the scorecard will not be credible.
A verification certificate can actually be an integral sales point when pitching for a tender. Having a good scorecard will help generate business and help the client score BEE points at the same time. BEE is a win-win situation for all parties involved.
Deon is co-founder and CEO of Veri-Com, a SANAS Accredited BEE Verification Agency and has been involved with Black Economic Empowerment at various levels since 2004. View more articles by Deon Oberholzer.
Tags: BEE, black economic empowerment, business south africa, social responsibility
