The Bulrushes - 3 October 2023 On Wednesday, (4 October 2023), Kagiso Capital in collaboration with Kagiso Trust and the FirstRand Empowerment Foundation will host a seminar on the efficacy of Broad-Based Black Economic Empowerment (B-BBEE). The seminar in Sandton will held under the theme “Beyond the Façade – The Bittersweet Reality of Broad-Based Black Economic Empowerment”. B-BBEE has been a pivotal policy instrument in addressing historical inequalities and the transformation of black ownership and participation in the economy. Organisers said the challenge was the discussion on B-BBEE impact, progress, and potential improvement remains a polarising issue. The seminar will provide a platform for open, data insights-driven discussion on ownership, and significant transactions to date and unpack the complexities of structuring policy-aligned transactions in a dynamic ever-shifting socio-economic environment. The seminar will feature a dynamic line-up of speakers and panellists to mainstream discussions that often happen in isolation and to present a diverse range of views. Speakers include Kgolo Qwelane (RMB), Duma Gqubule (Financial Analyst), Tshediso Matona (BEE Commissioner), Polo Leteka (Identity Fund Capital), Ernst van Zyl (Afriforum) and Kganki Matabane (CEO Black Business Council. Other speakers and key stakeholders representing a broad spectrum of perspectives and expertise are lined up to contribute. These speakers are from the government, regulatory bodies such as the B-BBEE Commission, business forums, private sector leaders, entrepreneurs, broad-based organisations/NGOs, and civil rights organisations. The others are corporate financial lawyers. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://techfinancials.co.za/2023/10/03/sa-industry-leaders-and-business-take-on-elephant-in-the-room-b-bbee/

Sibongile Vilakazi | 4 October 2023 ORGANISATIONS go through their own natural cycles and changes where key decisions, such as who leads the organisation, are made in the interest of the organisation. These are always important decisions for the organisation as they determine the direction and posture both inside among staff members and outside to external stakeholders. One always assumes that based on all probabilities and calculations, the decision is always taken in the best interest of the organisation. When it comes to state owned entities, the decision must also take national interests into cognisance. The decision ought not to only be in the best interest of the organisation but it must also drive specific national agendas. One of the national agendas for South Africa that is supposed to be a non-negotiable is the transformation of socio-economic dynamics and opportunity distribution to reflect the population of the country. This is all forms of economic opportunities including decisions about who leads at the helm of both public and private entities. These decisions send a message that the country is on track in implementing its own interests and agendas to the benefit of all citizens. You can therefore imagine the concern when on the same day two big public entities made announcements on leadership changes that seem to be regressing the agenda of transformation. On September 29 2023 the Industrial Development Corporation (IDC) announced that Mr David Jarvis will be the interim chief executive officer (CEO) with effect from October 1, 2023, following the announcement on March 3, 2023, that Mr Tshokolo Nchoncho was stepping down as CEO. The IDC reported that the process of identifying Mr. Nchoncho’s successor was under way and to allow for a seamless transition. Mr Jarvis, who’s been with the organisation since 2013 and been in executive management since 2015 as Divisional Executive for Strategy, would take the role of acting interim CEO. While we were still following the IDC announcement, Transnet announced that both the CEO, Portia Derby, and the Chief Financial Officer (CFO), Nonkululeko Dlamini, resigned, leaving the entity rudderless as the two most senior positions immediately became vacant although both executives would be available for the handover. Ms Derby has been under increasing pressure from industry bodies to resign after what was seen as worsening operational performance under her watch. To manage the potential instability, the board appointed Michelle Phillips as CEO on an acting basis until the process of identifying the next CEO is concluded. Ms Phillips is the current CEO of Transnet Pipelines and has been with the organisation for 21 years. At face value the decisions are reasonable and are in the best interest of the organisation. However, in the case of the IDC, being a white male, the decision on Mr Jarvis communicates that on the national agenda of ensuring that the senior echelons of public entities in particular are transformed, there may be a relaxed view in the board of the IDC on who leads the IDC. Transformation may be negotiable when it is supposed to be a non-negotiable. This may not be true of course but it’s an impression nonetheless and impressions may be reality to onlookers. The issue at Transnet is even more troublesome when we consider black women leadership. It appears that Portia Derby was brought in to Transnet with a clear mandate to turn around the ailing entity, yet she was not given the support and opportunity to do what she was brought in to do. The turnaround strategy that the board had approved included significant actions and milestones that could not possibly take a year or even three years to achieve. The issues of corruption and its impact on productivity at Transnet are well documented and slow procurement processes in the public sector would have meant that all initiatives that required procurement would have at least needed a year before those initiatives were implemented. Therefore, the pressure put on Ms Derby to magically improve performance was unwarranted and creates the impression that she was never brought in to succeed and turn around the entity. It appears she was set up and it’s understandable that she eventually decided after three years at the helm that it was too exhausting and resigned. This case is worrisome if as a nation we claim that we want positions at top management to reflect the demographics of the country and we value women leadership. Without the necessary supportive environment, transformation efforts will remain lip service. It’s important to back our transformation intent and agenda as a country with tangible actions. Otherwise, what has happened to Ms Derby has sent the message that women should fear such positions because they are simply a trap. In actual fact, women leaders are not wanted. Why would despondency not set in after this? ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.iol.co.za/business-report/opinion/despondency-sets-in-when-transformation-is-seen-to-be-regressing-89eda703-7fbb-44c7-96af-879c96d1e16f

The core aim of Socio-Economic Project Contributions is to support income generation. Therefore, any contributions must pass the income generation test at the time of an organisation’s B-BBEE Verification. Schedule 1 of the Generic Codes of Good Practice defines Socio-Economic Project Contributions, which must be pre-approved by organs of state or a sector as: “Socio-Economic Project Contributions means monetary or non-monetary contributions carried out for the benefit of any projects approved for this purpose by any organ of state or sectors including without limitation: Projects focusing on environmental conservation, awareness, education and waste management; and Projects targeting infrastructural development or reconstruction in underdeveloped areas; rural communities or geographic areas identified in the government’s integrated sustainable rural development or urban renewal programmes; New projects promoting beneficiation.” Socio-Economic Development Services are available to Members to assist meeting requirements under the element of Socio-Economic Development.

Although entering into an Enterprise or Supplier Development loan contract is generally done with the best intentions, some loans issued will inevitably be defaulted on or, in the worst case, a Beneficiary will refuse to repay it. When giving a loan, an organisation has the full rights of recovery; however, this has to be clear in the terms and conditions. First and foremost, a loan must take the form of a debt instrument; thus, it must never be a grant disguised as a loan. Any loan made with the intention of not receiving repayment of the capital amount is not a loan but a grant and must be claimed as such. Consequently, claiming a loan under Enterprise or Supplier Development instead of a grant may be deemed as a Fronting Practice. Enterprise & Supplier Development Services are available to Members in assisting with developing sound Loan initiatives.

At times, merely making a financial contribution to an Enterprise Development or Supplier Development Beneficiary does not constitute a sustainable claim. A claim for each of these sub-elements needs evidence that demonstrates an organisation’s intervention has contributed to growth, sustainability as well as operational and financial independence. The monetary route is one contribution option. However, other avenues are contributing an asset or upgrading equipment. In such a case, the value of the asset or the upgrade will determine the claim. It is important to note that only the asset or upgrade is a claim. A B-BBEE Rating Agency will not recognise other line items on an invoice that is not to the benefit of the Beneficiary. When submitting a claim when granting an asset, it is irrelevant whether it is new or pre-owned, imported or locally produced. Enterprise & Supplier Development Services are available to Members in assisting with impactful initiatives.

Polity | 2 October 2023 The Metro Grounds Housing project in George promises to deliver 631 housing opportunities. 436 will be Breaking New Ground (BNG) top structures while 195 will be serviced sites. This project has a projected budget of R166 644 404.11 with 55% of that budget being spent to date. This project has so far contributed to job creation in the immediate local area, with 16 local enterprises employed and 172 Expanded Public Work Programme (EPWP) employments. A dedicated enterprise development programme is also being used to not only appoint and utilize local enterprises, but to purposefully develop them. Formal mentorship and training are provided across several topics including: • Legislative and compliance requirements • Business and finance management • Human resources and labour relationship management • Site management • Tenders and procurement • CIBD registrations and upgrading requirements MPP Matlhodi Maseko says: “The Metro Grounds Housing project in George delivers both housing opportunities and jobs to the people of George. This exciting housing project hopes to inject dignity into the lives of the beneficiaries, while boosting money into the local economy by contracting local businesses for the development of this project. A dedicated enterprise development program has been implemented, which doesn’t just hire local businesses, but helps them to grow and develop new skills. The completion of the Metro Ground Housing project is expected for June 2024.” ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.polity.org.za/article/r166-million-housing-project-in-george-providing-local-jobs-and-skills-development-opportunities-2023-10-02

IOL Reporter | 2 October 2023 South Africa’s economy needs greater support of regulatory measures to tackle prevailing concentration challenges that shut out potential competitors, particularly Small, Medium, and Micro Enterprises (SMMEs). Such regulations are required across the board, but the 17th Annual Competition Law, Economics, and Policy Conference highlighted the energy, national health insurance (NHI), and food sectors as requiring special focus. Market concentration is not just a matter of economic policy, but a fundamental prerequisite for fostering innovation, ensuring fair competition, and safeguarding the interest of consumers and businesses alike, says Competition Commission (CCSA) deputy commissioner Hardin Ratshisusu. For this reason, the Commission has an important role to play in shaping a fair and competitive economic landscape. The conference, opened by Commissioner Doris Tshepe, emphasised the critical need for fostering competitive markets that benefit all participants and addressed the persistence of high concentration levels in the economy. Despite the diligent efforts of the Commission and the Competition Act, the high concentration levels within South Africa’s economy remain an ongoing challenge. The primary objective of the conference was to engage stakeholders from diverse sectors, including business, government, labour, lawyers, and economists, to strategise methods for promoting competitive markets. Particular emphasis was placed on fostering participation, especially from SMMEs and firms controlled by historically disadvantaged persons (HDPs). Food inflation was a key focus at the conference, specifically its impact on low-income consumers. Strategies to address rising inflation, and the adoption of a competition protocol by African governments to facilitate cross-border trade, while ensuring competitiveness, were issues discussed. In her keynote address on day two of the conference, Competition Tribunal chairperson Mondo Mazwai delved into competition law and its crucial role in promoting inclusive markets and public interest in merger assessments. She cautioned that the journey towards fostering competitive and inclusive markets in South Africa may not yield immediate economic transformation or substantial SMME and HDP involvement, but said the persistent efforts of competition authorities, albeit gradual, play a vital role in shaping progress. By embracing a context-aware, transformative approach consistent with the Act's framework, Mondo says competition authorities can make meaningful contributions to South Africa's transformation objectives, one case at a time. The energy and the national health insurance (NHI) sectors were also key discussions, with panellists discussing how the energy sector faces challenges related to the country’s ongoing energy crisis. They agreed that there was a need to foster inclusive growth within the sector encompassing equitable pricing considerations for renewable energy components such as inverters and solar panels – ultimately, there is the need to ensure competitive markets that benefit all South Africans. In summary of the conference, Tshepe emphasises the importance of inclusive growth and highlights the tools at the Commission's disposal, including market inquiries, to address concentration levels and remove barriers to entry. She cites the ongoing market inquiry into the fresh produce market as an example of efforts to promote competitiveness and inclusivity in the economy. “The Commission remains committed to its mission of creating competitive markets that work for the benefit of all stakeholders.” ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.iol.co.za/news/more-competition-needed-in-sas-economy-especially-food-energy-nhi-sectors-a11a5144-d2a0-4f7d-9b1c-25d876eda2dc

It-Online | 2 October 2023 All South African companies and entities were required to submit beneficial ownership information to the CIPC (Companies and Intellectual Property Commission) before 1 October 2023. If they didn’t meet the deadline, they have a grace period until their next CIPC annual return is due, but then they will need to complete the process within 30 days to avoid falling foul of the new rules and risk penalties. This is according to Joshua Alexandre, InfoDocs founder and CEO, who says: “Over 6 000 beneficial ownership declarations have already been submitted via InfoDocs by the 1 October deadline. The majority of these were by professionals who help privately held businesses to manage CIPC compliance.” The beneficial owners are those individuals who ultimately own or control a company, either directly or indirectly. Although the Companies Act requires a register of those who own or control 5% or more of legal entities, the new laws provide greater transparency about ownership and control structures, which the CIPC will maintain in a central database. The intention is to avoid money laundering and combat terrorism financing. Alexandre says: “The consequences of not knowing who owns and controls companies in South Africa have been dire. Linking beneficial ownership for all companies and close corporations is an important step in preventing abuse, and avoiding further state capture in South Africa.” Private companies (Pty), close corporations (CC), non-profits (NPC), and state-owned companies (SOC) all need to file beneficial ownership. Any individual or entity holding more than 5% beneficial ownership of a company or close corporation must submit a register of beneficial owners to CIPC. The beneficial interest in relation to a company’s securities is entitlement through ownership, agreement, relationship or otherwise. Companies can access the online system directly on CIPC’s website, but they are put off by the complexity of the inefficient process and prefer to outsource the job to professionals. This can be a costly exercise and consequently over 72% of businesses are not compliant. InfoDocs provides a system that is used by professionals and SMEs to add their company directly from CIPC, produce professional templates and store company records securely online. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://it-online.co.za/2023/10/02/cipc-updates-deadline-for-beneficial-ownership-compliance/

Precious Gumede | 30 September 2023 The programme will run in intervals, starting with a group of 10. A non-profit based in Bhoboyi, near Murchison in partnership with three local business owners from Port Shepstone is running a free driving programme aimed at empowering individuals. The founder of Linda Legacy Foundation, Sthembile Linda said the programme will assist individuals who don’t have driver’s licences. “My partners and I saw that many of our youth are faced with unemployment, and a stumbling block among others is that they don’t have a driver’s licence. We decided to be the change we wanted to see.” Linda along with Bhekani Mbambo of B&H Logistics and Towing, Muhle Ronald Mbili from Mfanomuhle Driving School, Dumisani Dubaza Maluleka, a community liaison officer from Bhoboyi and Themba Tshabalala from A&T Busy Corner decided to be the solution makers. She said the programme will run in intervals, starting with a group of 10. “The beneficiaries will start with a learner’s licence course, on passing the test they will start driving lessons until they acquire their driver’s licence,” Linda added. All are encouraged to apply. “We want individuals who are hungry for success and are focused on changing their own lives.” Applicants must be above 18 and have completed matric. “We want them to share their story as to how the licence will impact their life.” Applications are open and will close on Friday, October 6. Email lindalegacyfoundation@gmail.com ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.citizen.co.za/south-coast-herald/news-headlines/local-news/2023/09/30/youth-to-benefit-from-driving-programme/

Ina Opperman | 1 October 2023 Billions are spent ever year on training and skills programmes for South Africa’s youth. The challenge is that while tens of thousands of youth learn new skills, they do not necessarily have a clear path into actual jobs. “What we need is a more targeted approach. For a growing number of institutions and businesses, the answer appears to lie in youth learnership programmes that lead to direct employment. The World Bank and the International Labour Organisation certainly think so, saying learnerships can have long-term positive effects on skills development, entrepreneurship and economic development,” Shobana Maikoo, head of TransUnion’s Global Capability Centre (GCC) in Africa, says. “Learnerships are a key tool in South Africa’s ongoing struggle to get young people employed. The GCC’s own experience highlights the effectiveness of this approach. Since being founded in 2021, it employed 60% of its 100+ learners full time after their 12-month learnerships.” She says businesses must be more precise in their upskilling efforts and focus on specific skills that are sought after in the local market. “In other words, skills that will land these learners actual jobs. The beauty of learnerships is that they effectively provide on-the-job training for the roles the youth might transition into.” Learnerships can combat unemployment The transformative effects of a learnership cannot be understated. Just ask Ntombikayise Skosana (25) from Tsakane, who matriculated in 2014 and was then unemployed for seven years. With no experience, she could not get a job. With no job, she could not get experience. It is a familiar catch-22 that millions of young people know all too well. Skosana started her learnership at the GCC Africa in November 2021 and today she is a management information systems analyst, looking to build on her qualifications and develop a meaningful career. “Our learnership programme has been designed to cater for young individuals with limited work experience or qualifications. Over the course of 12 months, they get international work experience and practical skills by working alongside experienced professionals and being involved in real projects,” says Maikoo. Another GCC learner, mother of one, Mbali Ndimande (28), grew up in Orange Farm in the south of Johannesburg. Despite graduating from the University of Johannesburg, she found herself unemployed for years and was about to give up hope of finding stable employment. She joined TransUnion’s GCC Africa learnership programme in November 2022 and today works full-time in the client operations department, supporting TransUnion’s United States market. However, it is not just the learners themselves who benefit, Maikoo says. “Employers benefit from financial support, including government grants, tax deductions and B-BBEE points, for providing learnership training. Learnership programmes also create a pipeline of skilled employees, who add value to the business and support its growth.” She says many South African businesses spend significant amounts of money each year on skills and development programmes. “Our challenge to the broader business sector is to find ways to create more learnerships. In the process, they will have a far greater impact on their own businesses, while helping make a dent in our country’s unemployment crisis.” ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.citizen.co.za/business/personal-finance/are-learnerships-answer-sa-youth-unemployment-crisis/

Ray Mahlaka and Tim Cohen | 30 September 2023 Board members, executives and CEO of state-owned enterprise Sanral launch a passionate defence of bid adjudication process after Chinese companies awarded road and bridge construction project tenders worth billions of rands. Two of South Africa’s largest road and bridge construction projects were ultimately granted to Chinese companies despite the bidders being disqualified early in the bidding process, tender documents show. The contracts, granted by the Development Bank of Southern Africa under rules determined by the South African National Roads Agency Limited (Sanral), were for the R4.05-billion Mtentu Bridge contract, South Africa’s largest bridge, and the R4.1-billion EB Cloete Interchange project, the largest road project ever allocated by Sanral. These infrastructure megaprojects are among government initiatives to strengthen the country’s logistics and transport corridors, grow the economy and create jobs. The EB Cloete Interchange project will involve the widening of the N2 and N3 national roads in KwaZulu-Natal. The upgrade of the N2 will focus on 55km of road from Lovu River on the south coast to Um­­dloti on the north coast. The N3 upgrade will focus on 80km from Durban to Pietermaritzburg. The project will take eight to 10 years to complete. Once completed by the end of 2027, the Mtentu Bridge will be 1,132m long and form part of Sanral’s N2 Wild Coast Road programme, which involves a 410km stretch from East London to the Mtamvuna River on the border between the Eastern Cape and KwaZulu-Natal. With the decline of South Africa’s railways, the national road network run by Sanral has become a vital commercial artery. However, the decision-making and methodology used by Sanral, a state-owned enterprise (SOE), have become increasingly questioned by business and the construction industry, which is already in a parlous state. In the case of the Mtentu Bridge, tender documents show that neither of the only two applications, the Stefstocks G-LTA Mtentu Joint Venture (JV) and the China Communications Construction Company Mecsa JV, met the eligibility requirements set out by the tender documents. These requirements are normally assessed early in the process of adjudicating a tender, so it’s worrying that neither of the applicants was considered eligible. The tender documents show that, on hearing about the disqualification of applicants, “Sanral’s ac­­count­ing authority sought a legal opinion and resolved that the two bids must be considered as qualifying and therefore be handled as such”. Sanral’s accounting authority is its chairman, Themba Mhambi. He issued a “formal directive”, which read: “The Accounting Au­thority of Sanral has noted the recommendation for the disqualification of the two bids for the Mtentu Bridge tender. After, however, considering a legal opinion at its disposal, the Ac­­counting Authority [of Sanral] has re­solved that the two bids must be considered as qualifying and therefore be handled as such. “The relevant committees are therefore di­­rec­­ted to proceed with the consideration of the two bids as qualifying”. On 27 Sep­­tem­ber, Sanral board members and executives, including CEO Reginald Demana, launched a passionate defence of the company’s project approval processes, saying all recently awarded contracts, including the Mtentu Bridge project, were above board. “They [the contracts] have been run through a rigorous process. It was the board’s prerogative to waive … any process as the accounting authority. “In the end, there was nothing in the process that was material enough to say the process was fatally flawed and should be cancelled. And those contract awards went ahead,” said Demana during a briefing to journalists. He said Sanral believes the tender process was run “normally” by the SOE despite neither of the bidders meeting the tender requirements at the evaluation stage, and being chosen after the board’s intervention. The process in the case of the EB Cloete Interchange was slightly different. The appointed contractors, Base Major together with China State Construction Engineering Company, also did not pass the first round of tender evaluations. This joint venture, which also won the contract for the Ashburton Interchange on the N3 close to Pietermaritzburg, also did not get through the first round of tender evaluations on this project. In these cases, the project was readvertised and subsequently granted to the Base Major-China State joint venture. However, according to insiders, the awards were made subject to the provision of documentation. Intense criticism The Development Bank of Southern Africa, which had been roped in to oversee Sanral’s tender bidding processes, has been approached for comment but has yet to respond. In recent months, Sanral has come under intense criticism from the construction industry for how it adjudicates and awards tenders, and for the inclusion of Chinese companies in South Africa’s infrastructure mega­projects. South Africa’s embattled construction industry is a third of the size it was a decade ago, mainly because of the weak economy and a decline in infrastructure spending by the government and state agencies, including Sanral. Since 2018, Sanral has spent less than half of the grant it receives from the government to embark on infrastructure projects. In 2021/22, it left R10.4-billion of its R15.4-billion budget unspent. The local construction industry wants Sanral to include it in infrastructure projects. However, Sanral’s Demana also defended the involvement of Chinese firms in the agency’s contracts. He said such firms are usually experienced and competitive in delivering projects cost-effectively and on time. “This is not to say that our local contractors are inferior. Some of the local companies have not invested in skills for 20 or 30 years and don’t have expertise in a particular area,” he said. “Therefore, they tend to bid incorrectly for projects. The costs can come up much higher than a firm that is experienced. Price is often a key determinant in the tenders.” But what Demana failed to mention is that Chinese firms in some of Sanral’s contracts, including the one involving the Mtentu Bridge, had the advantage of knowing the prices from previous bids, including those submitted by competing bidders based in South Africa, because the projects were being adjudicated for the second time. The Chinese firms would have had information about the pricing when they moved up the bidding stages and were getting closer to being selected as preferred bidders. Although they are active in the rest of Africa, Chinese construction firms have not gained a large foothold in South Africa. One of the main reasons is that South Africa has a well-developed construction industry and most local companies have strong empowerment profiles, as many firms are 100% black-owned. This is an imperative when state agencies like Sanral adjudicate tender bids. Chinese firms often have little to no empowerment credentials. To win contracts from Sanral, they often have to partner with local companies, piggybacking on their empowerment credentials. Most Sanral contracts, like the ones for the Mtentu Bridge and EB Cloete Interchange, carry a 30% local participation requirement for all bidders. The Chinese firms would have to subcontract some of the project work to local communities and companies (mainly small and medium enterprises). Although local communities and companies are being brought into the value chain, Chinese companies would still lead the execution of a project. Even though these mechanisms for the participation of local companies and communities in Sanral contracts have largely been welcomed, the industry is still puzzled by how the agency handed contracts to Chinese firms for the Mtentu Bridge and EB Cloete Interchange projects. Chris Campbell, the CEO of Consulting Engineers South Africa, an industry body, questioned the fairness of the Sanral tender process that gave a price advantage to the Chinese firms. “As much as we see ourselves as part of the global village and partnership, it would have been much better had we placed more emphasis on localisation and growing our own local companies,” said Campbell. Webster Mfebe, the CEO of the South African Forum of Civil Engineering Contractors, was not concerned about the awarding of contracts to Chinese firms, but he hoped that Sanral applied the principles of fairness, competitiveness and transparency during its tender adjudication process, and followed the requirements of the Constitution. But he was concerned that the principle of fairness and competitiveness may not have been followed, considering that the information about the Mtentu Bridge and EB Cloete Interchange projects, especially pricing in previous bidding rounds, was in the market and known, potentially benefitting the Chinese companies. Sanral has also ruffled feathers with changes to its Broad-Based Black Economic Empowerment (BBBEE) and a new preferential procurement policy it applies when adjudicating tenders, which major construction firms believe will make it difficult for them to win contracts from the agency. In the latest development, at least two construction firms, H&I Construction and SMEC South Africa, have obtained interim court orders to stop Sanral’s evaluation of projects using its new preferential procurement policy. Both interim interdicts were granted pending court applications to review and set aside the new policy. H&I Construction and SMEC South Africa have accused Sanral of not consulting the industry widely on the changes to the policy before implementing them. Sanral currently has about 200 tenders advertised in the market, with a value of about R33-billion. Sanral has estimated that a third of the issued tenders (with a value of R11-billion) will be affected by the court interdicts, but the roll-out of most of its planned projects will continue. Controversy about new system Preferential procurement is the system that paves the way for historically disadvantaged groups and companies to earn extra points in the scoring of tenders, helping them to emerge successful in the bidding process. In the past, Sanral used a bidder’s BBBEE rating to allocate a max­­­i­­­mum of 10 or 20 points out of 100 (depending on the value of the project) for compliance with the agency’s preferential procurement requirements, mainly its empowerment criteria. Companies with a Level 1 BBBEE rating (the highest and most coveted empowerment status) could automatically receive the full number of points. In May, Sanral abruptly changed the weighting of the 10 and 20 points for preferential procurement to provide maximum benefit for 100% black-owned firms. Sanral’s changes, argued H&I Construction, would relegate a bidder’s BBBEE rating to a mere 1 point, in the case of a tender valued at more than R50-million, or 2 points when a tender has a value between R30,000 and R50-million. Essentially, Sanral’s new preferential procurement would render some construction companies un­­­able to compete for contracts. Despite the court challenges, Sanral is sticking to its new procurement policy. Mhambi, the board chair, said the SOE believes that transformation is a constitutional imperative, and “we will drive it as long as we are the governing structure of Sanral”. Mhambi said that, despite all the transformation initiatives that Sanral is pushing, the biggest construction companies in South Africa are still the top beneficiaries of its contracts. “We will continue to support big companies in the construction space, but we will not do that at the expense of the small companies,” he said. “We will do that within a context that makes use of the big companies to assist the smaller companies to benefit, hence our subcontracting requirements, request for skills transfers to smaller companies, our insistence on the employment of local communities wherever we are doing business and our insistence on progressively increasing the ownership of black people in businesses in South Africa.” ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.dailymaverick.co.za/article/2023-09-30-sanral-on-a-rocky-road-in-wake-of-billion-rand-infrastructure-projects-awarded-to-disqualified-chinese-firms/

Staff Writer | 28 September 2023 Amid record levels of unemployment in South Africa, FirstRand co-founder and former CEO Paul Harris believes scrapping the minimum wage for anyone under 25 would have a notable impact on the country’s unemployment crisis. Last week, the Financial Mail asked 23 of South Africa’s top CEOs and power brokers how they would change the trajectory of South Africa and upend the narrative of failure – including Harris. Regarding his short-term strategy, Harris told the publication that he would scrap the minimum wage for anyone under the age of 25 – making it easier to hire and fire employees. “At present, people get the social grant without working, but the youth can’t enter the job market by voluntarily working for less than the minimum wage,” he said. “The outcome of minimum wages has been more unemployment and fewer viable SMEs; they employ fewer people, and more go bust. “The government should stand up in support of the unemployed – they haven’t got a union,” he added. Harris’ perspective on the National Minimum Wage (NWM) echoes the sentiments of business groups and other experts, who’ve voiced their concerns that the NMW – and the annual increases of such a wage – is not conducive in the current economic climate, especially for SMEs. It has only added to the unemployment queue in South Africa. The latest increase, announced in February, saw the national minimum wage hiked by 9.6%, bringing it up to R25.42 per hour. While unions and labourers welcomed the increase, employers and labour organisations were less enthused. Specifically, the latter raised alarms over the increase being far above inflation, pointing out that the wage was hiked around four percentage points higher than expected inflation for the year. This increases the cost of labour in a business environment already under pressure due to the prevailing economic conditions. Business groups acknowledged that the hardships faced by many minimum wage earners in South Africa and the dire economic circumstances they find themselves in could not be ignored, and the purpose of the NMW is to ensure a living wage. However, the challenging environment in South Africa has created hardships for wage earners and employers alike. Legal experts have argued that the national minimum wage itself is mostly smoke and mirrors. Firstly, the wage is not a living wage in South Africa – and secondly, it disincentivises businesses from hiring new employees due to the cost and the stringent labour laws that often protect workers over employers. As the wage increases, costs go up – and businesses, particularly SMEs, that can no longer afford the overheads cannot easily let workers go. Another issue with the minimum wage is that South Africa’s unemployment rate is so high that almost half the population is without any wage at all. According to the latest Quarterly Labour Force Survey (QLFS), South Africa’s official unemployment rate is 32.6%, while the expanded definition – including those not actively looking for work – is 42.1%. However, the Department of Labour said that the national minimum wage has not impacted employment levels or raised unemployment in sectors it has assessed. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://businesstech.co.za/news/business-opinion/721328/scrap-the-national-minimum-wage-for-those-under-25-in-south-africa-says-former-ceo/