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Skills Development as a Priority Element is critical to an organisation’s scorecard. This element aims to up skill Beneficiaries, then provide an employment opportunity whereby the scorecard rewards organisations with Bonus Points for Absorption by design. Whether they spend the target of 6% of the leviable amount or less, it is an investment for most organisations. Hence the money paid out to service providers in this space, for those unethically operating, is considered low hanging fruit. Since the introduction of the Generic Codes of Good Practice in 2007, unethical service providers operating in the Skills Development space have been circling. It goes without saying that working within the Skills Development space, one sees the very best and worst in a transforming South Africa. Taking the latter into account, this article intends to warn organisations of the risks involved when dealing with unethical Skills Development service providers. Those operating ethically in the field will appreciate having the modus operandi revealed of charlatans in this space. Using a scenario, we aim to illustrate how unethical service providers operate, as we delve into the transformation journey of ABC Traders, a Large Enterprise with 1,000 employees. They have a Status Level 6 with an associated 60% Preferential Procurement Recognition. ABC Traders’ Current Situation Investment in ABC Traders’ B-BBEE Strategy includes expanding its operation. In 2019 and 2020, ABC Traders had difficulty gaining and retaining business due to their unfavourable B-BBEE Status Level. Following an executive decision, the ABC Traders Executive Team set a goal to achieve a Status Level 3 at ABC Traders’ next B-BBEE Verification. They employ a Transformation Manager to oversee and implement its B-BBEE Strategy. To prepare the Transformation Manager immediately: Appoints B-BBEE Consultants and legal advisers to overhaul their Ownership Structure. Engages with the Human Resources Department to develop a workable plan to ensure equitable representation within ABC Traders. Re-looks how Beneficiaries are identified and how their Enterprise & Supplier Development Strategy is implemented. Retains the services of a Skills Development service provider to roll out their strategy. Invests in initiatives that create income-generating opportunities for their Socio-Economic Development Beneficiaries. The Transformation Manager is hastily ticking all the to-do boxes, but is falling short in Skills Development. It is one month after ABC Traders’ financial-year end. Before employing the Transformation Manager, ABC Traders was lax in its B-BBEE roll-out, specifically in Skills Development. At this stage, ABC Traders had not registered Learners, although they had allocated the spend necessary to implement it. Furthermore, a successful Skills Development roll-out and Absorption strategy would secure its plan to expand its internal operation. Phase 1 – Engagement Bear in mind that ABC Traders did not make any payments for Skills Development in their last financial year. However, to take the process forward, the Transformation Manager makes an appointment with three Skills Development Service Providers. Two of the three advise that they can only assist ABC Traders in its next financial year, as it did not register Learners in the year ending 2021. However, the third service provider, XYZ Skills, advised that non-registration and payment within ABC Traders’ financial period were merely semantics. They would simply backdate the registration and proof of payment so that ABC Traders could claim their skills spend to align with its financial year. Without red flags registering, the Transformation Manager signs a contract with XYZ Skills and immediately pays over the R21,000.00 for each of the five Learners, totalling R120,750 that includes 15% VAT. Before engaging with XYZ Skills, the Transformation Manager did not: Ascertain whether XYZ Skills would outsource the services to a third party; Conduct a reference check; Ascertain SETA registrations; Establish the method that would confirm the payment of salaries on the agreed date; Ascertain how they source their learners; and Determine if they receive or pay commissions based on ABC Traders’ Skills Development roll-out. The Transformation Manager did not do due diligence out of desperation to meet the mandate. Essentially a decision was made to contract and make a subsequent payment of R120,750.00 based on XYZ Skills’ willingness to backdate the registration and accept payment for ABC Traders’ Learners. Hence, the skills spend could be claimed at its following B-BBEE Verification. Phase 2 – following the payment After receiving the money, XYZ Skills advised the Transformation Manager to relax and that they would provide ABC Traders with evidence that the registration and payment for the Learners would be backdated to align with ABC Traders’ financial year. XYZ Skills then agreed to source the Learners and register them with the necessary SETA. Once the initial stage was complete, XYZ Skills said they would send confirmation of the registration with Superior Learning, the chosen service provider.Furthermore, XYZ Skills confirmed that they would send evidence for the payment of salaries to the Learners. With so much on the Transformation Manager’s plate and confidence in XYZ Skills’ ability, another tick was added to the transformation to-do list. The Transformation Manager should not have accepted the word of XYZ Skills. Processes should have been in place whereby the Transformation Manager would receive regular progress reports supporting all milestones achieved by XYZ Skills. Phase 3 – The red flags appear About three months later, the Transformation Manager receives a call from one of ABC Traders’ Learners stating that they had not received their salary. In addition, the learning institution chosen by XYZ Skills, Superior Learning, advised the Learner that they could not return the following week due to non-payment for services rendered. In addition, XYZ Skills informed the Learner that the Skills Development service provider was changing to the Level-up Institution from the following week. Horrified, the Transformation Manager realises that there was no communication from XYZ Skills about who the Learners were and how and when they would receive remuneration or registration status. The Transformation Manager should have had a list of Learners and identity numbers, so there would be confirmation that the Learner was just that when the call came through. Further, the Transformation Manager should know what institution the Learners were attending and should have done a site visit to confirm that the facilities met the needs of the ABC Traders Learners. Phase 4 – follow the money Over two weeks, the Transformation Manager could not reach XYZ Skills via email or telephonically. The Transformation Manager contacted the relevant SETA to confirm the registration of Learners. The result was that the SETA did receive the applications. However,they had not been processed. The next step was to contact Superior Learning to as certain the status of the Learners. Superior Learning advised that five Learners were registered three months prior. They had agreed with XYZ Skills that they would receive payments monthly. Unfortunately, XYZ Skills made no payment to the SETAs or towards the training and stipends due to the Learners, which meant they could not financially sustain them.Subsequently, Superior Learning halted the Learners’ registration initially submitted to the SETA by XYZ Skills. The Transformation Manager contacted Level-up who confirmed that five Learners were registered two weeks prior, and they had a contractual agreement with XYZ Skills to pay them monthly. Level-up confirmed that they had received no payment. As ABC Traders made no Learner registrations or payments,it could not claim its Skills Development spend. Another challenge is that two institutions have provided services without receiving payment. Furthermore, there is no way to confirm who the Learners are and their salary payments status. ABC Traders’ Skills Development Strategy is at risk of collapsing. Phase 5 – Paying a Premium Following due diligence, to save ABC Traders’ Skills Development investment, as XYZ Skills is still on the missing list, the Transformation Manager engages the services of Superior Learning directly, thus paying out another R120,750.00.Superior Learning undertakes the challenge. It had to re-recruit Learners and engage with the SETA to apply for an extension. Superior Learning then provides evidence that the Learners were registered and received their salaries. Of concern is that XYZ Skills remains on the missing list. To resuscitate the Skills Development Strategy, ABC Traders had to engage with Superior Learning to take over the mandate. ABC Traders had not even received the basic logs that would have confirmed its engagement with the Learners.The premium paid by ABC Traders extends beyond the co stand time to resuscitate its strategy. Phase 6 – The outcome ABC Traders could not claim any Skills Development spend at their next B-BBEE Verification for the 2019 financial year. Consequently, the Discounting Principle was triggered, which means they lost a Status Level. However, following a successful roll-out with Superior Learning, ABC Traders could claim R120,750.00 for the financial year ending 2020. Unfortunately, ABC Traders’ B-BBEE Rating Agency did not recognise the R120,750.00 paid to XYZ Skills for Skills Development services; thus, the amount was registered as a loss in its financial statements. The Transformation Manager eventually delivered on the Skills Development mandate, albeit a year later and achieved Bonus Points for Absorption. However, ABC Traders could not recover the money paid to XYZ Skills. The outcome was that XYZ Skills, upon receiving the funds,had gone the route of ghosting ABC Traders whilst continuing to solicit new business. Adding insult to injury, XYZ Skills provides ABC Traders as a reference when sourcing new low hanging fruit. XYZ Skills remains operational. The nightmare of Skills Development Service Providers does not end with the scenario outlined in this article. Other typical low hanging fruit includes, but is not limited to: Learners who complete a Management NQF 3 only to discover that the said Learnership was registered as a Business Administration NQF 3 with another SETA. The registration of identical Learners over two consecutive Measurement Periods. Registering the identical Learners with two organisations represented by different SETAs, pocketing one portion of the money received. Not paying the full salary over to the Learner, then retaining some funds. There is a deficit between the payslip and the money paid to the Learner. Paying stipends to Learners without any tuition. Both the scenario and the examples provided illustrate that an organisation’s Skills Development spend is low hanging fruit for charlatans operating in the Skills Development space. When choosing a service provider, due diligence will ensure that an organisation does not have to resuscitate a Skills Development Strategy. Core to due diligence is knowing the following: What is a Skills Development training provider? It is an organisation that provides occupational learning as per Section 1 of the Skills Development Act 37 of 2008. What is an Employment and Skills Development Agency? “An Employment and Skills Development Agency (ESDA) is an organisation or company that, through written agreement with an employer, employs learners and manages the placement of the learners with host employers for on-the-job training and assessment and approved training institutions for off-the-job training to complete a regulated training program, a learnership or apprenticeship,” – Skills Development Act. What is a learnership and what does it comprise? The Skills Development Act and Regulations guiding Learnerships require: A structured learning component that includes both practical and work experience; A specified nature and duration of intervention that it leads to a qualification registered by the South African Qualifications Authority and relates to an occupation; and Registration with the Director-General in the prescribed manner. How does an organisation mitigate the risk of Fronting Practice? It is conduct that undermines or frustrates achieving the objectives in the B-BBEE Act. Before engaging with a Skills Development service provider, an organisation must: Assess core and critical skills from the primary SETA. Accessing the incorrect SETA may result in a B-BBEE Rating Agency not allowing Skills Development spend as a claim. Form a Skills, B-BBEE or Steering Committee to assess core and critical skills. Be aware of the specific skills required. Obtain an NQF report from an organisation’s primary SETA’s website. Due diligence before contracting a Skills Development service provider would include establishing the following: How long have they been in business? Did they previously trade under another company name? What are the geographical areas they operate in? Do they have references that support a solid track record? What is the average drop-out rate of Learners? Do they rely on third-party intervention? Are the Learners’ salaries or wages in line with the national minimum wage requirements? Can they furnish evidence that they are an accredited Skills Development service provider? Do they adhere to the standards of the body of their accreditation? Can they provide a financial viability report from their auditors? Do they agree to a site visit to confirm that the facilities will adequately accommodate Learners from both an infrastructural and geographical perspective? Can they confirm that they have the in-house capacity to meet the contract requirements? Do they have a good relationship with the primary SETA aligned with the sector an organisation represents? Due Diligence Red Flag areas Unrealistic Absorption guaranteed; A willingness to circumvent the requirements of the Skills Development Scorecard; Can only operate with the support of third-party service providers; Outsourcing of services; Inability to provide accreditation evidence in the company name under which they operate. What are the risks when engaging withunscrupulous Skills Development trainingproviders? An unscrupulous training provider will only reveal itself once the contract has been signed. Even though an organisation might have the best intentions, there are dire consequences for incorrectly implementing Skills Development, namely: No recognition of the Skills Development Scorecard; Investigation into Fronting Practices; The rejection of future mandatory grant applications from the relevant SETA; Having to repay Skills Development spend to resuscitate a Skills Intervention and the loss of claimable tax as per section 12H of the Income Tax Act; The rejection of a Work Skills Plan by the relevant SETA; A fine; and Reputational damage. Using a reputable Skills Development service provider can be the difference between a Skills Development spend being allowed or disallowed at a B-BBEE Verification. The reason is that an organisation can only make a Skills Development claim after completing the Learnership Programme. Although running a Learnership programme can be tedious,contracting a service provider who provides an ethical and meaningful skills intervention goes far beyond the points of an organisation’s Skills Development Scorecard.

Bizcommunity | 1 March 2023 Image source: Yan Krukau from Pexels The Unemployment Insurance Fund (UIF) has paid out R22.6m to 4,942 former teaching and general assistants, who were employed under Harry Gwala and iLembe District Municipalities in KwaZulu-Natal. The payments were processed between 20 and 23 February 2023, when the UIF took services to clients via its mobile buses. The campaign started in November 2022 under Amajuba District Municipality, where the Fund disbursed R7.7m to 1,746 former educator assistants and general assistants. It proceeded to eThekwini and Pinetown in December 2022, where R28.8m was paid out to 6,204 beneficiaries. It subsequently moved to Zululand, uMgungundlovu, uThukela, Ugu, iLembe and Harry Gwala Districts. “To date, a cumulative R98.4m has been paid out to 22,037 beneficiaries, who were employed in the aforementioned districts. From 6 March 2023, the Fund will continue with processing and paying out claims in areas around the uMkhanyakude and uMzinyathi District Municipalities,” the Department of Employment and Labour said on Monday, 27 February. The pay-out claims at uMkhanyakude District, will be processed on 6 March at Manguzi Education Centre; 7 March at Sisizakele Special School in Ngwavuma; 8 March at Sinethezekile Secondary School in Jozini, and from 9-10 March at Inkosi Mzondeni Hall in Mtubatuba near kwaMsane Clinic. At uMzinyathi District, the pay-outs will be processed from 6-7 March at Spring Lake High School (Endumeni/ Nquthu); 8-9 March at Ukukhanya komsinga Special School in Msinga; and 10 March at Greytown High School. The department has urged clients who wish to lodge their benefit claims to bring along a valid identity or passport document, a fully charged smartphone with data, a black pen, and proof of valid banking details. “To increase the employment prospects of former teaching and general assistants, the Department of Employment and Labour’s Public Employment Services (PES) branch will be present on-site to register the CVs of the unemployed clients on the Employment Services of South Africa (ESSA) system. This service has been a standard feature of the campaign since it started,” the department said. ESSA is a system where work seekers can register their CVs for possible jobs and also search and apply for new job opportunities. The system can be accessed on https://essa.labour.gov.za/EssaOnline/WebBeans/. The former teaching and general assistants were employed as part of the Presidential Youth Employment Initiative (PYEI), which was implemented as part of the Basic Education Employment Initiative (BEEI) - across all nine provinces - to reduce youth unemployment in the country. When their contracts ended, the former employees qualified to claim unemployment insurance benefits from the UIF. The dates and venues for the final District, King Cetshwayo will be announced in due course on the Fund’s social media platforms and through the media. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.bizcommunity.com/Article/196/863/236433.html

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SA News | 28 February 2023 Unemployment and expanded unemployment rates have decreased marginally during Quarter 4 (Q4). This is according to the Quarterly Labour Force Survey (QLFS) results released by Statistics South Africa (Stats SA) on Tuesday. “The… changes in employment and unemployment resulted in the official unemployment rate decreasing by 0.2 of a percentage point from 32.9% in the third quarter of 2022 to 32.7% in the fourth quarter of 2022. “The unemployment rate according to the expanded definition of unemployment also decreased by 0.5 of a percentage point to 42.6% in Q4:2022 [the fourth quarter] compared to Q3:2022 [the third quarter],” Stats SA said. The institution explained there were employment gains for youth (those aged between 15 and 34 years old) during the period under review, this group remains “vulnerable in the labour market” with an unemployment rate of some 45.3%. “The total number of unemployed youth increased by 46 000 to 4.6 million in Q4:2022. There was an increase of 86 000 in the number of employed youth during the same period. The increase in employment and the decrease in unemployment among the youth resulted in a decrease in the youth unemployment rate by 0.2 of a percentage point,” Stats SA said. Stats SA indicated that despite difficult economic conditions, South Africans who gained employment, outstripped those who became unemployed. “The results indicate that 169 000 jobs were gained between the third quarter of 2022 and the fourth quarter of 2022. The total number of persons employed was 15.9 million in the fourth quarter of 2022. The number of unemployed persons increased by 28 000 to 7.8 million in the fourth quarter of 2022. “The number of people who were not economically active for reasons other than discouragement increased by 95 000 to 13.4 million and the discouraged work-seekers decreased by 151 000 in the fourth quarter of 2022 compared to the previous quarter resulting in a net decrease of 57 000 in the not economically active population,” Stats SA said. Sectors leading employment gains were those in finance, private households, trade and transport while jobs were lost in community and social services, agriculture and construction. “The formal sector recorded an increase in employment of 143 000 and the Informal sector recorded a loss in employment of 15 000 between the third quarter and fourth quarter of 2022,” the institution said. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.sanews.gov.za/south-africa/marginal-decrease-unemployment-rate

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Glenneis Kriel | 28 February 2023 Alicia Alves started working at Kleine Zalze eight years ago as a stock controller. She worked her way up and now plays an instrumental role in the logistics behind the millions of bottles of wine produced on the estate every year. Photo: Glenneis Kriel As part of an empowerment project, farmworkers at Kleine Zalze wine estate have released the first wines produced from grapes grown in their own vineyards. They spoke to Glenneis Kriel about their achievement. The workers on Kleine Zalze wine estate near Stellenbosch in the Western Cape had often heard stories of other farmworkers across South Africa who had benefitted from empowerment initiatives over the past two decades. However, they never thought such an opportunity would ever come their way. Gerald Snyman, vineyard manager at Kleine Zalze, says that while he dreamt about it, he didn’t think it was possible; and Alicia Alves, general manager of stock control on the farm, says the thought never crossed her mind. But in 2017, Kobus Basson, then owner of Kleine Zalze, made his employees’ dream a reality when he negotiated a long-term lease agreement for 20ha of municipal land bordering the farm, and entered into a partnership with his staff. A year later, the Kleine Zalze Empowerment Trust was established and, through its collaboration with the estate, the black-owned Visio Vintners company was formed that same year. According to Alves, Basson initiated the project because “he wanted to give something back to his workers for their contribution to his success”. The model As it is with many other broad-based black economic empowerment (B-BBEE) projects in the agriculture sector, the empowerment trust owns a 51% stake in Visio Vintners, while the estate owns the remaining 49%. The beneficiaries of the trust don’t hold direct shares in Visio Vintners, which eliminates the problem of what happens to the shares when people wish to sell them, or they leave their jobs at Kleine Zalze or pass away. Alves explains that all of Kleine Zalze’s permanent workers, whether they joined the labour force before or after the initiative was launched, will share in Visio Vintners’ profits for as long as they work for the estate. The benefit is lost when somebody leaves the company, unless that person has retired or become disabled, in which case he or she continues to receive the benefit for another five years. At the time of writing, Kleine Zalze had about 80 permanent employees. On the same page Brandon Uitlander, who is in charge of general maintenance at Kleine Zalze, says everybody knew from the start that the initiative wasn’t a “get-rich-quick [scheme]”. “Everybody understands that it takes up to four years from planting before vineyards bear commercial yields, and that the winemaking process can add another two years to that. “We knew it wasn’t going to be an easy ride and that it wasn’t a way to simply make [Kleine Zalze] look good by ticking B-BBEE boxes. The future of Visio Vintners lies in our hands,” he explains. Before any profit-sharing can take place, the empowerment trust has to repay a R3,5 million loan, which formed its contribution to the establishment and maintenance of the vineyards, as well as the winemaking, bottling, logistics and marketing costs. “Basson lent us this money, interest-free. Having to repay the loan is actually empowering in itself, as you realise that you don’t work for instant material compensation, but that as business owners we have to be patient and ride out the early cycles of costs and effort before we can move into the black and show a profit,” says Uitlander. While there haven’t been any major conflicts as yet, the project has seen a few “changes”, with the biggest being the sale of Kleine Zalze to the French wine group AdVini in September this year. “Good communication with the beneficiaries and the transparency in how things are done are ensuring a smooth transition during these times,” he adds. AdVini has also been very supportive of the Visio Vintners initiative. “I’ve had wonderful discussions with Antoine Leccia, AdVini’s president, and he is following the project with great interest because of its uniqueness; you won’t find anything like it anywhere else in the world. “I think AdVini would like to replicate the initiative on some of its other farms once the model has proved itself,” explains Uitlander. Planting and management With 15ha reserved for planting, Basson kicked off the project by planting its first vineyards in 2017. “When I saw the land that had been set aside for us, I knew this was a serious project, as the site had become renowned for producing high-quality red wines from the vines that were planted there before,” says Snyman. Thus, their primary focus is the red varietals Cabernet Sauvignon, Cabernet Franc and Shiraz. The remainder of the 15ha were planted this year. The first vineyards were planted on a vertical-shoot trellis system, while those planted this year were done so via a vine-by-post system, which essentially involves trellising a bush vine onto a single pole. The latter vineyards are also unique in that they were planted to a field blend of Syrah. Their choice of trellis system is determined by the style of wine they want to make, says Snyman. The vineyard rows are planted in a north-south orientation, which means the entire canopy receives more light than it would if the rows were planted in an east-west direction. This, in turn, helps to evenly ripen the grapes and leads to more uniform fruit. Cover crops are planted between the vineyard rows, and alternate between triticale and oats, and barley and lupines. “The cover crops help to improve the soil, create a favourable ecosystem, and buffer soil temperatures against extreme cold and heat,” explains Snyman. Contract workers are employed to do the big tasks in the vineyards, such as pruning and harvesting. Snyman, however, says he would prefer if the empowerment trust beneficiaries could do more of the work in their vineyards themselves, as this would help to reduce costs. “I guess this isn’t a practical solution, though, as the beneficiaries are employed in different areas of the Kleine Zalze business, so most of them don’t know how to work the vineyards.” Alves adds that putting in extra time and effort to make the Visio Vintners brand successful, be it in the vineyard, the winemaking process, logistics or marketing, doesn’t feel like work at all, because it is something they are doing for their own benefit: “This is our baby, so we are willing to go out of our way to ‘raise’ it to become a legacy.” Nonetheless, while owning your own vineyard and wine brand is rewarding, it also comes with a certain amount of worry, Snyman says. “I sometimes have sleepless nights because of the vineyard. And now, since the rain has been untimely and we have received so little of it, the risk of poor fruit set is high,” he explains. The wine The first wines under the Visio Vintners label were released earlier this year. The range comprises a Sauvignon Blanc, a Pinotage, a Cinsault rosé, a premium red blend called Alliance, and a perlé sparkling wine. Cellar manager Norman Paulse, who works alongside cellarmaster RJ Botha, says that while the true art of winemaking starts in the cellar, it does require food-quality grapes: “You cannot make something brilliant from inferior raw materials.” So far this year, says Alves, Visio Vintners has produced roughly 40 000 bottles of wine, which have been sold locally and internationally, and 55 000, 200mℓ cans of the sparkling wine, most of which were exported to Scandinavia. Their first export order was from Norway for a container of Sauvignon Blanc. Visio is also set to supply Hatch Mansfield, a UK premium wine specialist, which is planning to place its first order for shipment in early January 2023. The aim is to establish the brand in restaurants and independent retail stores in the UK from March next year. Alves says that while Visio doesn’t want to compete with Kleine Zalze directly, it helps to tap into the latter’s network of distributors, which includes Hatch. “In South Africa, Vinimark will sell and distribute Visio Vintners from March, too, and AdVini’s distribution network promises to open up new markets for us.” Main aim She says their biggest goal now is to perfect the quality of Visio’s wine. And they seem to be doing just that, considering that their Alliance 2020, a blend of Cabernet Sauvignon, Cabernet Franc, Shiraz and Pinotage, scored a commendable 92 out of 100 points in UK wine writer and Master of Wine Tim Atkin’s South Africa 2022 Special Report. What’s more, their 2020 Pinotage won gold at the Michelangelo International Wine & Spirits Awards. “Owing to the millions of other brands around the world that we have to compete with, we know that wine quality will be the biggest driver of our project’s success. That’s why we trust Botha to advise us and lead our winemaking,” says Alves. They are also working on building and marketing the Visio brand, which they started doing at the CapeWine 2022 exhibition in October. Once they have established distribution networks in core markets, demand for their product will grow and the trust will be able to repay its debt to Basson. They are also considering appointing a dedicated winemaker to take the brand to a next level. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.farmersweekly.co.za/agri-business/agribusinesses/empowerment-through-winemaking-farmworkers-make-top-quality-wines/

The following rules apply when calculating Mandated Investments for Statement 100, Ownership : "Mandated Investments means any investments made by or through any third party regulated by legislation on behalf of the actual owner of the funds, pursuant to a mandate given by the owner to a third party, which mandate is governed by that legislation. Some examples of domestic mandated investments and the portions of those investments subject to the Exclusion Principle are contained in Annexe 100A attached to statement 100." Furthermore, as per clause 3.7 of Statement 100 of the Amended Codes of Good Practice, the following is stated: "3.7 Mandated Investments 3.7.1 When determining Ownership in a Measured Entity, Rights of Ownership of Mandated Investments may be excluded. 3.7.2 The maximum percentage of the Ownership of any Measured Entity that may be so excluded is 40%. 3.7.3 A Measured Entity electing not to exclude Mandated Investments when it is entitled to do so may either treat all of that Ownership as non-Black or obtain a competent person's report estimating the extent of Black rights of Ownership measurable in the Measured Entity and originating from that Mandated Investments. 3.7.4 A Measured Entity cannot selectively include or exclude Mandated Investments and therefore an election to exclude one Mandated Investment is an election to exclude all Mandated Investments and vice versa. 3.7.5 A Measured Entity applying the Exclusion Principle to Mandated Investments cannot benefit from the Modified Flow-Through Principle." Ownership Services are available to assist Members in calculating Black Shareholding which includes Mandated Investments.

The Employment and Labour Minister recently announced an increase in the National Minimum Wage (NMW) to R25,42 per hour as of 1st March 2023. The increment aligns with the NMW Act of 2018. The policy framework of this Act is the floor, a level below which no employee should be paid. The Act dictates that it is illegal and unfair labour practice for an employer to unilaterally alter an employee's working hours or other Conditions of Employment due to the wage adjustment. Notwithstanding, the NMW covers the wage payable for ordinary work hours and excludes allowance payments, such as transport, tools, food or accommodation, or payments in kind such as board and lodging, tips, bonuses, or gifts. The Act requires that the NMW Commission reviews the prescribed rates annually, then makes recommendations to the Minister on any adjustment, taking into account alternate views like public comment. The increment applies to Y.E.S Employees who fall under that wage bracket. Support Services are available to direct members in implementing the amended NMW adjustment.

It is often seen as a victimless crime for those engaging in bribery and corruption. However, in reality, it reduces efficiency and increases inequality. The truth is that the cost of corruption is colossal, with tangible consequences. According to the World Bank, the corrupt pay more than $1 trillion in bribes annually. The World Economic Forum estimates that the cost of corruption equates to more than 5% of global GDP, or $2.6 trillion. Essentially, corruption is one of the core obstacles to sustainable economic, political and social development in emerging and developed economies alike. To clarify, ‘corruption’ is any illegitimate use of office and includes crimes like nepotism or cronyism and misdirecting funds. ‘Bribery’ is limited to the giving or acceptance of payment for leverage. South Africa has international commitments and obligations to curb the scourge of corruption. Furthermore, the Constitution mandates compliance with international law and requires the country to comply with its international obligations. South Africa has ratified several international conventions and treaties and participates in forums that need the government to implement measures to prevent and combat corrupt activities, like: The United Nations Convention against Corruption (UNCAC), which promotes the prevention and criminalisation of corruption. It highlights the need for international cooperation in the fight against corruption and the return of assets associated with corrupt activities. The African Union’s Convention on Preventing and Combating Corruption. The SADC Protocol Against Corruption. The Financial Action Task Force (FATF). The Group of 20 (G20) Anti-Corruption Working Group, where South Africa participates, thus provides an accountability report. United Nations Convention Against Corruption (2003). The Organisation for Economic Cooperation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997), The United Nations Convention against Transnational Organised Crime (2000) and its associated protocols. What is clear is that South Africa is internationally committed to preventing and combating corruption and has a legislative framework that paves the way. Each convention and treaty ratified by South Africa compels action to prevent and combat corruption. The National Anti-Corruption Strategy (NACS) is the driving force overseeing compliance in the public and private sectors. Other significant local anti-corruption laws include the Prevention and Combating of Corrupt Activities Act (12 of 2004), The Prevention of Organised Crime Act 121 of 1998 and the Financial Intelligence Centre Act (38 of 2001). Many organisations address corruption by implementing remedial measures and controls to identify it. However, without public and private intervention, the scourge of bribery, extortion and/or bribe solicitation will continue with impunity. The OECD Recommendations, The Public Services Act, The Companies Act and the NACS all address the preventing and combating of corruption in public and private sectors. OECD Recommendations In 2010 there was a positive step forward in the fight against corruption when the OECD Recommendations on Combating Bribery, Bribe Solicitation and Extortion (2011) were introduced in terms of regulation 43 of the South African Companies Act (71 of 2008) as amended. Hence, South African organisations are obliged to: not pay or demand bribes; have an anti-bribery policy; develop internal processes and controls to mitigate the bribery risk; keep fair and accurate books and records; perform an anti-bribery risk assessment to identify the risks of bribery; perform due diligence on agents, intermediaries and consultants to ensure that they do not pay bribes on behalf of an organisation; educate employees and agents on anti-bribery processes; publicise their anti-bribery initiatives; and avoid unlawful political contributions. To adhere to the OECD Recommendations, organisations across all sectors must implement robust anti-bribery and corruption programmes. The recommendations’ core objective is to neutralise people’s ability to pay bribes in the private sector. The ripple effect would halt public sector corruption, as those in the private sector invariably pay bribes. Organisations should regard the OECD Recommendations as a normal business practice. They amount to good corporate governance and commitment to doing ethical business and mitigating the risks associated with bribery. Public Sector Legislation The amendment of the Public Service Act (Act 103 of 1994) and the Public Service Regulations aim to protect procurement processes and send a strong message to the ruthless breed of capitalists intent on keeping corruption thriving. The amendments include: Prohibiting public officials from undertaking other remunerative work outside their employment. Public officials performing other remunerative work outside their employment should seek permission from senior officials. When participating in additional work and receiving remuneration, they must obtain a Certificate of Approval, which must be attached to the public service employee’s Financial Disclosure Form, allowing for easy verification; Prohibiting public officials from conducting business with any organ of state, whether in their capacity as individuals or through companies in which they are directors; Prohibiting public officials from accepting gifts from any employee or person in return for performing their duties; Compelling designated public officials to disclose their financial interests, which is essential in managing any conflict of interest; and Establishing an ethics infrastructure, such as ethics committees, ethics officers or ethics champions in public organisations. The Companies Act Any South African organisation falling under the jurisdiction of the Companies Act must adopt the OECD Recommendations. Those falling within the ambit include: State-owned enterprises; All listed public entities; In two of the previous five years, any other company that scored more than 500 points relevant to regulation 26(2). Regulation 43 of the Companies Act mandates that an organisation establishes a social and ethics committee. Among many duties in promoting sound corporate citizenship and ethics, the responsibilities include reducing corruption and ensuring the organisation adopts and implements the OECD Recommendations. A summary of the duties of the nominated social and ethics committee, based on the OECD Recommendations on combating bribery, bribe solicitation and extortion, is: Monitoring an organisation’s activities against relevant legislation, legal requirements, or prevailing codes of best practice in social and economic development matters. It includes an organisation’s standing in terms of its goals and includes: the tenth principle set out in the United Nations’ Global Compact, which stipulates that organisations should work against corruption in all its forms, including extortion and bribery; the OECD Recommendations regarding corruption; o the Employment Equity Act; and the B-BBEE Act. Ensuring good corporate citizenship by promoting equality, preventing unfair discrimination and reducing corruption; Contributing to the developing communities in areas where an organisation operates or where it markets product or services; Maintaining a record of sponsorship, donations and charitable giving; Overseeing issues relating to the environment, health and public safety, as well as the impact of an organisation’s activities, products or services; Ensuring that an organisation's advertising and public relations align with consumer protection laws; Addressing labour and employment issues: Evaluating the organisation’s standing in terms of the International Labour Organization Protocol on decent work and working conditions; Appraising an organisation’s employment relationship and contributions with regard to the educational development of its employees; Drawing matters within its mandate to the board’s attention, as the occasion requires; and Reporting to shareholders at the organisation’s annual general meeting on the matters within its mandate. National Anti-Corruption Strategy 2020-2030 The South African Government developed and published the NACS, a strategic framework and action plan for the country which seeks to create a society that: Reinforces the government’s administrative and procurement processes to ensure greater monitoring, accountability and transparency. Educates the public about what constitutes corruption, thus empowering them to respond when or where necessary. Encourages support and protection of the public and whistle-blowers who report corruption. Holds public officials accountable for providing inadequate services. Creates a culture of zero tolerance toward corruption in any sector by holding those involved in corrupt activities accountable. Holds organisations and civil society accountable for bribery and corruption. The premise of the NACS principle is the emphasis on preventing corruption through good governance, transparency, integrity and accountability. An integrated approach to fighting corruption will help mitigate the risk of costly commissions of inquiry, forensic investigations and other legal processes. The government built the strategy on the following six pillars: Promote and encourage active citizenry, whistleblowing, integrity and transparency in all spheres of society. Enhance employee professionalism to optimise their contribution towards creating corruption-free workplaces. Enhance governance, oversight and accountability in organisations across all sectors. Improve the integrity, transparency and credibility of the public procurement system. Strengthen dedicated anti-corruption agencies to resource and coordinate transnational cooperation, performance, accountability and independence. Protect vulnerable sectors most prone to corruption and unethical practices with effective risk management. Prevention and Combating of Corrupt Activities Act This legislation applies to organisations based in South Africa, including international ones conducting business in the country. Facilitation payments have always been illegal in South Africa. In terms of the Prevention and Combating of Corrupt Activities Act (12 of 2004), it is a criminal offence to provide any form of ‘gratification’ to an official if it is not lawfully due. The Act regulates bribery as: “any person who directly or indirectly gives or accepts or agrees or offers to give or accept any gratification from another person to act personally or influence another person to act in a manner that amounts to an illegal, dishonest, or unauthorised action or an abuse of authority, a breach of trust or a violation of a legal duty, is guilty of the act of corruption.” In addition to the general offence of corruption, the Act sets out an entire series of corrupt activities, including the bribery of public and foreign government officials. It addresses corruption related to, among others, tenders, contracts, agents, members of the legislature and judiciary, sporting events and games of chance. On a global front, the Act imposes lengthy periods of imprisonment on individual offenders convicted of corrupt activities. The mandatory minimum sentence for corruption in the South African sentencing guidelines is direct imprisonment for 15 years. The Prevention of Organised Crime Act 121 of 1998 The main objective of this legislation is to provide for the recovery of the proceeds from unlawful activities. The High Court has jurisdiction to make a forfeiture order as per section 50(1)(b) of the Prevention of Organised Crime Act, 1998, in respect of property situated outside the territory of South Africa and belonging to persons who are presently resident elsewhere. An order can be made upon reasonable grounds to believe the property concerned is an ‘instrumentality of an offence’ referred to in Schedule 0 (s 38(2)(a)) or is the ‘proceeds of unlawful activities’ (s 38(2)(b)). The definitions of the terms ‘instrumentality of an offence’ and ‘proceeds of unlawful activities’ feature prominently in the Act. The former relates to any property concerned with the commission of an offence, irrespective of where it occurred. The latter applies to any form of property of direct or indirect benefit from any unlawful activity. The legislation aims: to combat organised crime, money laundering and criminal gang activities; to prohibit certain activities relating to racketeering activities; to provide for the prohibition of money laundering and for an obligation to report certain information; to criminalise certain activities associated with gangs; to provide for the recovery of the proceeds of unlawful activity; to ensure the civil forfeiture of criminal assets that the corrupt used to commit an offence or assets that are the proceeds of illegal activity; to provide for the establishment of a Criminal Assets Recovery Account; to amend the Drugs and Drug Trafficking Act, 1992; to amend the International Co-operation in Criminal Matters Act, 1996; to repeal the Proceeds of Crime Act, 1996; and to incorporate the provisions contained in the Proceeds of Crime Act, 1996. The Prevention and Combating of Corrupt Activities Act and the Prevention of Organised Crime Act are a strong foundation for addressing corruption, an acceptable overall anti-corruption. "To clarify, ‘corruption’ is any illegitimate use of office and includes crimes like nepotism or cronyism and misdirecting funds. ‘Bribery’ is limited to the giving or acceptance of payment for leverage." The global fight to combat corruption As many organisations and individuals fly under the radar of culpability inside South African borders, the global playing field of accountability for corruption has changed drastically in the last few years. For some time, anti-corruption campaigners and activists have urged South African authorities to consider adopting legislation similar to the United Kingdom Bribery Act (UKBA) that came into effect in July 2014. Through its innovation, a new corporate offence, “the failure by a commercial organisation to prevent bribery,” has been compelling organisations associated with the United Kingdom (UK) to take robust anti-corruption measures. The UKBA is similar to the Foreign Corrupt Practices Act (FCPA), a United States (US) statute containing anti-bribery prohibitions and accounting requirements. Like US legislation, the UKBA provides extra-territorial jurisdiction to the UK regulators regarding acts of corruption committed by organisations associated with the UK. It is irrelevant whether the Act of corruption occurs in the UK or elsewhere, or where the organisation in question is registered or located globally. Unique to the UKBA is that it applies to both the public and private sectors and criminalises facilitation payments. The legislation is not only aggressive, but it has more far-reaching consequences for South African organisations, as it gives the Serious Fraud Office the power to impose fines for failing to prevent bribery. The US remains the most robust global enforcer of corruption violations. A critical factor for South African organisations is that the US Department of Justice adopts a comprehensive approach to jurisdiction and has cautioned that it will find jurisdiction regarding bribes paid to foreign government officials. It does so if payments route through US dollar accounts or e-mails, where transmission happens through US-based servers. Accordingly, South African organisations that may not ordinarily regard themselves as subject to the international regulators may inadvertently become subject to their extra-territorial jurisdictional reach. For example, if an employee in a subsidiary in South Africa pays a bribe to a foreign government official, a prosecution could occur there. However, the perpetrators could face prosecution in the US as well. It is only a question of time before the South African government implements drastic measures against corruption, similar to those of the UK and US. Therefore, as part of being a good corporate citizen, South African organisations should initiate robust anti-corruption programmes to comply with and avoid prosecution by international regulators and, of course, conform with the South African Companies Act. In today’s global and local anti-corruption compliance environment, it would be reckless for any board of any organisation not to pay serious attention to creating an anti-bribery culture. Non-compliance with anti-corruption requirements has far-reaching consequences and is a risk that organisations must appropriately manage. Despite South Africa being a signatory to international conventions and treaties, as well as having robust legislation in place, it has not fared well in the Transparency International Corruption Index. In 2015 it ranked 61st out of 167 participating countries, and in 2021 ranked 70th out of 180 participating countries. Food for thought, the cost of corruption far exceeds that of mitigating it.

Barend Matthee | 28 February 2023 Extended blackouts and relentless loadshedding is crippling essential infrastructure and service delivery in South Africa. In a recent announcement, one of South Africa’s largest telco providers stated they were making the shift from the national power grid and would begin sourcing electricity from Independent Power Producers (IPPs). This signals the start of a new era in commercial autonomy as essential service providers seek to bypass the effects of loadshedding. By engaging IPPs, businesses with the funding will either establish their own power plants or purchase power directly from them, as South African IPPs are ready to roll out their alternative power generation projects. To date, several have been signed off and are already at various stages of implementation. With a national state of disaster hanging in the balance, timing is critical and the urgency of getting these projects up and running as soon as possible cannot be understated. Here, a Temporary Employment Services (TES) provider can leapfrog unnecessary delays and get IPPs on track toward creating the stable power supply our country so desperately needs. Impending state of disaster The South African government is currently considering whether the ongoing energy crisis meets the legal requirements to declare a national state of disaster, as record levels of power cuts continue to hamstring the economy. Fuel stations in remote areas, medical facilities, water supply services, food production and telecommunications have suffered immensely in recent months due to incessant scheduled power cuts. With no decisive action taken to date by the government to rectify the ailing power grid, service providers are having to take matters into their own hands now that regulations within the IPP industry have been eased. Following the example of Central and South America where telco companies use renewable energy to power signal towers in remote areas, such solutions will need to be applied in South Africa, not only to power telecommunications but for critical services as well. Providing skills and speed Given the scale and urgency of demand, however, it is unlikely that IPPs have reached a point of maturity where they can step up and meet this deficit, particularly from a labour perspective. Many skills and many hands are required to build the power generation capacity required, and this is where a TES provider would be an ideal partner. With a national footprint and an extensive database of verified skills and labour, a TES provider will help IPPs find and deploy the workforce necessary for the construction, operation, maintenance and repair of renewable power plants. Not only does a TES provider source and place the workforce, but theirs is also an end-to-end employment solution that encompasses the entire administrative burden of managing a large workforce as well as the various compliance considerations required by law. By partnering with a TES provider, IPPs will be able to hit the ground running much faster, overcoming all the usual hurdles involved in projects at scale, and will be able to take on much larger projects which would otherwise have been impossible without the necessary resources. Saving time through support In this respect, a TES provider can save a substantial amount of time on IPP projects. During the consultative phase, the TES provider offers invaluable experience from previous similar undertakings for the IPP to leverage, ensuring that all obstacles and delays are swiftly overcome. At the point of execution, the TES partner can provide critical support in the form of budget planning, HR and IR management, as well as safety and strategic advisory. Of central importance is the direct supply of labour, including contingency staffing and recruitment. The TES provider delivers agile support, including contractor-side recruitment, and the fulfilment of local content requirements. Additionally, the TES partner is capable of handling the indirect supply where the IPPs are required to onboard many suppliers within the project ecosystem. Reducing the administrative burden With the right TES partner in place, IPPs have access to the proper systems and technology for transparency, traceability and auditable information to support the compliance framework and reporting structures required by the Department of Mineral Resources and Energy, massively reducing the administrative burden on the IPP. Here, the TES provider plays an inclusive facilitatory role with the experience and infrastructure necessary to support that procurement function - everything from staff medicals, to transport, training, Personal Protective Equipment (PPE) and staff wellness initiatives. By utilising a TES provider, it becomes possible to achieve labour harmony, as the TES provider also facilitates community and stakeholder engagement, completely handling all elements of human resource management and ensuring the surrounding community benefits properly from job creation, skills development and enterprise and supplier development. Accelerating the entire project lifecycle When considered from this perspective, it becomes clear that a TES provider is effectively competent, enabling turnkey operation, playing a pivotal acceleratory role in the journey to get to that empowerment of the IPPs that results in achieving a stable power supply for essential services, much quicker. Furthermore, the faster a project is completed, the faster the TES provider can assist the IPP to get to the next phase, which is longevity development. This is where true economic recovery and progress happen, as the TES provider supports IPPs and local communities as an empowering catalyst that drives economic initiatives to full effectiveness. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.engineeringnews.co.za/article/averting-disaster-how-a-tes-partner-can-empower-ipps-to-fast-track-a-stable-power-supply-for-essential-services-2023-02-27

Thobeka Ngema | 28 February 2023 Durban — The KwaZulu-Natal Agricultural Union (Kwanalu) has said that the national minimum wage increase for farmworkers will place strain on an already difficult economic climate for the country’s agricultural sector. This comes after Employment and Labour Minister Thulas Nxesi raised the minimum wage of farmworkers and domestic workers by 9.6%. The increase will take effect from March 1. Nxesi said the increase will also cover workers employed in the Expanded Public Works Programme (EPWP), learnership allowances, the cleaning sector and wholesale and retail. The percentage increase for farmworkers and domestic workers will translate to R25.42 per hour, while the EPWP will be R13.97 for the same duration. The cleaning sector in the metropolitan areas will enjoy R27.97 and the rest of the country is R25.50. The significant increase will benefit 892 000 domestic workers who are overwhelmingly women and 800 000 farmworkers. Kwanalu said the increase would place tremendous strain on an already difficult economic climate for the country’s agricultural sector. “The increase in the national minimum wage will have a negative impact on the livelihoods it aims to serve, as the agricultural sector struggles to keep afloat following other recent key contributing factors,” said Kwanalu chief executive Sandy La Marque. Kwanalu’s statement follows statistics shared with the commission by Kwanalu, which were compiled from the Department of Labour’s quarterly statistics and annual reports, as well as submissions from Kwanalu’s member survey, which also included all the commodity groups in KZN. “These statistics show that specific pressures have, year on year, resulted in a decrease in agricultural employment since 2019 in KZN,” La Marque said. She said that the pressures outlined in Kwanalu’s report included an increasingly narrow economic production climate, an abnormally high cost of inflation when compared with other sectors due to the nature of inputs, severe incidences of flooding, the impact of the July 2021 unrest, foot-and-mouth disease, deteriorating road and infrastructure conditions, and the significant impacts of the ongoing and increased load-shedding schedules. “Kwanalu believes that there is insufficient evidence to equitably enforce a greater than consumer price index (CPI) inflation on rural employment, a 0% base rate should have been the departure point. This is relevant as the rural cost of living is lower than the urban cost of living, so it may well be prudent to give agriculture its own minimum wage determination. “Kwanalu prior to the announcement recommended that an increase of less than CPI is more realistic of the industry position and the impacts on livelihoods of rural employees and dwellers. We will continue to explore options to address the high increase and its impacts,” La Marque said. Meanwhile, last week, Agri SA centre for excellence on labour chairperson, Johan Wege, said Agri SA was alarmed by the announcement of a 9.6% increase in the national minimum wage. Any increase in costs would further strain already hard-pressed farmers. As the sector battled to contain the costs associated with load shedding, crumbling infrastructure and high input costs, this increase would further undermine food security and put much-needed jobs on the line. “The increase continues a trend of above-inflation increases for more than a decade. Whereas farmers were previously in a position to absorb these increases thanks to the sustained growth in a number of agricultural industries, that period is now over. The sector faces extreme headwinds, which on their own threaten food security in the coming years,” Wege said. “Notwithstanding the challenges that the sector faces, Agri SA made a submission proposing a CPI minus 2% increase in the national minimum wage. This proposal recognised the financial pressure on workers in this inflationary environment, but also addressed the reality of farmers’ inability to continue to absorb above-inflation increases. That government has ignored this balanced position is a devastating blow not only for the sector, but also for the consumers who will eventually see this increase reflected in their food expenditure.” ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.iol.co.za/dailynews/news/national-minimum-wage-increase-poses-threat-to-agricultural-jobs-and-the-sector-kwanalu-2b4f0c15-a3cc-4565-a180-274bd3c98690