IT-Online | 31 January 2024 Strategic business planning in South Africa needs a forward-thinking approach so when it comes to cultivating a skilled workforce, there is one action that repeatedly delivers – the inclusion of learnerships into Workplace Skills Programmes (WSP) and Annual Training Reports (ATR). “Companies are constantly seeking ways to remain competitive and future-ready,” says Rajan Naidoo, MD of EduPower Skills Academy. “One of the best ways to achieve this is to leverage learnerships in their WSP and ATR. “This not only contributes to the creation of a robust talent pipeline, it also unlocks substantial financial benefits in the form of mandatory and discretionary grants.” Understanding WSP and ATR. WSP and ATR are integral components of the Skills Development Act in South Africa. The WSP outlines a company’s skills development needs and strategies, while the ATR serves as a report on the actual training undertaken. “These documents are fundamental for companies seeking to align their workforce with industry demands and government regulations,” explains Naidoo. The role of learnerships Tried and tested, learnerships are one of the best mechanisms for building a talent pipeline. These work-based learning programmes integrate structured theoretical learning with practical, on-the-job experience. “Learnerships greatly enhance the employability of individuals and with the skills they gain over the 12 months of the programme, graduates can add value from day one,” he adds. “By including learnerships in the WSP and ATR, businesses can, therefore, achieve a multi-faceted approach to employee development that benefits both the business and its workforce.” Creating a talent pipeline Another advantage of incorporating learnerships into your WSP and ATR is that fact that this will allow companies to identify and nurture individuals with potential, moulding them into skilled and competent professionals. “This provides a mechanism to address current skills gaps and ensures the sustainable flow of qualified employees to meet evolving industry needs,” states Naidoo. Financial benefits Beyond the intrinsic value of cultivating talent, integrating learnerships into WSP and ATR is a strategic move that also pays off financially. Companies can tap into the government incentives in the form of Mandatory and Discretionary Grants available through the Skills Development Levies Act, enhancing their return on investment in skills development. * Mandatory Grants: Companies required to pay skills levies are eligible for mandatory grants when they submit their WSP and ATR. By including learnerships in these plans, businesses increase their chances of qualifying for a higher percentage of the grant. This serves as a direct financial incentive for investing in learnerships. * Discretionary Grants: In addition to mandatory grants, companies may qualify for discretionary grants based on their commitment to promoting skills development. By aligning their learnerships with the strategic objectives of the relevant SETA, businesses can access additional funding, amplifying the financial benefits associated with talent development. Strategic considerations for success Naidoo advises companies that want to maximise the impact of learnerships in their WSP and ATR to adopt a strategic approach that includes the following: * Alignment with Organisational Goals: Ensure that learnerships are aligned with the overall strategic goals and skills development needs of the company. * Partnerships with SETAs: Collaborate closely with relevant SETAs to identify priority areas and secure discretionary grants that support targeted skills development initiatives. * Effective Implementation: Work with an accredited and reputable training provider that will implement your learnerships effectively, providing a balance between theoretical knowledge and practical experience to create well-rounded professionals. * Monitoring and Evaluation: Regularly monitor and evaluate the progress and outcomes of learnership initiatives, adjusting strategies as needed to optimise results. He emphasises that by strategically incorporating learnerships into the WSP/ATR framework, companies establish the groundwork for long-term success. “As organisations prioritise learnerships aligned with their business goals, they not only augment their eligibility for government incentives but also pave the way for a future-ready workforce. This progressive approach simultaneously contributes to addressing unemployment and inequality in South Africa,” Naidoo concludes. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://it-online.co.za/2024/01/31/make-your-companys-training-pay-for-itself/

Opinion | 31 January 2024 While the South African government maintains an official position that the unbundling of Eskom into three entities, transmission, distribution, and generation, won’t lead to privatisation, the assertion that the move is “reckless” and would result in Eskom’s eventual death spiral could prove to be valid. In the current regulatory environment that Schedule 2 state-owned enterprises (SOEs) like Eskom are compelled to operate under, there is no possibility in the world that Eskom Generation state-owned company would be able to sell electricity through the National Transmission Company and still be competitive against independent “subcontracting” power producers (IPPs). Eskom Generation will, under an unbundled framework and with the burden of all the red tape, without a shadow of doubt, be the most expensive producer of electricity in South Africa. The policies that hamstring Eskom are a consequence of the strict transformation agenda, mandatory localisation laws and the Preferential Procurement Policy Framework Act (PPPFA), as well as the so called “Treasury Instructions”. Contrary to public misperception, an SOE does not operate like an ordinary company. One simply cannot pick up the phone and call the best-suited company to solve the problem at hand, as doing so would “exclude potential new players in the market”, because the SOE is forced to acquire services through a competitive bidding process. Ignoring competitive bidding even for an emergency task would automatically be classified as fruitless and wasteful, or irregular expenditure as per the regulations. In contrast with the private sector, where there is more discretion, it sometimes does not matter to pay a small premium to get operations up and running fast, because any downtime is deemed wasteful expenditure that affects the private company’s bottom line. Government regulations do not allow such business thinking and current procurement policies do not factor in the important consideration of opportunity cost into the strategies. With the current procurement systems imposed on SOEs, even a straightforward task such as securing a contractor for emergency repairs can extend to weeks instead of hours, as is the case for private power producers. Despite being labelled an “emergency”, the process is not expedited according to the scope of “emergency” regulations. As outlined in Treasury Note 3 of 2016/17, emergency procurement is only limited to situations where there is a serious and unexpected threat to health, life, property, or the environment, necessitating immediate action and lacking sufficient time for competitive bids. An operational emergency, such as a critical component failure in a power station, does not trigger emergency procurement under the current framework, and any acquisition of components or subcontractors to address the issue must undergo a competitive bidding process. Incidentally, the issue of “emergency” procurement came up in early 2021 when Eskom’s former CEO André de Ruyter requested the South African Treasury to amend the regulations and allow Eskom to use original equipment manufacturers (OEMs) instead of the politically connected black economic empowerment (BEE) middlemen. They amended the regulation and introduced Instructions 3 of 2021/22, which outlines the concept of “urgent procurement”. Urgent cases involve critical early delivery where inviting competitive bids is either impossible or impractical, not due to improper planning. While it may seem like a reprieve from Treasury, even this approach comes with specific conditions and therefore an admin burden, because urgent procurement must: – clearly define in its procurement policy cases in which urgent procurement may be invoked – the process to be followed in identifying suppliers for urgent procurement – draw up plans to curtail such procurement – carry out an assessment of all instances that give rise to such procurement. Therefore, even a task such as straightforward as an urgent procurement will necessitate administrative activities and increase procurement costs, especially as per the regulations the auditor-general must conduct an audit of these cases. As the upcoming articles in this series will demonstrate, Eskom is being hindered by a set of impractical policies and regulations such as the above-mentioned emergency and urgent procurement regulations as per Treasury Note 3. Reforming these policies is in our view one of the prerequisites for unbundling Eskom; otherwise, South Africa may end up with a compromised electricity system, leading to either the de facto demise of Eskom Generation or a South African led government effort to wield control over electricity supply as the privatisation process commences. Amid growing political pressure from unions in the Mpumalanga region, we anticipate that the South African government might deviate from the path of unbundling by leveraging the influence it still holds over the institutions under its control. The government could still obstruct the process through the selective application of tenders or licensing laws via the Department of Mineral Resources and Energy (DMRE) or by asserting political pressure on the the National Electricity Regulator of South Africa (Nersa). In the scenario of backtracking on the commitment to unbundling, Eskom Generation retains a de facto monopoly over South Africa’s electricity supply, resulting in a more rapid decline in energy availability, an increase in the price of electricity, and a surge in fuel poverty among South Africa’s most vulnerable communities. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.iol.co.za/business-report/economy/why-sa-procurement-regulations-spell-a-death-sentence-for-eskom-generation-in-a-liberalised-electricity-market-f81d2be2-f448-46bb-9164-bb53e9119b9c

Schalk Burger | 31 January 2024 Industry organisation the South African Cane Growers Association (SA Canegrowers) says that, following the disbursement of transformation funding this month, the sugar industry has met its objective of investing more than R1-billion in transformation funding over five years. The funding has been critical in sustaining the livelihoods of more than 21 000 small-scale growers and their farm workers, as the industry has endured waves of crises over the past five years, says SA Canegrowers chairperson Andrew Russell. In January, the South African Sugar Association distributed nearly R176-million in dedicated transformation funding, which brought the total paid out to small-scale and black-owned growers, as well as land reform beneficiaries, between 2019 and 2024 to more than R1-billion. These payments, to which growers contributed 64%, have been distributed biannually over the five-year period. “Through these payments, the industry has been able to help the most vulnerable to absorb the shocks caused by drought and floods, cheap sugar imports, the Health Promotion Levy (or sugar tax), Covid-19 and the ongoing crisis in parts of the milling industry,” Russell points out. Further, the funding commitment also supported the objectives of the Sugarcane Value Chain Masterplan, with the first three-year phase concluded in 2023. Industry stakeholders have since worked together to conceptualise a framework for a second phase of the Masterplan. This new phase will help to continue the work of the first phase, protecting vital jobs within the industry and restructuring it for a sustainable, diversified future, he says. It is essential that government supports the efforts of the industry by reaffirming its commitment to prioritise procurement of locally produced sugar, and by halting all plans to increase the sugar tax that has contributed to the hardships faced by the industry, he asserts. “SA Canegrowers is committed to preserving and expanding opportunities in the industry for young, black and women growers among others. To achieve this, we must overcome the challenges the industry faces and work together with all industry stakeholders, especially government, to create a policy environment within which new growers can find a foothold and build sustainable livelihoods,” says Russell. SA Canegrowers urges President Cyril Ramaphosa and Finance Minister Enoch Godongwana to announce critical measures to help it to protect the one-million livelihoods the industry supports, including through the suspension of the Health Promotion Levy. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.engineeringnews.co.za/article/sugar-industry-meets-r1bn-transformation-funds-disbursement-goal-2024-01-31

Ashley Lechman | 1 February 2024 Most survey respondents identified sky-rocketing operational costs, as well as continuous load shedding throughout the year as the main challenges stifling performance in 2023. Small businesses in South Africa last year found it tough to operate amid the many economic challenges faced. This was according to Garth Rossiter, the head of credit and chief risk officer at Lula. Lula is a fast-growing Business 2 Business digital credit and capital provider in the country. Rossiter said that 2023 was a difficult year for SMMEs, marked by fluctuating market dynamics. “The results of our recent business performance survey are sobering. Nearly 68% of businesses did not meet their own goals, with close to 40% of respondents reportedly falling significantly below their business and growth expectations,” Rossiter said. Over 609 South African SMMEs responded to a survey promoted by Lula in December 2023. The survey ran from December 21, 2023 till January 5, 2024 and asked SMMEs to look back on the year in trade and answer questions related to business, finance, and their challenges while also looking ahead to 2024. Most survey respondents identified sky-rocketing operational costs, as well as continuous load shedding throughout the year as the main challenges stifling performance in 2023. “The silver lining was that, of the 32% of businesses which met their business goals, results of more than half of these respondents exceeded expectations, highlighting that South African businesses are resilient. Broader economic stagnation led to shrinking customer pools, which in turn meant that businesses had to tighten belts in 2023,” Rossiter said. “In our 2023 survey, general inflation emerged as the most significant challenge affecting more than 80% of SMME owners and entrepreneurs. The increased cost of fuel (reported by 75% of businesses surveyed) was also a major factor,” Rossiter said. “In terms of business cash flow and financial management, access to working capital remains a top-of-mind concern. Many respondents also pointed to the high interest rates and fees associated with capital acquisition. Furthermore, around half of the responding businesses said they grappled with slow customer payments, which impacted their daily operations and cash flow. Nearly 40% struggled with effectively tracking and managing their cash flow; an obstacle we are working to solve with a range of digital banking and business finance tools. “Our official trading numbers for 2023, suggest that, despite the challenging economic climate, we have seen notable areas of growth and resilience. It is clear that our focused approach to providing tailored financial solutions to SMMEs has assisted our clients in addressing critical pain points with which SA’s small businesses commonly grapple,” Rossiter said. Despite the challenging year that was, most businesses Lulo asked (65%) are feeling confident going into 2024. The survey revealed that this optimistic outlook suggested a sense of positivity and a prevailing belief that the business environment will improve in 2024. “The most-cited rationale for this confidence is rising customer demand, and secondly, the galloping pace of technological innovation, which promises to boost operational efficiency considerably over the coming years,” Rossiter said. “An overwhelming majority, almost nine out of every ten, anticipate a need for more funding or financial support in 2024. Most indicated they would use such capital to cover the costs of equipment and maintenance, with about half indicating they would primarily use it to drive growth and expansion. Inventory and materials purchases, and simply covering operational costs also featured prominently,” Rossiter told Business Report. He further advised that 2024 would be a year shaped by trends like a focus on environmental and social sustainability; the steady rise of remote and hybrid work models; and greater personalisation and customer-centric approaches. “On the tech side, get ready to embrace e-commerce and online marketplaces, and to create digital marketing content. Also, keep a cautious eye on the rise of generative AI, and try to spot any business opportunities or threats it might present,” he said. “As the business year kicks off in earnest, we expect to see South Africa’s businesses target new markets and invest in the skills training needed to expand. Our advice is to consider upscaling the tech they use this year to help save time – and ultimately, money – in 2024. We suggest that companies self-reflect honestly, analyse their performance and try to identify their ‘low-hanging fruits’,” Rossiter said. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.iol.co.za/business-report/entrepreneurs/smmes-had-a-tough-2023-fighting-off-many-challenges-but-can-look-ahead-on-a-positive-note-for-the-new-year-87d4e3e9-0473-45b9-b6e2-3792f251fd24

Nkosinathi Ndlovu | 4 February 2024 French broadcasting giant Groupe Canal+ has expressed confidence in its bid to acquire South African pay-television operator MultiChoice Group, despite the high regulatory hurdles the Vivendi Group subsidiary must first overcome. “The deal would have to go through both [communications regulator] Icasa and the Competition Commission, and Icasa is very strict on foreign ownership rules. There is no exemption from section 64 of the Electronic Communications Act (ECA),” Kerron Edmunson, legal and regulatory specialist at Kerron Edmunson, said in an interview with TechCentral on Friday. Section 64 of the ECA limits foreign ownership of South African broadcasters to 20% of voting rights, although their economic interest may be higher. This is the scenario currently at play regarding the Canal+/MultiChoice relationship, where Canal+ owns 31.7% of MultiChoice but does not enjoy an equivalent share in voting rights. Proposed changes to legislation, in the form of the white paper on audio-visual services, is still in draft form – and are unlikely to be gazetted for years still. The white paper has proposed lifting the 20% restriction to 49% (for both the economic and voting interests) for any foreign entity investing in a local broadcaster. “Canal+ would have made their decision to bid with the upcoming legislation in mind, which could take at least a year to come into effect, but we must consider that the draft has been around for some time already,” said Edmunson. The draft legislation could take years to come into effect, and even if it does, it likely won’t solve Canal+’s problem as it wants a controlling stake in MultiChoice. Another point for consideration is Icasa’s rules pertaining to transformation, an agenda which the regulator is cracking down on in 2024. BEE rules Transformation legislation in South Africa’s broadcasting and telecommunications sectors dates back to the Telecommunications Act of 1996, with other stipulations outlined in its replacement law, the ECA of 2005. After noting that the industry was largely non-compliant regarding transformation, Icasa published the Limitations of Control and Equity Ownership by Historically Disadvantaged Groups regulations in March 2021. Under the rules, licensees must have a minimum of 30% of their equity owned by previously disadvantaged individuals and reach level-4 broad-based black economic empowerment status as defined by the IT sector empowerment codes. The deadline for compliance is 31 March this year. “Canal+ would have to set up a local entity, have an office, and employ local staff,” said Edmunson, explaining some of the steps the broadcaster will have to take to meet the transformation criteria. The French broadcaster’s intention to unbundle from parent Vivendi and pursue a separate listing in South Africa will help its cause, but the MultiChoice acquisition may be blocked, not due to a lack of compliance, but on the basis of market dynamics and competition law. The Competition Commission aside, Icasa itself has been carrying out an inquiry into the subscription broadcasting services market since 2016. In a preliminary findings document from 2019, Icasa found that MultiChoice “possessed significant power in markets that are characterised by ineffective competition”, effectively saying that MultiChoice holds a monopoly in its operational markets. As a remedy, the regulator proposed several changes to the broadcast licensing regime. The matter is currently open for stakeholder comment before a final decision is made. Edmunson suggests that the Competition Commission’s view of MultiChoice’s position in the market is likely similar to Icasa’s. “You have MultiChoice having a monopoly that the commission says it wants to remedy and then Canal+, which is just a bigger MultiChoice with even deeper pockets and more ‘monopolistic’ power wanting to take it over. Allowing the transaction would go against commission’s current thinking,” said Edmunson. Justifying Groupe Canal+’s optimism is a business case that is hard to argue against: the combined forces of Africa’s market leaders in the Anglophone and Francophone pay-TV markets would give birth to a continental broadcasting powerhouse. “Combined with Canal+, MultiChoice would have the resources to invest in scale, local African talent and stories, and best in class technology, to allow it to grow in Africa and compete with the global streaming media giants. We are steadfast in our belief that MultiChoice could enjoy a bright future as part of a combined group with Canal+,” said Maxime Saada, chairman and CEO of Canal+, in a statement on Thursday. However, foreign ownership restrictions and the effect the deal would have on competition in the local market might prove an insurmountable hurdle for Canal+.  – © 2024 NewsCentral Media ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://techcentral.co.za/canal-plus-uphill-battle-multichoice-deal/239071/

Bongani Mdakane | 5th February 2024 Minister of Employment and Labour Thulas Nxesi has set a target for mining firms to have 50% of their top brass being people of colour in the next five years, as part of the new sectoral numeral targets published this week. Nxesi said of the 50% top management targets, 29.9% must at least be males, and 20.1% female.   Over the same period, the minister also wants at least 40% of top managers in the financial services sector to be black people. The financial services sector and the  mining sector are the backbone of South Africa’s economy, employing thousands of people. The six largest banks employed about 180 000 people, while the mining sector commands  a workforce of more than 400 000 employees. The banking sector has over the past decade made strides in promoting black people to executive positions. Africa’s largest bank by assets, Standard Bank, is headed by Sim Tshabalala while Investec is run by Fani Titi. The country’s biggest banking group by market value, FirstRand, recently appointed Alexandra-born Mary Vilakazi as its next chief executive officer. Standard Bank’s asset management unit Stanlib is headed by Derrick Msibi while its rival Coronation is headed by Anton Pillay. Coronation, which has about R630-billion assets under management, has 42% of these assets managed by black investment professionals. While progress has been made, the Banking Association South Africa in its latest annual report acknowledged that the sector is still lagging in terms of getting more black people to management positions. According to the organisation’s Transformation in Banking report, in 2021 banks were ahead of ownership targets, at 32% black owned against a target of 25%; and are increasing empowerment financing year-on-year, to R279-billion in 2021. “However, they are still falling short on management control targets – to various degrees. Nevertheless, year-on-year, the percentage of black managers is increasing across all categories. “The strong junior and middle management pipelines make it inevitable that the top and senior management of banks will better reflect the demographics of South Africa – if not as fast as is desired,” the annual report reads. “The improvement in reaching Financial Sector Code targets every year, shows the sustainable commitment of banks – in hard numbers – to the transformation of the industry and the economy.” Major mining entities Kumba, Exxaro, and Thungela are run by black businesswomen. Mpumi Zikalala heads Kumba Iron Ore as its CEO, while Nombasa Tsengwa is the CEO of Exarro. For the past 24 years since 2 000, empowerment deals in the mining sector exceeded R300-billion, while the country’s empowerment laws have facilitated the creation of companies such as Exxaro Resources, Patrice Motsepe’s African Rainbow Minerals, Seriti Resources, Thungela Resources, United Manganese of  Kalahari, Tshipi é Ntle Manganese Mining, Kalagadi Manganese, among others. The Black Business Council chief executive officer, Kganki Matabane, said: “This year, South Africa is celebrating 30 years of democracy and 26 years of the Employment Equity Act and what we hear is talk and plans. We need more implementation and less talk. Whatever the minister says will never happen if it is not in the legislation. The department does not even have capacity to monitor the implementation of its own legislation. As such, we are not convinced that anything will actually happen.” Black Management Forum managing director Monde Ndlovu said his organisation has always believed in setting targets for transformation, and that a self-regulatory approach will not yield the desired outcome. “The BMF has also believed in negotiated targets, encouraging a clear commitment to change for an organisation whose thought process has been old order and minimalist. These targets for organisations from our view should have been achieved already. “Through our own analysis in 1993, we set corporate targets at senior management to be 30% for black people by the year 2000. “We are now in 2024 and corporate leadership has not fully embraced the spirit and mind for transformation, we are now living in an era of transformation fatigue. “Black women targets should be higher because they face a twin evil, that is, being black and also being a woman,” said Ndlovu. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://sundayworld.co.za/business/nxesi-wants-more-black-execs-in-banks-and-mines/

Mike Miller | 6 February 2024 SA is an extremely complex investment destination that needs a collaborative approach if new investment is to not only deliver a commercial return but also, crucially, tackle and alleviate inequality, unemployment and the liquidity crisis. Given that SA is a developing country, the priority should be on the creation of new wealth to reduce inequality and unemployment to boost liquidity. SA’s liquidity crisis is driven by the fact that about 94% of the nation’s wealth is controlled by just 10 companies. Whether debt or equity, these companies primarily invest in the JSE’s Top 40. This makes sense to them as for the most part they have common stakeholders. To put this statement differently, everyone else who is not part of the JSE’s Top 40 “club” is left to fight for the 6% funding scraps. SA introduced broad-based black economic empowerment (BBBEE) legislation as a mechanism to facilitate the easier movement of funding and opportunities to advance economic transformation and participation in the economy. Although the legislation has the best of intentions, the reality is that BEE transactions destroy shareholder value for companies and, in their current guise, are not sustainable over the long term. There are two inherent flaws in BEE transactions: firstly, the challenge of securing funding without an existing balance sheet and track record, creating a self-defeating cycle for raising new capital to create new wealth and a tendency to fail over time. A second issue relates to the accounting recognition of BEE equity participation in transactions. From a company accounting perspective, BEE participation is recognised as an asset, but in most transactions this is incorrect. Companies’ partner with empowerment parties to gain access to their networks, which are expected to facilitate future commercial value. However, to call this an asset companies must be able to control their partners to ensure future economic benefit is guaranteed. Given that companies cannot control people and cannot guarantee future economic benefit, this participation cannot be recognised as an asset and consequently rather meets the definition of an expense. To correct these inherent flaws in BEE transactions companies would be better advised to partner with community structures such as trusts, communal property associations or tribal authorities, which, in turn bring access to and control of community resources. Commensurate equity is given to the community in return for the control and utilisation of their asset. The company can control and operate the resource, making the BEE partnership accretive to shareholder value creation, which results in tangible future economic benefit for all stakeholders. In this scenario the communities pay for their equity participation by providing access to and relinquishing control of their resources. These further derisks the investment as investors can acquire assets through commensurate dilution, which avoids the funding of dead capital that results in funding being primarily used for working capital purposes. The challenge still reverts to the rules of funding as inevitably the community does not have recognised bankable balance sheet and a track record of its utilisation thereof, to raise new funding. Mantengu Mining was born out of a desire to, among other things, prove that the traditional rules of funding can be circumvented to create new wealth by opening new entry points to finance. We strategically decided to create a new bottom-up project, which would need to be carefully structured and focused to meet all legislative, socioeconomic and society sensitive non-negotiables. This would give us the most flexibility when structuring the finance without any balance sheet or track record. In terms of practical implementation, we developed a renewable energy project that was baseload-power and people-centric, underpinned by the best of breed operate and financial skill and experience. When progress in this project started to slow down we decided to buy our own chrome and PGM mine, Langpan, to prove that the financing and renewable energy model would work. We began the arduous process of installing the technical, financial, and corporate governance controls required to underpin the necessary funding requirements. It was then that we had first-hand experience of SA’s liquidity issue. It was evident that regardless of our effective structuring we would not find the requisite capital given the unavailability of funding domestically, and in consequence we embarked on a series of international capital raising roadshows. It became clear that while there was appetite to invest in SA, there was a clear gap between first-world investment principles and third-world deployment. Given the complexities of foreign investment into SA, debt investors demand collateral for funding, especially as SA faced increasing political and economic uncertainty. Traditional security models were deemed outdated, and the country's risk rating as “junk" further complicated matters. To overcome these challenges we needed to find a bridge to gain access to these pools of cash. The company successfully negotiated with underwriters and guarantors to provide guarantees underpinning the company’s performance. This effort resulted in the creation of a demand production guarantee, termed the special performance guarantee. This was designed to be backed by production metrics, ensuring that foreign investors had collateral without the need for them to physically reclaim assets in potentially unstable environments. Finally, enter Mantengu. Though the JSE has become a less viable platform for raising direct capital, being listed requires adherence to the highest levels of governance. Given that the investment gap centres on the concern of the efficacy of deployment of funds, a listing strategy was presented to our foreign funding partners, which confirmed that the stringent listing requirements would go a long way to providing them with sufficient comfort for a positive investment decision. The JSE-listing process was completed in August 2022 and trading commenced in March 2023. To date Langpan, which started life as a shelf company, has raised about R200m and Mantengu, Langpan’s 100% shareholder, recently secured a R500m equity facility from an offshore lender. We believe this is a funding model that can be replicated to correct the current deficiencies in how BEE is implemented. Mantengu is at the start of its journey to add value to rural and SME SA. As an investment platform that allows smaller companies to truly participate in the economy on an accretive basis, we have strategically decided to focus on the mining, mining services and energy sectors to be a catalyst for new wealth creation. Our funding model is proof that listed companies can equitably add value to rural communities and no-one can say it cannot be done. The question to our industry peers across all sectors is: how will you participate? ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.businesslive.co.za/bd/opinion/2024-02-06-mike-miller-rethinking-bbbee-and-balancing-mining-sector-balance-sheets-in-sa/

Goitsemang Matlhabe | 6 February 2024 Civil society groups, associations, and political parties need not fear that increasing job opportunities will cause more harm than good, according to an economist. The negative comments come after Employment and Labour Minister Thulas Nxesi gazetted an increase of 8.5% to the minimum wage, set to take effect at the beginning of March. The national minimum wage will increase from R25.42 to R27.58 per hour as of March 1, 2024. This increase has been welcomed by vulnerable employees, especially farm workers and domestic employees. However, organisations such as the FF Plus raised concerns about how similar to Affirmative Action (AA) and Black Economic Empowerment (BEE) only benefit a small group at the expense of millions of unemployed South Africans, so too would an increased minimum wage bill. Heloïse Denner, FF Plus chief spokesperson explained that an increase in the minimum wage bill would benefit only a handful of cadres at the expense of the masses, and at best, benefit only a small group at the expense of millions of unemployed. “Compensation ought to be fair and should be based on a process of negotiation between the employer and employee, subject to experience and productivity. This is just another way for the ANC government to score cheap political points before the elections, without taking the destructive consequences into account. Exploiting workers through starvation wages is wrong and unacceptable.” If anything Denner said the reality of increasing the national minimum wage by 8.5% would result in many people losing their jobs, consequently increasing the country’s unemployment rate. Chief Executive of the National Employers’ Association of South Africa (NEASA), Gerhard Papenfus, said the increase recommended by the National Minimum Wage Commission (NMWC) and gazetted by Nxesi had all but ignored the inputs and concerns from numerous business institutions and trade unions. According to Papenfus, the minimum wage had all but ignored the fact that employers, without exception, only paid wages that they could afford and which they wanted to pay. Furthermore, for employers who were already paying more than the minimum wage, the increase would become entirely irrelevant; and worst of all those employers who could not afford it would simply revert to alternative arrangements by reducing working hours, restructuring, reconsidering the need for lower-paid employees, and even retrenchments. “This minimum wage is an arrangement that prevents anyone from being employed unless he can find an employer who is prepared to pay him a wage, not a wage that he is demanding, but that which the Government determines he must receive. This arrangement dictates that unless a jobseeker can find such an employer, he will be doomed to a life of abject poverty.” Associate Professor in the Department of Economics in the Faculty of Economic and Management Sciences at the University of Pretoria, Professor Heinrich Bohlmann, explained that the increase in the minimum wage, in isolation, would most certainly be negligible at a macroeconomic level, however, its impact on employment had been greatly misunderstood. Bohlmann stated that the hike in minimum wage may not have a significant effect on medium and large companies since minimum wage workers did not make up a significant portion of their overall cost structure. However, this reasoning does not apply to small, medium, and macro enterprises. “No company wants to pay more for labour if they can avoid it. However, the minimum wage is an important part of our socio-economic structure and is widely implemented across the world without concern. In the long term, there are important benefits to having or moving towards a sustainable minimum wage level for workers in the economy. “Many organisations will, like they do every year, warn that an increase in minimum wage will be 'bad' for employment. Sure, it will not be a boost to employment, however, research has consistently shown that small real wage increases, such as the one just announced, end up having little to no impact on employment.” Bohlmann said many other factors were far more damaging to employment and related economic outcomes than small real increases in the minimum wage. “Our general cost of doing business, due to poor infrastructure, crime, and procurement regulations, is very high and costing our businesses millions every year, and that has a far greater impact on their ability to be competitive, invest more, and ultimately produce and employ more. Governments across all levels, in combination with the private sector, will need to step in to address these, but blaming our employment woes on small increases in the minimum wage is misplaced.” ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.iol.co.za/the-star/news/economist-stresses-minimum-wage-increase-will-not-lead-to-job-losses-c8f5fb25-9f93-4fe1-bb64-240677eef02a

Yuneal Padayachy | 5 February 2024 As South Africa moves into 2024, the landscape of Broad-Based Black Economic Empowerment (B-BBEE) is poised for significant shifts. The B-BBEE framework has been a cornerstone of economic transformation in our country, aiming to address historical imbalances and promote inclusive economic growth. In 2024, I am hoping to see the following taking place in the B-BBEE transformation space: Updated B-BBEE sector Codes of Good Practice: The B-BBEE Codes of Good Practice including for specific sectors, are subject to periodic reviews, and 2024 may see updates to these Codes of Good Practice especially aligning to the 2019 Amendments to the General B-BBEE Codes of Good Practice. Businesses should anticipate changes in scorecard elements, weightings, principles and compliance criteria. Staying abreast of the modifications will be crucial for companies striving to maintain or improve their B-BBEE status. Enhanced focus on implementation and monitoring: One of the primary expectations I hope to see for 2024 is an increased emphasis on the effective implementation and monitoring of B-BBEE initiatives. The notion of impactful B-BBEE initiatives needs to be instilled within the mindsets of B-BBEE practitioners and transformation managers. There is a need to place a stronger focus on ensuring that companies are actively working towards achieving the outlined B-BBEE goals and that the intended benefits are reaching the targeted Black beneficiaries. The shift from being transactional to transformational is a must. Increased collaboration and partnerships: Collaboration between businesses and stakeholders is expected to be a key theme in 2024. Companies may engage in strategic partnerships to pool resources, share best practices, and collectively work towards achieving B-BBEE objectives which will achieve larger impacts on the intended Black beneficiaries. Focus on skills development: Skills development has been a crucial pillar of B-BBEE, and in 2024, there may be an intensified focus on training and upskilling initiatives. I do foresee companies exploring more innovative approaches to skills development, including mentorship programmes, online training platforms, and partnerships with educational institutions to address the skills gaps in our country. Focus on job creation: South Africa still faces a large challenge in respect of unemployment. In 2024, I hope to see more collaboration between the public and private sector to address challenges of unemployment. From a B-BBEE perspective, it would be great to see more of an uptake of participation under the Youth Employment Service (YES) initiative in 2024 and giving a young people an opportunity to gain working experience. Inclusive procurement practices: Procurement is a significant component of B-BBEE, and 2024 is likely to witness a continued emphasis on inclusive procurement practices. Companies are encouraged to source goods and services from Black-owned and Black women-owned businesses focusing on small business as well. As South Africa looks ahead to 2024, the evolution of B-BBEE transformation is inevitable. Companies must proactively adapt to the changing landscape, embracing technology, fostering collaboration, and prioritising the holistic impact of their B-BBEE initiatives. The trajectory of B-BBEE transformation in South Africa for 2024 promises an array of pivotal changes and opportunities for businesses. As we anticipate updated B-BBEE Sector Codes of Good Practice, a pronounced emphasis on implementation and monitoring, increased collaboration, and a sharpened focus on skills development, job creation, and inclusive procurement practices, the landscape of empowerment and economic growth is set to undergo significant evolution. Businesses must be vigilant in staying abreast of these developments, ready to pivot and align their strategies to effectively navigate the shifting B-BBEE landscape. Embracing innovation, forging strategic partnerships, and committing to impactful initiatives will be integral in not just meeting compliance criteria but truly fostering inclusive economic growth and addressing historical imbalances. https://www.bizcommunity.com/article/great-expectations-for-b-bbee-transformation-in-2024-345498a

Piet Le Roux | 7 February 2024 Labour minister Thulas Nxesi's latest employment equity quotas are so weak and watered down that it actually reveals severe weakness in his department’s position. Employers are in a strong position to avoid and oppose further state interference in hiring processes. The new quotas, as contained in the minister's latest draft regulations, are intended to reflect the amended Employment Equity Act of 2023. This Act aims to empower the state to force businesses to hire employees according to the government's targets for race and gender. On paper, the state could even impose fines of up to 10% of turnover on companies that continue to hire employees freely.  In practice, however, the state’s efforts have been engulfed at every turn by its own decline and failure. Despite its claims to strong implementation capacity, the Department of Labour has shown itself unable to publish even a coherent set of regulations, let alone capable of enacting and enforcing the law.  Sakeliga opposes the entry into force of the Amendment Act as well as the draft regulations (see here for our statement on the Amendment Act). Although the latest regulations are also unacceptable and harmful for how they impede business growth and hiring, they represent a drastic setback for Minister Nxesi. In May 2023, in page after page filled with tables and percentages he proposed a multitude of quotas for men and women, subdivided for coloured, black and Indian persons, and then divided again over 9 provinces and 18 different "sectors". In the face of widespread domestic and international resistance, the Minister has now published the February 2024 version. Without any explanation, he has deviated drastically from his previous aspirations. The new version contains only national figures and no provincial breakdown, and only specifications for men, women and the disabled. Although it mentions "designated groups", there is no clarity in the regulations as to how this should be applied. This month's significant watering down indicates that the minister recognises the considerable problems with his planned policies. As Sakeliga's lawyers pointed out to the minister last year, his previous regulations would be defeated substantively as well as procedurally in a legal process. The new version may be different on the surface, but it has the same substantive and procedural problems as the previous one and should likewise be withdrawn. Sakeliga advises businesspeople to remain firm and not make any changes to their employment policies for the sake of the Amendment Act and the draft regulations. Given the minister's apparent willingness to make such wild swings in quota design, there is currently no clarity on what the final regulations are that he hopes to make, let alone the timelines by which he would be able to get them implemented. Opposition from the side of businesses and others has caused the state to retreat. This pressure must be maintained.  Both the amendment and the draft regulations remain highly contentious in litigation, unenforceable in practice, and altogether against the public interest. ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.politicsweb.co.za/politics/employers-are-in-a-strong-position-against-new-quo

Sisanda Mbolekwa | 7 February 2024 ActionSA leader promises to fix SA's economy, create jobs and crack down on crime if elected. South Africans are worse off today than they were six years ago, ActionSA leader Herman Mashaba said in his alternative state of the nation address (Sona) on Wednesday. Mashaba said the legacy of President Cyril Ramaphosa’s time in office was a rundown economy with rampant unemployment, crime, load-shedding and decaying infrastructure. “By almost every measure, South Africans are worse off today than they were six years ago. We cannot continue to vote for the same selfish leaders, election after election, and expect our country to improve. One cannot hope to do the same thing over and over again and expect a different outcome,” he said. He accused Ramaphosa of consistently making grand promises while delivering little. “To bring about positive change, we must be bold. We must be courageous. We must try something new. We must take action. We must look to a solutions-based alternative to challenge the failed political establishment.” Mashaba said his party wanted to fix the country by working with South Africans who want to make SA work. The party held its first national policy conference in September last year, bringing together more than 600 delegates to consolidate policy proposals as solutions to address the country’s problems. The party’s priority is economic prosperity, which comprises creating a conducive environment for economic growth and job creation through interventions that will stabilise the energy market, develop world-class economic infrastructure and improve the ease of doing business. “We will reform labour regulations to break the stranglehold of unions and make it easier to do business, to create millions of jobs and lift our people out of poverty. We will support SMMEs and ensure we remove the barriers to growth that prevent small businesses from succeeding.” The party said it is unapologetically in favour of black economic empowerment and the previously marginalised, but it rejects the B-BBEE Act of 2003 which has created tenderpreneurs for the politically connected while leaving others in poverty. “An ActionSA government will replace B-BBEE with a policy of inclusive economic empowerment that will empower all previously disadvantaged South Africans, as well as those harmed by 30 years of corrupt and incompetent government. “Inclusive economic empowerment, or IEE, is the first real alternative to BBBEE. It will directly address the legacy of apartheid by creating economic opportunity for all previously disadvantaged South Africans, not only the connected few.” On education, Mashaba said the government’s neglect is a grave injustice, robbing generations of the opportunity for a brighter future. “We will begin with the establishment of universal access to early childhood development (ECD) to ensure all South African children receive a foundation of quality education. ECD centres play a pivotal role in shaping future educational outcomes later in life.” The party said it will break the stranglehold unions exert over schools by implementing reforms to ensure the most qualified teachers are appointed to key positions. ActionSA believes it has what it takes to end load-shedding. After enduring nearly 17 years of rolling blackouts, Mashaba said little had been done by the ruling party to end the curse. “ActionSA will change this by ending Eskom’s monopoly and introducing competition into the electricity market. This will help drive down prices while increasing efficiency. “We will also incentivise private homes and businesses to install solar power, and will protect schools, police stations and hospitals from load-shedding to ensure front line services can continue uninterrupted.” The ActionSA leader vowed to clamp down on crime and corruption, saying no country can flourish and no economy can grow in a state of anarchy, chaos and lawlessness. “ActionSA’s approach to law and order aims to reinstate the rule of law by prioritising visible policing over VIP protection for politicians. This involves a comprehensive overhaul of the police service, instilling a sense of pride in the force, and rebuilding trust so criminals no longer operate with impunity. “We will review bail, parole and sentencing guidelines for severe offences such as rape, murder and drug trafficking.” Mashaba said another priority will be securing the country’s borders. “South Africa was built on the back of migrants. ActionSA wants the people of the world to come to South Africa, but they must do so legally and obey our laws once here. We will secure our borders while reforming our immigration system to make it easier for those who can contribute to our economy to enter legally. “We will clamp down on corruption and issuing of fraudulent documentation in the department of home affairs.” He also promised to expedite the deportation of undocumented criminals. Mashaba said his solutions will place the country on the path towards an inclusive and prosperous future. “They represent a major shift in the status quo that will empower millions of people to leave behind poverty and achieve their true potential. If implemented, these solutions will lead to safer communities, improved economic infrastructure and a prosperous country where everyone has equal access to opportunity.” ActionSA contested elections for the first time at local government level in 2021, receiving more than 550,000 votes. It is represented in six out of 278 municipalities across the country. This year will be the first time the party contests elections at national and provincial levels.  ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.businesslive.co.za/bd/politics/2024-02-07-herman-mashaba-says-sa-worse-off-than-six-years-ago/

Ntuthuzelo Nene | 7 Februarie 2024 In a pre-SONA engagement in Cape Town on Tuesday, President Cyril Ramaphosa said while government works on addressing unemployment, the youth should not be too picky when choosing jobs. CAPE TOWN - President Cyril Ramaphosa has urged South African youth not to be choosy when job opportunities present themselves. Ramaphosa engaged the youth of Belhar in Cape Town on Tuesday, to reflect on the three years since his administration launched the Presidential Youth Employment Intervention and the Presidential Employment Stimulus Programmes. Ramaphosa told the youngsters that the programmes had created at least 1.8 million job opportunities for the youth since they were launched. The president also promised the youth that government was making progress in addressing unemployment. Ramaphosa also shared a story on how he was introduced to the workforce many decades ago:  "I was in Standard 9, which is today's grade 11, I think. I walked door-to-door saying 'kan ek werk kry asseblief, net 'n vakansie werk?' and I got a job to pack boxes of cigarettes and boxes of sweets." The president said this taught him a lesson in hard work.  "That's why I encourage young people, don't just want to get an office job. Go and get any job, manual or otherwise, because it teaches you the discipline of work." ‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’. https://www.ewn.co.za/2024/02/07/go-and-get-any-job-because-it-teaches-you-the-discipline-of-work-ramaphosa-tells-youth