This is the view of one of the most prominent BEE advisory firms EconoBEE. The view comes to add to rising tide of opposition against sector codes.
In its submission to the process of amending the BBBEE codes of good practice the Black Management Forum (BMF) made the same point. “We believe that all sector codes should be abolished. The sector codes have arbitrary deviations from the BEE Codes, which have no rationale,” said the BMF. This view has been echoed by high profiled BEE thinkers including Ajay Lalu and Duma Gqubule.
In his latest submission EconoBEE CEO Keith Levenstein said “The current codes can easily be used for all industries. We don’t need the sector codes, and we call on the minister to cancel them when he issues revised codes.”
He noted that to date nine sector codes have been gazetted since the first batch in 2009. The key ones are to be found in the financial sector, mining, ICT, construction and property sectors.
“They are not so dissimilar to the normal codes, only that they serve a purpose to the industry they represent. Some of the sector codes are badly drafted, even after many years of drafts, they become impossible to follow.”
“Each sector code establishes their own sector council. Most sector councils are not in operation and most are dysfunctional. It is impossible to obtain a simple answer from most sector councils or even contact them,” said Levenstein.
“The sector councils are mandated to issue annual reports and monitor progress in the sector, but do not. Fronting is rife amongst industries in the sectors but the sector councils take no action.”
Levenstein added that many companies use the sector code, or imminent release of a sector code, as a reason to remain non-compliant, rather than follow the sector code. “It is simply an excuse, but widely used by many companies. The process of gazetting the sector code has set back the sector by many years.”
He argued that many verification agencies are unaware of the sector codes, or make the wrong decision about which set of codes to apply for their client.
“The sector codes add unnecessary complexity to the codes. All professionals in the industry need to understand all sector codes. When companies receive certificates from their suppliers, they are expected to check if the certificate is valid and also if the correct sector code was used to verify their supplier.”
Levesntein said the sector codes cost industry and government many millions in fees, meetings and lawyers.
“Each time the current codes are revised, the sector codes will need to be changed as well”.
“If this does not happen we can imagine many companies jumping on the bandwagon and pretending or trying to belong to a sector that has the ‘easiest’ scorecard to follow. Since the sector councils are not interested in curbing this practice it will be used/abused,” he said.