BMF takes a hard line stance on BBBEE codes

 The new leadership of the Black Management Forum (BMF) may have sent a strong signal that it was not about to become the darling of Corporate South Africa at the expense of black economic empowerment (BEE).

This can be taken from the hard line stance, taken by the BMF in its submission to the process of amending the broad based black economic empowerment (BBBEE) codes of good practice. The BMF released its submission today spitting more fire than ever before. This may come to dilute widely held views that the BMF was going softer in the post Jimmy Manyi era and under the direction of new president Bonang Mohale.

The BMF’s submission will suggest nothing has changed in the reflection of the organisation on BEE issues. Most notably the BMF has hard line stance about the status of the sector focused charters. It called for the abolition of all charters.

The BMF said the “The BEE Act must supersede all other laws and policy tools that seek to achieve economic transformation. It must be the country’s trumping legal and policy framework. The Department of Trade & Industry (DTI) must lead and champion economic transformation in the country and align all sectors of the economy with the BEE Act”.

 In a message set to send shock waves across the market the BMF launched a scathing attack on the Mining Charter. “We note with disappointment the fact that mining, a critical sector of the economy that employs 500 000 people and generates more than 30% of merchandise exports, is the only industry in South Africa that has made no attempt to align with the BEE Act and that the DTI as the champion of economic transformation has not publicly taken steps to address this issue”.

 “The mining charter should align itself with the amended BEE Codes. In its current form, it betrays every principle of empowerment that is contained in the BEE Codes. Mining is the only sector of the economy where there is no requirement for independent verification of BBBEE contributions. None of the mining companies has a BEE certificate. It is the only sector that has made no attempt to align with the BEE Act.

 The BMF added that “We also note with disappointment that the government continues to approve unnecessary sector codes”. This comment made for another sharp attack on the financial sector charter. “On November 14, the minister of trade and industry released Phase 2 of the Financial Sector Charter (FSC) for public comment. If the FSC charter becomes a sector code, the majority of JSE-listed companies by value will not be measured against the generic BEE Scorecard”.

 The BMF said “We believe that all sector codes should be abolished. The sector codes have arbitrary deviations from the BEE Codes, which have no rationale. For example, in the ICT sector a company becomes compliant if it has concluded a transaction worth R7.5bn. The sector codes exclude large sectors of the economy from implementing the codes. They introduce added complexity and make it impossible to have cross-sector comparisons of BBBEE performance”.

 The BMF has also made a number of other radical submissions.

The BMF said all BBBEE elements should be priority elements. “We note with disappointment that the amended codes have not included management control among the proposed priority elements. We believe that all BBBEE elements should either be priority elements or discarded. It will send the wrong message to say that some BBBEE elements

are not priorities”.

 The BMF said the weighting points for management control must be increased to 30 points from a proposed 15 points. “We note with disappointment the fact that the proposed codes have significantly de-emphasised management control with an allocation of 15 weighting points compared with 25 in the current Codes”.

 The BMF said “BEE Verification agencies must be fully transformed before they can verify the transformation of others. They should be superior contributors to BBBEE. They must achieve a BBBEE Status of at least that of level 3 contributor to BBBEE and have a minimum of 25% black ownership”.

Here is the full BMF document: BMF REVISED B-BBBEE CODES

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