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BEE CONFERENCE: WESTERN CAPE PROVINCIAL GOVERNMENT LOOKING TO THE FUTURE: WHAT NEEDS TO BE BEE CONFERENCE: WESTERN CAPE PROVINCIAL GOVERNMENT LOOKING TO THE FUTURE: WHAT NEEDS TO BE DONE NOW LOYISO MBABANE

BEE CONFERENCE: WESTERN CAPE PROVINCIAL GOVERNMENT SOME OF THE KEY CHALLENGES *Paradigm shift and BEE CONFERENCE: WESTERN CAPE PROVINCIAL GOVERNMENT SOME OF THE KEY CHALLENGES *Paradigm shift and growing the “cake” *Definition-related issues (Black) *Underlying principles of BEE *Scope of BEE and beneficiaries *Overall economic development framework (Ikapa elihlumayo) *Sectoral approach and need to target *Roles of various stakeholders and responsibilities *Financing and support mechanisms

PROBLEMS WITH PAST BEE INITIATIVES: SHARE-OWNERSHIP TYPES Failure of stock market approach (1998 crash) PROBLEMS WITH PAST BEE INITIATIVES: SHARE-OWNERSHIP TYPES Failure of stock market approach (1998 crash) Poor performance of “black chips”, (discount to NAV) Difficulty in raising capital (SPV model) & heavy gearing Narrow focus on “deals” and very limited number of participants (35 “black-influenced” companies (JSE) in April 1999, 21 in 2003) Continued dilution of BEE component in most of the “black-influenced companies”; divestment by black shareholders and delisting of many. None or little operational involvement by shareholders and no impact on control and management of companies; SD, or procurement.

OTHER BEE CHALLENGES Abuse of Affirmative Procurement facility; poor monitoring of service providers by OTHER BEE CHALLENGES Abuse of Affirmative Procurement facility; poor monitoring of service providers by clients (paper partners) Little or no skills transfer; business training or mentorship for blacks in “partnerships” and JV’s Non-strategic partnerships/ JVs; focus on “non-core” No involvement and/or buy-in by unions and employees Ill-prepared communities and low entrepreneurial culture Continuing barriers to business start up and high failure Continuing problems with access to capital

SOME RECOMMENDATIONS FOR BEE, GOING FOWARD Must adopt the integrated & broad-based approach of SOME RECOMMENDATIONS FOR BEE, GOING FOWARD Must adopt the integrated & broad-based approach of the Scorecard Adopt an inclusive approach to “Blackness” and avoid “Darker than thou” Ownership still important but to be accompanied by operational control and robust EE and SD strategies (an integrated strategy) Broaden BEE, as in Mining Scorecard, and make it relevant to all stakeholders (internally & externally); also consider “bottom up” interventions & SME’s Make BEE (in its broad sense) an integral part of the Vision and Business Strategy of every company/ institution/ Department Each component of company/ institution to have BEE objectives and to be measured on performance (from CEO’s KPA’s to top management) To have support systems for BEE: Business Development Units; financial support mechanisms; entrepreneurship education; auditing of BEE partnerships and ventures; appropriate internal structures

- SOME RECOMMENDATIONS FOR BEENeed to focus on green field operations (expansion of the - SOME RECOMMENDATIONS FOR BEENeed to focus on green field operations (expansion of the cake and new job creation in successful areas), not just partnerships in existing businesses Also target specific sectors based on growth prospects and significance to economic growth (six sectors identified); develop provincial BEE charters Ensure value added and skills transfer for BEE initiatives Effective use of R 10 bn (Finance Ministry) to finance new ventures in key sectors, and new DFI regime of DTI (NEF, etc) Explore Provincial and Sectoral Financing and Venture Capital Schemes Deal with the continued problem of education system and skills (need to focus on ES&T at high school level); SETA’s role is vital; Departments; Municipalities (Entrepreneurship and business training to be part of SD) Encourage entrepreneurship education and culture among school children; communities and employees (Need for constructive and pro-active campaigns, not just re-active disaster management programmes)

ROLE OF GOVERNMENT IN BEE Provide overall guidance and framework (policy guidelines; targets): As ROLE OF GOVERNMENT IN BEE Provide overall guidance and framework (policy guidelines; targets): As in Ikapa Elihlumayo at the provincial level and link to national Assist with benchmarking and good practice across sectors Conduct effective monitoring to stem out BEE abuse Help with financing of BEE and lower cost of capital (SME’s) Transform the education system and ensure production of appropriately skilled population in the relevant fields (R 1, 09 extra on education and focusing on key subjects) Monitor implementation of Skills Development Programmes and the HRD strategy to align them to the development needs of the country Aggressively enforce BEE requirements and targets in procurement; privatisation of state assets; licensing (mining, gambling, etc); PPP’s; SDI’s; rural and urban nodes and other government-related initiatives

ROLE OF (WHITE) BUSINESS IN BEE Must understand importance of sharing the country’s resources ROLE OF (WHITE) BUSINESS IN BEE Must understand importance of sharing the country’s resources and commit themselves to the BEE project Participate actively in the redressing of past imbalances and contribute with the skills and the resources in their control, be a partner Be involved in the mentorship and development of black business as well as the skills transfer within institutions (must get measured and rewarded for succeeding in this regard) Get involved in meaningful partnerships with black businesses; joint ventures and champion other empowerment initiatives Review and adjust past policies and practices where necessary in order to further BEE (e. g. financing; procurement, etc) Allow for failure Provide the necessary support mechanisms for black businesses

ROLE OF BLACKS IN BEE Must acquire the necessary skills and experience Refrain from ROLE OF BLACKS IN BEE Must acquire the necessary skills and experience Refrain from being “procurement prostitutes” Ensure operational involvement in the ventures they are in Use their shareholding and control to effect positive changes Make a pro-BEE and EE difference in their companies Seek new business opportunities and better ways of running business (add value and positively transform past and present business ways) Enter into meaningful partnerships with white business (value added) Be good role models to their communities and abide by legislation Be prepared to fail and learn Not seek mere personal enrichment

OTHER CHALLENGES IDENTIFIED Building a conducive overall economic framework Sustainable economic growth Geographic equity OTHER CHALLENGES IDENTIFIED Building a conducive overall economic framework Sustainable economic growth Geographic equity Inclusion of Youth; women and people with disabilities Focus on downstream operations (e. g. beneficiation in marine sector) Creation of ready-to-occupy enterprises and financing Proper planning around the R 10 m loan and partnership