B-BBEE amendment bill

Public Sector Transport Sub-Sector Code
Introduction

NABC Public Sector Transport Sub-Sector Codes
Application of the SS Code
The SS Code is aimed at accelerating transformation within the Transport Sector. The stakeholders are:
  •      Department of Transport;
  •      Transport Agencies;
  •      State-owned Enterprises;
  •      Provincial Departments of Transport;
  •      Local authorities;
  •      Labour; and
  •      Transport Education and Training Authority (TETA).

The B-BBEE Scorecard - Department of Transport (DOT)

The Department of Transport’s Scorecard has 5 indicators of Empowerment, namely: Management, Employment Equity, Skills Development, Preferential Procurement and Enterprise Development.
Ownership and Socio-Economic Development do not apply because the DOT operates within the constraints of the Public Financial Management Act (PFMA).

The Management Control Scorecard - DOT

Dept Transport Management Control Scorecard

The public sector does not have a say over who is appointed as a minister or a member of the executive council. Therefore, the board of directors’ indicator has been excluded.
Executive directors include Director General and Deputy Director-General.
Top management include Chief Directors and Directors.

Note: the Adjusted Recognition for Gender does not apply.

The Employment Equity Scorecard - DOT

Dept Transport Employment Equity Scorecard

The senior management criteria under the EE element may be collapsed into the Top Management category.
The middle management will constitute professionals as defined in the EE Act.
Junior management will constitute technical, academically qualified and skilled people.

Note: the Adjusted Recognition for Gender does not apply.


The Skills Development Scorecard - DOT

Dept Transport Skills Development Scorecard

The SD Scorecard

Note: the Adjusted Recognition for Gender does not apply.

The Preferential Procurement Scorecard - DOT

Dept Transport Preferential Procurement Scorecard

Stakeholders intend to increase procurement from black-owned entities, implement transparent and ethical policies and practices, and develop best-practice supplier development policies.

The measurement of procurement, as portrayed below, will provide a transparent and consistent manner in which organisations within the public sector are scored. The targets and recognition levels for suppliers are less stringent initially, becoming stricter as the years progress and the enterprise gains market experience and starts to grow.

B-BBEE Status for Accreditation on Preferential Procurement - DOT

Dept Transport BBBEE Status for Accreditation on Preferential Procurement
Accreditation on the PP Scorecard

The Enterprise Development Scorecard - DOT

Dept Transport Enterprise Development Scorecard
The ED Scorecard

The B-BBEE Scorecard - State Owned Enterprises (SOE)

State Owned Enterprises BBBEE Scorecard
The Ownership Scorecard

Guidelines for selection in the sale of an SOE or a Productive State Asset:
According to the BEE Act, the Codes of Good Practice must be applied when determining qualification criteria for the sale of state-owned enterprises. In line with this stipulation, SOEs will be allocated according to the acquiring company’s BEE status as determined by the acquiring company’s sector charter. In the absence of the charter, according to the Codes of Good Practice shall be applied.
The ownership requirements will be used in the evaluation of the bidder’s ownership status and the appropriate SS Code where applicable.

Guidelines for selection in the sale of an SOE or a Productive State Asset:
  • According to the BEE Act, the Codes of Good Practice must be applied when determining qualification criteria for the sale of state-owned enterprises. In line with this stipulation, SOEs will be allocated according to the acquiring company’s BEE status as determined by the acquiring company’s sector charter. In the absence of the charter, according to the Codes of Good Practice shall be applied.
  • The ownership requirements will be used in the evaluation of the bidder’s ownership status and the appropriate SS Code where applicable.

The Management Control Scorecard - SOE

State Owned Enterprises Management Control Scorecard

The Management Control Scorecard

The Employment Equity Scorecard - SOE

State Owned Enterprises Employment Equity Scorecard
The EE Scorecard

The Skills Development Scorecard - SOE

State Owned Enterprises Skills Development Scorecard
The SD Scorecard

The Preferential Procurement Scorecard - SOE

State Owned Enterprises Prefential Procurement Scorecard
The PP Scorecard

The Enterprise Development Scorecard - SOE

State Owned Enterprises Enterprise Development Scorecard
The ED Scorecard

Enterprise Development Enhanced Recognition Factor Mechanism
Preamble

NABC Enterprise Development Enhanced Recognition Factor Mechanism
In order for the country to realise its full economic potential it must draw its entire population into the mainstream economy. This includes the reduction of unemployment and the eradication of poverty by developing new enterprises in the SMME sector.

Definitions
  • Contributing Enterprise (CE): the organisation that is doing the developing and will be claiming the benefit in its SS Code scorecard;
  • Beneficiary Enterprise (BE): this is the new/ existing enterprise that is receiving the mentorship, direction and assistance from the CE; and
  • Enterprise Development Programme: this is the programme that the CE designs to develop new/existing organisations against which its scorecard points will be measured in terms of its progress against the plan.

Categories

NABC Enterprise Development Categories
Enterprise development can be separated into four categories:
  1. Suppliers – of equipment, material and the like;
  2. Professional service providers – auditing and financial service providers, legal services etc;
  3. Other service providers – contractors, cleaning services etc;
  4. A special category is necessary for SOEs, provincial and local government for the PPP’s. Outsourcing and possible privatisation of certain functions that are still being done internally. This has a short-term duration.

Formulation of Enterprises

NABC Policy for Formulation of Enterprises
The BE must:
  • A legal entity compliant with all the necessary regulations;
  • The owners/ shareholders must be employers of at least 3 other permanently employed people; and
  • It must be a genuine emerging entity with employees and shareholders that lack the skills and experience and have a genuine need to be empowered.

Enhanced Recognition Determination:
Determination of ED Compliance; and
Measurement of development and computing this measure of progress and determining the enhanced recognition factor.

Development Compliance

NABC Policy for Development Compliance
  • Auditors or an accredited verification agency will measure the progress against the plan of development;
  • Auditors or an accredited verification agency will review the enterprise development documentation;
  • Auditors or an accredited verification agency will interview the BE owner and selected staff to gauge benefits provided and actual development attained.

Measurement:
If the above steps are achieved, the auditor can deem that the enterprise development has been attained and that the development programme is compliant.
The formula to convert this achievement into an enhanced recognition is explained below.

Prerequisites

A CE should have a minimum of two BEs’ that are being developed at a time, in order to qualify to receive enhanced recognition for ED.

The phase-in period for the CE to develop its programme and identify its BEs’ is 12 months from the date of signature of the Transport Sector Code.
BEs should be factored in over 24 months from the date of signature to be catering for a minimum of 30% of a CEs discretionary spend increasing to 60% at the end of year 5 from the date of signature.

Scoring

NABC Scoring for Enterprise Development
  • The scores derived from the MM for each enterprise in the Programmes are added together and an average is computed.
  • If the average growth rate is less than the real GDP growth for the period in question the CEs will receive a penalty point, i.e. reduced score with zero as a minimum.
  • If the average growth rate is equal to real GDP growth the CE will be neither penalised nor rewarded.
  • If the average growth rate exceeds real GDP growth the CE will be rewarded on a sliding scale up to a maximum of multiplier of 1.5.

Criteria for compliance

  • Management skills transfer;
  • Establishment of administration systems;
  • Establishment of cost control systems;
  • Planning skills transfer;
  • Business skills transfer;
  • Technical skills transfer;
  • Legal compliance skills transfer;
  • Procurement skills transfer;
  • Establish credit rating/ history; and
  • Establish financial loan capacity/ history.                

Measurement Matrix

NABC Measurement Matrix for Enterprise Development
Measurement Matrix (MM)

Example BE1

NABC Measurement Matrix for Enterprise Development Example 1
Example BE1

Example BE2

NABC Measurement Matrix for Enterprise Development Example 2
Example BE2

Example BE3

NABC Measurement Matrix for Enterprise Development Example 3
Example BE3

Average Growth Rate:
= (14.5 + 4.1 + 18.9) / 3
= 12.5


Assume GPD growth rate to be 10:
12.5 > 10 Therefore, Growth rate exceeds real GDP growth annualised by 25% and the multipliers factor is 1.125

If the 3 BEs accounted for 15% of the CE discretionary spend in the year, out of the 30% allocated by the CE for SS Code requirements then the multiplier effect will be:

= 1.125 x 15
= 16.875 x the monetary value of discretionary spend from the entities.

So if discretionary spend was R 20 million, then:
30% = R 6million; and
16.875% = R 1.0125 million; and
15% = R 0.9 million

CEs Scorecard Score = R 1.0125 million = 16.875% x weighting (10 or 20)

The Socio-Economic Development Scorecard - SOE

NABC State Owned Enterprises Socio-Economic Development Scorecard
The SED Scorecard
B-BBEE amendment bill