Grant Thornton’s managing director of verification services, Jenni Lawrence sat down with Carla de Klerk to discuss the changing BBBEE codes and the potential advantages it can hold for corporates and the economy.
“People are often very negative about BEE, and that’s because they often fail to see the positive benefits of it. Looking for the good, you see companies actively trying to make a difference within the communities and for their own staff. When you look at enterprise development, skills development and socio-economic development you see something that makes an actual difference in the country.”
-Jenni Lawrence, Grant Thornton
The changing of the codes:
“With the new codes, to be implemented on 1 May 2015, there are definitely more financial expenses and administrative burdens. But I think people are going to get creative with it. It’s a mind-shift in the end, people need to stop seeing the codes as a penalty and start looking at it as an opportunity to improve their business. A good BBBEE scorecard makes businesses more competitive, and achieved properly, is a sure way to get a return on their investment. Multinational companies look at a country’s infrastructure before investing, its utilities, infrastructure, policies and labour relations. If we get BBBEE right it’s going to improve the skills level in our country and improve the country’s prospects as a destination for foreign investment. The basics of the matter are – if you lift up the people, the country will go up as well. How can that be a negative thing?”
How can BBBEE be positive?
“We all live in this country, so we all have to contribute to this country. You can’t put all of the burden on political parties or the government; people need to start seeing BBBEE as social responsibility. If you are developing a country through enterprise and supplier development initiatives, you are empowering people to get off of grants and therefore easing the burden on the tax payer. If you develop the economy so that there are more people in the tax paying pool, you can put more money into developing other areas, such as infrastructure and education. It’s simple, if you have more people contributing the economy, there is more money to go around.
To verify or not to verify…
“I predict a lot of companies are going to follow the five stages of grief regarding the new codes. Denial, anger bargaining, depression, acceptance! We are seeing them all. There is going to be a lot of denial and bargaining until people get used to the fact that they live and work in South Africa, it is the reality of the country and is much needed to bring equal opportunity to the country. Our proactive clients have started converting their scorecards to what they will look like under the new codes, and although the amended BBBEE codes require more administration and spend than the previous version, they are looking for ways to overcome these obstacles. The key is to see it as a long-term investment, not a penalty. In most cases, it is not a legal requirement to be BBBEE compliant, rather, it works through peer pressure. It only becomes a requirement if you’re applying for a license or a government incentive, but you need to remember that even though you might not do business with the government, you probably have customers who do. In the end, BBBEE can make you competitive in your industry, so you need to weigh up your risks carefully.
BBBEE as investment
“BBBEE is an investment in your country, it’s a PR investment, it can give you a competitive edge and it’s a marketing tool. More and more sales managers contact us, pushing for certification for their company. Again, it’s all about your mindset. Use the code to your advantage, whether it be through marketing or social consciousness – don’t fall into a negative trap about it. What I love about MEDO, is that rather than cursing the codes, they rolled up their sleeves, rubbed their hands together and said, ‘Let’s get to work. Let’s make this happen.’ We need more companies that are open-minded and positive about the opportunities the new codes offer rather than the difficult parts. What I’ve seen from what MEDO is putting together, is that the people they are working with are the people that are more likely to succeed. Together we are pushing the message that it’s about making BBBEE work for companies and work for our country.
MEDO and Grant Thornton are partners in the verification process of the BBBEE scorecards, with MEDO acting as code consultants ensuring efficient spend on development projects.