BBEEE’s generic scorecard combines industries that do not have a sector-specific one.
It includes mining, manufacturing, retail, education, chemicals and fertilisers, energy and water, food and beverages, R&D and textiles.
Due to the many companies (2,165) that fall into this category, the second-largest after the construction sector, it influences the general weighting of the overall scorecard and there is a misconception they are not pressured to implement and report on BBBEE.
Together, these sectors achieve level 4 BBBEE recognition, with an average of 87.75 points. Looking at scorecard elements, generic companies achieved 75.2% of the target for ownership, 57.7% for management, 74.5% for skills development, 76.1% for ESD and 142.5% for socioeconomic development.
Explaining the importance of analysing generic sector results during the launch of the 2022 Sanlam Gauge Report, co-founder Andile Khumalo said sectors critical to the economy report in generic sector codes.
“My favourite (generic subsector) is the retail sector. It is often forgotten when it comes to BEE because retailers will say, ‘If I have the best loaf of bread at the best price, no-one cares if I’m black-owned or contribute to BEE’.
“You don’t see many of them doing BEE deals or even reporting on transformation as an important part of their business, and that leaves them out. When we pull this data out we hope to engage with key sectors that sit in generic and almost become muted and forgotten, while they are important players.”
Management control and skills development are flagged as requiring special attention due to their ability to hamper growth in the generic sector.
Cedric Singh, co-director at Siyakhula BEE ratings agency, said companies continue to use the excuse of a lack of qualified black people for not meeting management control targets.
“When consulting with clients I use the game of Monopoly to explain BEE. When a new player joins Monopoly four hours into the game, when the original players have amassed hotels and houses, the new player struggles to catch up.
“SA Inc is a monopoly and BBBEE is there to help new players to adjust. Unfortunately we will continue to have poor management control showing until companies realise that skills development feeds into management control and when those in charge are willing to give people a break.”
Diveshan Rao, MD of verification agency BEE Online, said implementing BBEEE continues to cause polarisation in the generic sector, with companies merely ticking boxes to comply with regulations.
Covid-19 heightened this resistance as entities focused on saving jobs and felt implementing scorecard elements was an unnecessary, added pressure.
“The biggest failure of transformation is that companies fail to align their BEE strategies to their strategic objectives. We have clients who believe BBBEE is a waste of money and say they don’t see a return on their investment.
“They slash their skills development budgets and unfortunately this reduction in expenditure leads to entities losing scorecard points. We cannot have corporate strategies that are not aligned to an organisation’s skills development requirements.”
Reviewing the implementation of BBBEE over a decade from 2011, the MD of ratings agency Empowerdex, Lerato Ratsoma, said there was a steady increase until it reached a peak in 2015, at 84.9%.
When the 2013 codes of good practice came into effect in May that year, there was a decline until 2018, when a slight increase began showing, until the gains were shattered by the onset of Covid-19 in 2020, said Ratsoma.
“Now that the economy is in recovery, there is an expectation that next year we should start seeing some improvement in BBBEE numbers. We will see how long it takes us to get back to the highest point of 2015.
“If we do not see the rise in numbers, then we will have to ask what is influencing that and if the regression could be because of lack of interest in implementing BBBEE.”
Khumalo encouraged all qualifying entities to comply with BEE legislation, saying when it’s left only to the “good guys” to report, it becomes a hollow chamber, making it difficult to put together reports such as Sanlam Gauge. Its research is based on valid BEE scorecards that are signed off by South African National Accreditation System (SANAS).
• This article was paid for by Sanlam.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.