Many companies that service native municipalities are in all probability conscious of a black financial empowerment (BEE) requirement to do enterprise with that municipality. Usually this implies the submission of a BEE scorecard or affidavit together with the bid.
Sadly, this side of BEE is usually the one factor that the municipality itself is conscious of.
Most municipalities are unaware that they’re, in reality, legally obligated to not solely measure their procurement spend however implement a complete BEE scorecard for his or her municipality.
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The uptake of BEE compliance in organs of state (together with municipalities) is so dire that the BEE Fee, in its Nationwide Standing and Traits on Broad-based BEE Transformation Report 2021, noticed that of the 326 organs of state, solely 82 submitted BEE experiences to the fee, one thing that the BEE Act compels them to do. Apparently of those 82 entities, one-third have been non-compliant.
The BEE Fee may not seem to hold a lot weight on this course of, however the auditor-general could flag this as non-compliance in that entity’s total governance, which can affect a municipality’s clear audit standing.
Many municipalities are far behind on service supply and wish to indicate their constituents that they’re making progress in direction of a superb governance observe file.
Most individuals take into consideration black possession as being crucial factor of BEE compliance. However within the case of municipalities, possession isn’t a consideration in any respect.
Municipalities are, in any case, ‘owned’ by the federal government and therefore are exempt from the possession factor. They’re, nevertheless, required to implement programmes and measure their efficiency every year within the type of a BEE scorecard.
Creating cohesion
This text is just not about what’s required for a municipality to adjust to a scorecard. As an alternative, we have now chosen to take a look at how the implementation of a BEE programme can create higher cohesion inside a group. For instance, we have now solely targeted on three of the 4 components.
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The primary one is the talents improvement of black individuals. Among the funds can be utilized on inner employees, however quite a lot of the cash might be used for the event of core and important abilities locally that would result in higher service supply and extra environment friendly governance.
We now have come throughout bursary schemes in native communities that goal to develop younger individuals in competencies that attempt towards higher service supply. All of those programmes contribute to the talents improvement scorecard.
In a single relatively distinctive state of affairs, a municipality paid for the training of 1 particular person whereas that individual was present process an internship in a neighborhood enterprise.
Procurement of native items and providers doesn’t should be targeting black-owned companies completely. Any enterprise with a turnover of lower than R10 million want solely full an affidavit, and they’re routinely BEE compliant.
By supporting these kind of companies in addition to black-owned companies, municipalities are encouraging native employment. These corporations can speak to municipalities concerning the abilities they require so the municipality can begin engaged on the event of these abilities and prioritising them of their abilities improvement programme.
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Service supply is an issue in virtually each municipality. A few of that service supply could be outsourced to small black-owned companies. This must be tied into the talents improvement programme that we mentioned above to attain a sustainable service supply programme. These small companies will want tools, uncooked supplies and different items and providers, all of which could be sourced from the companies locally.
And eventually, a municipality-driven programme that focuses on programmes like early childhood improvement pays dividends for the subsequent technology to come back.
Every of those programmes contributes to an final BEE degree within the municipality’s BEE scorecard.
Not solely has the municipality complied with the regulation, nevertheless it has made a constructive distinction in its communities. It has created the required abilities, developed small companies, bought from these small companies in addition to lots of the different small companies in its communities and, on high of that, invested in the way forward for its ratepayers.
In different phrases, they’ve delivered on their mandate and coincidentally complied with a BEE scorecard which, on the outset, appeared so advanced.
Rudolf Rautenbach is a chartered accountant.
