Government’s BEE strategy is giving rise
to a whole new industry of paperwork, as thousands of companies
need to have their empowerment credentials checked. But the verification
agencies themselves are still waiting for accreditation.
Empowerdex executive director Chia Chao Wu said
the BEE verification industry was about R400-million a year, although
this could be lower as the government is considering exempting more
businesses from BEE requirements. Micro and very small businesses
are already exempt.
“Using the StatSA Integrated Business Register,
there are 428 540 active companies in South Africa [out of roughly
1,2-million registered] … Only 11% of the active companies
in the country actually need to consider BEE,” Wu said.
He calculated that 49 281 companies need to have
empowerment ratings. So far about 3 000 have been rated. Government
has urged companies not to wait until agencies are accredited.
Wu said the cost of a rating for a listed entity
would be “anything between R60 000 and R300 000, depending
on size, employees and complexity”. Empowerment ratings start
at R5 000 for a company, but depend on complexity.
Verification agencies need to be vetted by the
South African National Accreditation System (Sanas). This cannot
be done until the BEE Codes of Good Practice are gazetted, and as
yet there is no indication as to when this might be.
“That’s the million-dollar question.
We’re hoping soon,” said Theo Lombard of Empowerlogic,
the interim president of industry body Abva, the Association of
BEE Verification Agencies, when asked when he thought the codes
would be ready. “But we’ve been hoping that for a year
already,” he added.
In the meantime, Sanas and the department of trade
and industry are running workshops to explain the process to the
verification agencies. The accreditation criteria verification agencies
will need to comply with are in the final stages of being drawn
up, said Sean MacCurtain of Sanas.
Agencies will be able to apply for accreditation
from October 1, until one month after the Codes of Good Practice
are gazetted. These applications will be considered at the same
time, and temporary licences granted for six months. No one is sure
how many agencies will apply for accreditation, or when. Abva has
just more than 100 members, but only about 40 of these are apparently
ready to apply. Not all members are operational, and in order to
be accredited they must be already working in the field.
There’s also the question of accuracy. If
an incorrect rating is given, the company concerned can appeal to
Sanas, which has the power to revoke the agency’s licence
where necessary. Assessors are trained to pick up indicators of
BEE fronting, and can ask for evidence of a company’s shareholding.
“It’s a growth industry, but it’s
still in its infancy,” Lombard said. He could not give an
indication of the number of jobs already created by verification
agencies, but said many other companies were expected to enter the
field.
The verification process
The Sanas website says it will assess whether verification agencies
are themselves competent, have implemented the accreditation criteria
and have qualified assessors who can conduct verifications at a
variety of organisations.
“The qualifications and composition of a
team that would rate a South African multinational entity would,
of necessity, be higher and more comprehensive than for a team rating
a small- to medium-sized entity with a simple share and management
structure,” the website says.
It would also be important to ensure that agencies
were consistent in their ratings. Sanas says on its website that
it will do an on-site assessment of the verification agency and
that it would witness the agency doing ratings, to assess competency.
Agencies also need to comply with seven indicators of the broad-based
BEE scorecard, and be independent and impartial. The indicators
concern equity ownership, management and control, employment equity,
skills development, preferential procurement, enterprise development
and residual factors. A Sanas document says that agencies will be
re-assessed after 42 months.
Once Sanas has accredited a particular agency,
the minister of trade and industry will need to approve the accreditation.
Approval will depend on whether the agency is itself a superior
contributor to BEE and whether it is a members of Abva, the industry
body.
