Panic around the New BEE Codes will subside

The New Codes is arguably the most hotly anticipated piece of legislation released in 2013. Industry experts gave delegates at the Smart Procurement World Western Cape Conference some insights into what the New Codes mean for industry, the economy and your organisation.

“Panic is an appropriate description of how the market is reacting. The stretch between the current Codes and the New Codes is greater than anticipated,” says Wade van Rooyen, Managing Director: Verification Services, Grant Thornton.

“But as the market begins to understand the strategy and intentions behind the revisions they will realise it is necessary to transform our economy”.

When charting a course for earning BEE scorecard points the question remains where do we begin? With which spend do we begin? The answer is still ‘on suppliers that influence your score the most’, says van Rooyen. But owing to the combined category of enterprise and supplier development offering a 40 point weighting under the New Codes, those suppliers are not the ‘easy fixes’; they are the suppliers that influence your strategic supply, such as industrialists.

“The revised Codes require you to take a long-term view of strategic suppliers and to develop new suppliers in collaboration with your current suppliers. In this regard, vertical integration is a possibility,” he advises.

He added that the old practice of ‘buying points’ cannot apply under the New Codes. Rather, the New Codes require a culture change throughout all departments.

“Government has sent a clear message; there is cohesion among the regulations. So don’t fight – support.”

The New Codes are indeed a wake-up, says Elelwani Pahlana, Executive: Enterprise Development at Telkom.

“One can no longer merely tick the boxes and comply; organisations must revise their strategies: a strategy compiled under the old Codes is not sufficient – the New Codes require that enterprise development (ED) and supplier development (SD) must align with company objectives.”

Furthermore, the increased target for spend with black-owned suppliers means no more training for ‘training sake’; money must now be spent in a core-influencing way. “ED in the supply chain must talk to company objectives and must add value,” notes Pahlana.

The New Codes have been structured in such a way so that compliance with them will achieve transformation, she adds.

Makhosazana Seate, BEE Director for Procurement Transformation and Verification at the Department of Trade and Industry (dti) said it will take effort, but meeting the requirements of the New Codes will grow the South African economy and address job creation. “We will be smiling in the near future.”

She concluded with a remark that under the Codes, the drivers of change are the private sector; the dti is taking a leading role, but it is relying on the private sector to drive the change, spurred on by incentives.