Rural and Community Development Africa Indaba July 2015 Rural Development as a means to achieve Broad-Based Black Economic Empowerment

Rural and Community Development Africa Indaba

July 2015

Rural Development as a means to

achieve Broad-Based Black

Economic Empowerment

The Central Strategy:

Industrial Policy Action Plan (IPAP V)

New Growth Path

National Skills Development Strategy

National Development Plan

Companies Act

Agricultural Policy Action Plan (APAP)

King III (People, Prosperity, Planet)

Employment Equity Act

Gender Equality Bill

Disability Charter

SA Business Environment- Central Strategy

Localisation

New Growth Path investment underpinned by National Development Plan and Industrial Policy Action Plan created a framework for localisation and economic Development.

Job Creation Direct jobs

Indirect jobs

Job preservation

Capacity Building Staff

Suppliers

Customer

Local Content South Africa, Provincial, Municipal/District

Taxation, salaries, percentage e.g.. material, goods, components sourced in South Africa

Development for South Africa

Enterprise and Supplier Development: Priority Element

B-BBEE for the South African Business

PREFERENTIAL PROCUREMENT Weighting TargetProcurement BEE Procurement Spend from all

Empowering Suppliers based on the BEE Procurement Recognition Levels

5 80%

BEE Procurement Spend from Qualifying Small Enterprises based on the applicable BEE Procurement Recognition Levels

3 15%

BEE Procurement Spend from EME based on applicable BEE procurement recognition level

4 15%

BEE Procurement spend from Empowering Suppliers who are 51% or more black owned entities

9 40%

BEE Procurement Spend from Empowering Suppliers who are more than 30% black female owned

4 12%

Bonus Point BEE procurement spend from designated group suppliers that are at least 51% black owned

2 2%

Enterprise and Supplier Development: Priority Element


Weighting Target

Supplier Development

Annual value of all Supplier Development Contributions made by the Measured Entity

10 2% NPAT

Enterprise Development

Annual value of all Enterprise Development Contributions made by the Measured Entity

5 1% NPAT

Bonus Graduation from ED to SD 1

Creation of 1 or more jobs 1

ESD TOTAL 44

Enterprise and Supplier Development

Where else will Skills play a role?

2% of Net Profit After Tax (NPAT) must be invested in Supplier Development Programmes

1% of NPAT must be invested in Enterprise Development Programmes

Businesses should develop a structured plan which includes Clear objectives Priority interventions Key performance indicators A concise implementation plan with clearly

articulated milestones


Enterprise and Supplier Development Beneficiaries are EME’s and QSE’s who are 51% black owned Award of 3 year contracts, has a procurement multiplier of

1.2 Award of contracts to ED beneficiaries or SD beneficiaries

has a procurement multiplier of 1.2

Enterprises are encouraged to align their ED and SD programmes to the sectors identified in Government’s Localisation programme

Contributions are recognized annually unless a large scale project requires the total contribution to be spread over more than one year




Businesses should develop a structured plan which includes Clear objectives Priority interventions Key performance indicators A concise implementation plan with clearly articulated

milestones

Imports

Where a business claims import exclusion they will be required to develop and evidence a plan, to implement a supplier transition as above

Using legislative requirements to make development happen


Example One

Mining : Waste Management

Waste Management machines address waste The output is activated carbon The process produces electricity The carbon cleans the water and restores the soil

PH balance

Using legislative requirements to make development happen


Example One

Community benefit

Jobs created to manage the waste process

Water is cleaned

Soil is restored for agricultural activity

Company benefit

Electricity is produced creating a cost savings

Carbon tax project produces carbon credits

Compliance with ESD (B-BBEE)

Mine rehabilitation criteria

Mine Community Development


Example Two

FMCG company : Sustainable Oils

Farmers of canola and sunflower oil are identified

Development programmes are put in place to develop their capacity, accreditation and quality

Production of oil is phase II to produce a final product ready for market consumption



Example Two

Community Benefit

Farmer Development

Uptake agreements

Accreditation and export-readiness

Company Benefit

Local access to a core ingredient

Greater control over quality

ESD points (BEE compliance)

Carbon tax offset

Reduction in logistics time


Government

Policy

Private Sector Public Sector Market

Transformation Co-operation Monitoring and Evaluation; Impact; Environment for Success;

Facilitation

Making Development Happen

Collaboration within the market should achieve

•Access centralised information regarding the state of Transformation in the sector

•Provide access to information, support and understanding of the sectoral objectives

•Positively influence challenges for sectoral participants to reduce the barriers to growth; sustainability or empowerment

•Facilitate greater response from senior officials and industry to encourage collaboration in sectoral transformation


Making Development Happen

Collaboration within the market should achieve

•Access centralised information regarding the state of Transformation in the sector

•Provide access to information, support and understanding of the sectoral objectives

•Positively influence challenges for sectoral participants to reduce the barriers to growth; sustainability or empowerment

•Facilitate greater response from senior officials and industry to encourage collaboration in sectoral transformation


Identification of issues to date Need to grow export opportunities

Need to share information on market demand and growth opportunities so that the sector is more likely to achieve longer-term success

Need to link the market to the customer more effectively

Need to monitor and evaluate transformation programmes to ensure impact-focused approach

Need to define an applicable model to graduate micro and small participants to mid and large scale participants

Need to introduce a stronger education platform to development applicable skills

Need to introduce a communications strategy that allows for consultation and engagement by industry stakeholders

Empowerment vs Transformation

Transformation of the sector includes many facets, not least of which include

• Sectoral Growth

• Green, Organic, Sustainability and environmental programmes to support growth, make the sector market relevant and offset Carbon Tax obligations for South Africa

• Technology as a means to attract Youth and improve efficiencies

• Localisation : decrease in imported products, equipment and services

• Growth of existing black enterprise to move from micro to large commercial enterprises

• Increase in exports

All of the above, are intended to result in

• Food Security

• Empowerment

• Inclusion of marginalised groups in sectoral growth

• Job creation

17


Empowerment of the sector includes those elements defined by the B-BBEE framework of the dti

• The priority is

• ensuring that black South African’s own, manage and control sustainable assets;

• that black South Africans are represented at each occupational level of every entity operating within the sector;

• that companies within the sector develop skills and capacity; and

• that they participate actively in developing black, localised enterprises to buy goods and services from; as well as

• ensuring that all industry participants re-invest in social development programmes


Critical Success Factors

As opposed to request-led responses; the market needs to strategically identify the gaps and invest its resources, funding, time and money into achieving strategic programmes that are critical to the impact of the sector

Localisation imperatives need to be identified and responsible, transitional programmes put in place to achieve growth in high value, programmatic products, services and commodities

This needs to be balanced with a strong export drive to use the need for international food security as an opportunity to secure direct and indirect markets

Effectiveness of support programmes needs to be monitored and customised to achieve higher impact

Education is imperative

Access to information underpins all transformation

QUESTIONS…….

Dionne Kerr [email protected] 083 307 7766

“Government alone cannot solve the

challenges faced by the country, but

working together, solutions are

possible.”

Jacob Zuma (State of the Nation 2012)

Documents

Rural and Community Development Africa Indaba July 2015 Rural Development as a means to achieve Broad-Based Black Economic Empowerment