2008 Annual BEE Conference: BEE Procurement decreases by 20%

BEESA Consulting and EES-Siyakha hosted their second annual Black Economic Empowerment (BEE) Conference on the 11th, 12th and 13th of November 2008 at the Birchwood Hotel and OR Tambo Conference Centre in Johannesburg. More than 80 delegates from both the private and public sectors attended the event in order to get to grips with the rapidly shifting South African empowerment landscape. And the message was clear: Transformation is a process, not an event.

Andrew Bizzell, co-founder of BEESA Consulting, told SmartProcurement that the aim of this conference is “to give delegates the opportunity to catch up on BEE developments, and to be exposed to other BEE organisations and what they do in the marketplace”.

The conference proceedings were opened by EES-Siyakha Managing Director, Jan Munnik, who noted that since last year’s conference BEE has come a long way: “The most significant development in the last twelve months is to be seen in the increasing numbers of organisations that have started to tackle BEE in a meaningful and serious manner. Many of them are notching up good scores on the BEE scorecard or have improved their scores, but there is still, in some sectors, quite a delay. Big corporates are embracing BEE, but quite a significant percentage of smaller organisations in particular are still not taking it seriously”.

Munnik elaborated further by stressing the importance for organisations to ascertain their BEE score correctly. “Each element of the scorecard allows organisations to target weak and strong elements, and thus to ensure that they embark on a process that is structured and benchmarked, with the added benefit of tracking their progress regularly”.

Cas Coovadia, Managing Director of the Banking Association of South Africa, concurred that the second annual BEE Conference is taking place at a very important time: “It is a time of significant changes in the governance structure of our country. This conference will be a tool to enable new actors to debate critical issues and sensitise them to some of the new dynamics of BEE”.

Apart from the annual review on BEE progress, the main issues dealt with by this event were:

  • The successful implementation of BEE best-practice codes and how these can, in turn, unlock an enduring business template that can last long into the future;
  • The new ruling party’s leadership approach to broad-based BEE; and
  • The actual dynamics of several BEE processes, e.g. BEE social programmes; how to overcome resistance to employment equity – probably the most painful part of BEE; the BEE dynamic itself; and how we should engage verification agencies to ensure maximum benefit.

Another additional benefit that distinguished this conference from others was the fact that delegates could attend concurrent sessions led by topic experts that focused on practical elements of the empowerment scorecard relevant to delegates’ specialist areas. These sessions, in turn, built onto a workshop programme that facilitated the implementation of best-practice strategies in the respective scorecard elements – training that delegates could use practically when returning to their organisations.

The facts about preferential procurement
Procurement was one of the main buzzwords at this year’s conference. In terms of the BEE scorecard, preferential procurement has decreased with 20% (from an average 10.8 scorecard score, to 8.6) in the last twelve months (KPMG 2008 BEE Survey). Industries which are particularly trailing behind in their score are the Manufacturing, and Community, Social and Personal Services. The Electronic, Gas and Water industry, as well as the Mining sector, are, conversely, doing well.

A primary reason for the overall decrease in preferential procurement scores is the absence of suppliers with verified scorecards. The KPMG Survey also found that only 46% of procurement departments that requested BEE certificates in 2008 actually received them from suppliers. In order to rectify this low response rate, the survey suggests that the preferential procurement tendering process be revisited and streamlined. This will help suppliers to no longer think of BEE as a threat, and, in turn, will help procurement to allay fears and build best-practice, business-focused understanding.

Finally, procurement should be seen as one of the primary elements that will either improve or reduce an organisation’s competitive advantage. In this context, BEE is thus an opportunity to strategically re-align the supply base towards overall procurement objectives.

Bizzell concluded the conference by noting that “BEE is no longer an amorphous moral obligation; it is a business reality. Organisations now have to contend with changing empowerment and related procurement legislation that can have an immediate and material impact on their bottom line. BEE can no longer be ignored”.

**SmartProcurement would like to thank Lou-Marie Meyer from EES-Siyakha for all her help in the compilation of this article.

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