Empowerment 2021 by SundayTimesZA

JUNE 2021

IN ASSOCIATION WITH THE BLACK MANAGEMENT FORUM

www.businessmediamags.co.za

Tasneem Fredericks

Andile Nomlala

Tsakani Maluleka

Tandi Nzimande

Busi Sibeko

Kganki Matabane

INCLUSIVITY, COLLABORATION, ACCOUNTABILITY

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A DV ER T ORI A L

MAKING THE RIGHT MOVES WITH THE STANDARD BANK BUSINESS CREDIT CARD As a business owner you need and want a credit card that allows you to take advantage of opportunities or pay for day-to-day running costs. Standard Bank’s newly launched, globally accepted Visa Business Credit Card is the solution

Standard Bank has also ensured that customers who use the Visa Business Credit card on qualifying purchases will see an added benefit when linking it to the bank’s UCount Rewards programme. With UCount Rewards for Business, customers earn up to 1.25%* back in Rewards Points on credit card purchases, up to R5 per litre back on fuel and oil at Caltex and up to 2.5% back at the programme’s Rewards Retailers. “Business plays a crucial role in the growth of Africa. It provides employment, stokes new economies, and connects the continent and the rest of the world. As a major bank operating throughout Africa, we want consumers to know that if they are looking to grow their business by accessing additional funding, the Standard Bank Visa Business Credit Card is one way that will help to get things moving again. Standard Bank is committed to partnering with businesses to provide solutions that will aid their recovery and that of the South African economy. Bank on us and let us drive your success,” concludes Nyembe.

he Standard Bank Visa Business Credit Card not only gives business owners the licence to make the right moves, but also access to cash to grow their business. The card also enables businesses to manage spend in real-time. Sophisticated business reporting makes it easy for business owners to monitor spend and empowers them to make informed decisions around managing their business. “Liquidity is key to achieving business growth and managing business costs. At Standard Bank, we understand that business owners do not want their business to be derailed by big purchase items, ad hoc office expenses or unplanned extras. At the same time, we also understand that business owners do not want to miss out on opportunities to grow their business due to a lack of financing,” says Ethel Nyembe, head of Group Card and Payments at Standard Bank. “The Visa Business Credit Card helps to ensure that our customers are able to run and manage healthy businesses. It offers a convenient way for them to optimise their cash flow, manage their repayment, monthly fees, expenses and card custodians via real-time insights.”

BENEFITS AND REWARDS

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The Visa Business Credit Card also ensures cash flow and liquidity at the ready with 55 days interest-free. With a minimum 5 per cent repayment requirement and low monthly fees, it offers more affordable credit.

For more information:

www.standardbank.co.za

Ethel Nyembe

Customers can download and use Standard Bank’s mobile banking app or internet banking platform to manage their account, view balances and their latest transactions.

“The Visa Business Credit Card helps to ensure that our customers are able to run and manage healthy businesses. It offers a convenient way for them to optimise their cash flow, manage their repayment, monthly fees, expenses and card custodians via real-time insights.” – Ethel Nyembe

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F ROM T HE EDI T OR

EMPOWERMENT PUBLISHED BY

Picasso Headline, a proud division of Arena Holdings (Pty) Ltd, Hill on Empire, 16 Empire Road (cnr Hillside Road), Parktown, Johannesburg, 2193 Postal Address: PO Box 12500, Mill Street, Cape Town, 8010 www.businessmediamags.co.za

EDITORIAL Editor: Ryland Fisher Content Manager: Raina Julies rainaj@picasso.co.za Contributors: Jermaine Craig, Trevor Crighton, Delia du Toit, Duma Gqubule, Puseletso Mompei, Jovial Rantao, Tiisetso Tlelima Copy Editor: Brenda Bryden Content Co-ordinator: Vanessa Payne Digital Editor: Stacey Visser vissers@businessmediamags.co.za

INCLUSIVITY AND COLLABORATION

mpowerment does not always get good press. The perception that many have is that it is something that the ruling ANC dreamt up to enrich themselves and some of their comrades. But empowerment is certainly not that. It is at the heart of efforts to transform our economy from one that has been very exclusive – meaning that it benefitted only white people – to one that will be inclusive – meaning that it will benefit everyone. Apart from the high-profile BEE beneficiaries, who always hog the headlines for all the wrong reasons, there are people who are trying to empower those who have always been on the sidelines of the economy. People who religiously help to develop the skills of young people, who make sure that corporates procure from smaller, mainly black businesses, and who try to

make sure that those who need finance to kick-start their businesses have access. We will never move forward as a society and an economy if we do not try to find ways to involve the majority in creating riches for everyone. The days of only the few benefitting are over. In this issue of Empowerment, we look at the work done by South Africa’s new Auditor-General, who has to hold government departments to account for their spending; how government has responded to the COVID-19 pandemic and the public-private partnerships that have resulted because of this crisis; plus regular features such as fronting and gender empowerment.

Ryland Fisher Editor

CONTENTS

DESIGN Head of Design: Jayne Macé-Ferguson Senior Designer: Mfundo Archie Ndzo Advert Designer: Bulelwa Sotashe Cover Images: Supplied SALES Project Manager: Jerome van der Merwe jeromem@picasso.co.za | +27 21 469 2485 I +27 082 668 1496 Sales: Frank Simons PRODUCTION Production Editor: Shamiela Brenner Advertising Co-ordinator: Johan Labuschagne Subscriptions and Distribution: Fatima Dramat, fatimad@picasso.co.za Printer: Novus Print

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Copyright: Picasso Headline. No portion of this magazine may be reproduced in any form without written consent of the publisher. The publisher is not responsible for unsolicited material. Empowerment is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/ advertorials have been paid for and therefore do not carry any endorsement by the publisher.

BLACK MANAGEMENT FORUM 4 5 6 7

MANAGEMENT Management Accountant: Deidre Musha Business Manager: Lodewyk van der Walt General Manager, Magazines: Jocelyne Bayer

SKILLS DEVELOPMENT No joy, says BMF president Andile Nomlala, commenting on the slow progress of empowerment BMF deputy president Tasneem Fredericks seeks hope among the frustration of continued gender inequality South African women have been the hardest hit by the fallout from COVID-19 The government’s response to the country’s COVID-19 related economic crisis was inadequate

ACCOUNTABILITY 9

What local government can do about promoting greater accountability for the spending of government resources

GENDER 10

What is the status of gender parity at board level?

PARTNERSHIPS 16

The important role of collaboration for reaching social developmental goals

Are South Africa’s youth equipped and skilled for the digital age?

BEE 20

B-bBEE initiatives continue to be a contentious subject, especially as little progress has been made

FRONTING

Good governance is needed to stamp out fronting

INVESTMENT 24

South Africa has passed the halfway mark of its investment target. We look at some of the most recent ones

ECONOMY 25

Government’s economic recovery plan is all words and no action

AUTOMOTIVE 26

The automotive industry is on the right road to transformation

OPINION 28

Jonathan Jansen discusses the experience of living in two worlds

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BL ACK M A N AGEMEN T F ORUM

NO JOY OF FREEDOM

THE BMF CELEBRATES 45 YEARS As the Black Management Forum (BMF) celebrates 45 years of existence, it is important to critically reflect on the condition of black people in South Africa today. The BMF’s transformation agenda is as relevant today as it was at its inception 45 years ago under a legal system of political and economic discrimination against black people. The BMF’s vision of economic empowerment of Africans is still far from being realised despite wide gains. We have experienced accelerated job losses, deepening poverty and shocking levels of inequality. These issues continue to exclude Africans from meaningful participation and benefit from the mainstream economy, pushing them further into vulnerability and deprivation, with the most affected being women and people living with disabilities. Africans in the mainstream economy find themselves in extremely precarious situations today because of lack of ownership and

management control in the corporate sector. Discrimination persists with very little done in terms of legislative reforms to safeguard the position of black women in the economy. We must condemn gender discrimination in the workplace, such as gender pay gaps, and the gender-based violence that plagues our country.

THE MISSING LINK The political system needs to rid itself of partisan decision-making, and rather embrace country-led decision-making. The public service reflects a cadre mentality, far removed from a management mentality. The public service should display the highest form of ethics and values – the economy of the country depends on key state-owned enterprises (SOEs) that can contribute to economic growth, economic development, and economic transformation. In addition to the government’s economic power, SOEs are also the largest procurer of goods and services. This lever has been abused by business and unethical politicians. The procurement system alone can create more value through buying and trading with emerging black business. This will further widen and grow the black middle-class. Government has taken this aspect lightly, for it holds not only this lever, but also the lever of legislation. Professionalising the public service will be key to growing the middle-class. The BMF is pleased to see that government is pursuing the National Implementation Framework Towards the Professionalisation of the Andile Nomlala Public Service, having contributed to the framework when it was out for public comment.

The B s vision of economic empowerment of fricans is still far from being realised despite wide gains. e have experienced accelerated ob losses, deepening poverty and shoc ing levels of ine uality. 4

Issues of land, ownership of the economy, and socioeconomic development urgently need to be addressed. The debates on land taking place today in South Africa remind us of the violent history of dispossession against black people and the reality that black people remain at the bottom of the economy with very little ownership of land, resources or property. These debates also show us the brazen arrogance of the corporate sector, which remains predominantly white and exclusionary while refusing change and transformation. This is especially important, given the recent Banking Association of South Africa’s Transformation Report, which praises the sector’s progress, despite having set weak targets for black people. We should not “wallow in the joy of freedom” when the country is littered with daily violations of human rights. This is our first and critical task: to not rest until economic freedom is achieved.

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ormer president Nelson Mandela said: “As long as many of our people still live in utter poverty, as long as children still live under plastic covers, as long as many of our people are still without jobs, no South African should rest and wallow in the joy of freedom.” South Africa recently celebrated two key public holidays, Freedom Day and Workers Day. Freedom Day in South Africa is meant to deepen democracy and its key principles: “to heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights”, as stated in the Preamble of the Constitution. These public holidays are fast beginning to hold little value for civilians and significance to our collective history.

ISSUES THAT NEED ADDRESSING

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ANDILE NOMLALA, BMF president, shares his thoughts on the slow progress of the country’s political and economic empowerment

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BL ACK M A N AGEMEN T F ORUM

GENDER JUSTICE:

FINDING HOPE IN HOPELESSNESS TASNEEM FREDERICKS, BMF deputy president, discusses the frustration and anger of the country’s women, who continue to be sidelined and victims of gender-based violence

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amenting the state of gender justice in a country like South Africa can lead the sane to insanity, and those already at the edge of the ledge, over it. We have too many laws and entrenched rights guaranteed by the Constitution to impede progress at a rapid pace in the realm of achieving gender equality. South Africa has also ratified the Beijing Platform for Action in 1995, the Declaration on Gender Development and the UN Convention on the Elimination of all forms of Discrimination against Women. The legislative framework in all of its beauty exists. Yet, we are nowhere near to closing the gender gap or eliminating gender-based violence. The sheer frustration and lived realities of black women in particular manifests the enormity of this struggle. We live in a country that is so brutal and antiwomen that a simple trip to the post office in broad daylight is no longer an act to be taken casually when it can result in our deaths. Let’s face it, it feels hopeless on the best of days. Equally enraging are the rare and peppered announcements about black women still being referred to as the first CEO of a corporate company or state-owned enterprise. This news is splashed on the covers of the trendiest and glossiest magazines in slow lounges across the nation and media outlets. Let us celebrate the success and achievements of these women, but let’s not turn it into a Halley’s comet event, capable of only occurring every 75 to 76 years.

Tasneem Fredericks

To add fuel to the raging fire, let us talk about the intersectionality of being black, young, queer, trans, differently-abled, poor, or uneducated to this gender inequity equation. We cannot shy away from a society where these issues are alive yet remain closeted.

Plotting the path that women have taken since 9 August 1956 and all other marches to date, like the Total Shutdown March, gives a sense of hope and motivates women to keep going.

WOMEN MUST LEAD THE CHANGE AND THE CHARGE To plot a journey, one needs a start point. A road map, a vehicle filled with the right amount of fuel and the tools to navigate and charter the path. Plus, the assurance of safe and unhindered passage and the guarantee of safe arrival at one’s destination. So too, plotting the path women have taken since 9 August 1956 and all the other marches to date, like the Total Shutdown March, gives a sense of hope and motivates women to keep going. We will arrive at the end goal, but only if we remain deliberate and consistent in our planning and execution of this journey. Only women can lead the change we want to see. Measuring these milestones and marking them as rites of passage motivates the weary and downtrodden to keep going. The youth will be inspired to take over the reins without being asked and the older generation will share the pearls cultivated over the years, ensuring an intergenerational formula. This marking of milestones engenders confidence, a factor that magically finds itself in men, but is a genetic disposition for women. UN Women launched its global campaign: Generation Equality: Realizing Women’s Rights For An Equal Future on 6 May 2019 and continue to roll it out in various countries. A campaign of this magnitude should be supported and endorsed by all governments and welcomed as another step towards reaching gender equality at a quicker and deliberate pace. While memorable and forever etched in our minds, the Women’s March of 1956 did not immediately achieve emancipation for women, but it did symbolise the resilience and strength that inspires hope in the hopelessness of the situation. The Black Management Forum subscribes to women-led entities and we understand the value of having black women at the head of the table as opposed to being seated at the side and close to the door where we are consistently marginalised socially, culturally, politically and economically.

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BL ACK M A N AGEMEN T F ORUM

nO FAIR SHAKE

FOR WOMEN South African women bore the brunt of the economic devastation during the national lockdowns, writes DUMA GQUBULE

STARTLING STATISTICS The National Income Dynamics Coronavirus Rapid Mobile Survey (NIDS-CRAM), reports that women accounted for two million of the three million jobs lost during the hard lockdown phase between 27 March and 30 April 2020. NIDS-CRAM researchers Daniela Casale and Debra Shepherd say: “Globally, women appear to have been disproportionally affected by the COVID-19 crisis. Women were particularly hard hit by the initial lockdown phases and school closures, both in terms of labour market outcomes and childcare responsibilities.” A subsequent NIDS-CRAM survey in October 2020 showed a substantial recovery of roughly two million jobs. “But women’s employment was still down by just under 700 000 jobs, while men’s employment

was down by 200 000 jobs,” Casale and Shepherd say. Statistics South Africa’s Quarterly Labour Force Survey (QLFS) for the fourth quarter of 2020 shows that 311 000 domestic workers, mostly women, lost their jobs during the second quarter of the year compared with the first quarter. By the end of 2020, there had been 119 000 job losses among domestic workers. The QLFS, which surveys a larger number of people than NIDS-CRAM, found that 1.1 million women lost their jobs during the second quarter. Following a recovery during the next two quarters, 642 000 women had lost their jobs by the end of 2020. During the fourth quarter of 2020, the expanded unemployment rate for women, which takes into account discouraged work seekers, was 46.3 per cent compared with 39.4 per cent for men. A staggering 51 per cent of black African women were unemployed.

GENDER BIAS IN SOCIAL RELIEF MEASURES South Africa’s economic response to the crisis included R58.7bn, which the Unemployment Insurance Fund (UIF) paid to people who were temporarily unemployed during the lockdown, and R33bn that the government paid in additional social grants. The NIDS-CRAM survey found that only 39 per cent of UIF beneficiaries were women. The under-representation of women receiving UIF support was evident whether one compared this value to women’s share of the labour force (51 per cent), to their share of those who were unemployed using

Women were particularly hard hit by the initial lockdown phases and school closures, both in terms of labour market outcomes and childcare responsibilities.” – Daniela Casale and

Debra Shepherd

Dr Sibongile Vilakazi

“Crises like this always have more of an impact on the most vulnerable people, those who are at the bottom of the economic pyramid.” – Dr Sibongile Vilakazi the expanded definition (60 per cent) or their share in the net job losses between February and October (77 per cent). “One of the likely reasons for this is that women are less likely to be registered on the UIF system in the first place, probably because of the types of jobs they are employed in relative to men,” Casale and Shepherd say. There was a similar bias or under-representation of women in the disbursement of the new COVID-19 social relief of distress grant (SRD) of R350 a month – paid to unemployed people who did not receive any other social grants. Women accounted for only 37 per cent of these beneficiaries in October. “Unemployed women have effectively been penalised for collecting the child support grant (CSG) on behalf of a child for whom they are the primary caregiver. This gender bias in the social protection system is all the more worrying following government’s decision to suspend top-up grants to the CSG in October 2020,” comment Casale and Shepherd. The research also showed that the childcare burden in households increased substantially, and women took on more of this additional unpaid care work than men.

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he country’s economy took a battering during the hard lockdowns implemented to control the spread of the coronavirus pandemic, and it was the women who were affected the most. Dr Sibongile Vilakazi, chairperson of the Black Management Forum’s (BMF’s) Sandton branch, says: “Crises like this always have more of an impact on the most vulnerable people, those who are at the bottom of the economic pyramid. Many women are involved in service industries – face-to-face jobs that cannot be digitalised. We have to address such systemic issues and rethink how we structure the economy,” she says.

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BL ACK M A N AGEMEN T F ORUM

INADEQUATE, INEFFICIENT

AND UNFOCUSED

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outh Africa’s response to the collapse of the economy during 2020 was inadequate and did not prioritise economic transformation, claims Andile Nomlala, president of the Black Management Forum. On 21 April 2020, President Cyril Ramaphosa announced a R500bn stimulus package to counter the effects of the lockdown implemented on 27 March. The package was equivalent to 10 per cent of the gross domestic product (GDP) and had two components: 1. Above-the-line (off-budget) spending of R240bn. This comprised a R200bn loan guarantee scheme and R40bn for the Unemployment Insurance Fund (UIF) to pay people who were temporarily unemployed because of the lockdown. 2. Below-the-line (on-budget) spending of R260bn. This comprised R100bn that the government would spend on job creation and small and medium enterprises (SMEs); tax measures of R70bn; R50bn to be spent on additional social grants; R20bn for health; and R20bn for municipalities. However, up to 75 per cent of the stimulus package did not materialise because of National Treasury’s decision to effectively cancel the stimulus and the failure of the loan guarantee scheme. A report by the Institute for Economic Justice (IEJ) revealed that the real stimulus – new money that was injected into the economy – was R158bn. IEJ economist Busi Sibeko said: “The stimulus announced by President Ramaphosa provided hope for many, but several of the promises in

The government’s response to the country’s 2020 economic crisis was a huge let-down, particularly as it failed to focus on empowerment, reports DUMA GQUBULE the package were not kept. In addition to the shrinking size of the package, there has been a systematic failure to implement the stipulated rescue measures. If the government does not step up and provide the rescue and relief required by households, small businesses and other vulnerable groups, there is no chance of economic recovery.” A report by the Studies in Poverty and Inequality Institute (SPII) found that the actual stimulus was only R123.5bn. This comprised a R34.6bn increase in government’s noninterest-spending; tax measures of R12bn; R58.7bn that the UIF paid to 5.4m people; and bank loans of R18.2bn. The South African stimulus was equivalent to 2.5 per cent of GDP. By comparison, major developed and developing countries decided that the only way out of the crisis was to spend $16-trillion, equivalent to 16 per cent of world GDP.

LOAN GUARANTEE SCHEME FAILS Nomlala says the R200bn loan guarantee scheme was a spectacular failure because the government relied too much on the

“There were no clear rules on how ban s and government departments should use the stimulus pac age to include more blac people in the economy.” – ndile Nomlala

good faith of private banks and failed to involve its own development finance institutions. Before the crisis, South African banks had failed to provide loans to black SMEs in terms of their financial charter commitment. According to a report by the Banking Association of South Africa, the total balance sheet exposure of banks towards black SMEs declined to R21.2bn in 2019 from R29.3bn in 2018 – equivalent to only 0.5 per cent of total banking sector assets. “The government also failed to clearly stipulate criteria for bank lending,” Nomlala says. “We heard from small business minister Khumbudzo Ntshavheni that 75 per cent of the loans went to white businesses. The banks only know how to lend to white businesses. There were no clear rules on how banks and government departments should use the stimulus package to include more black people in the economy. All government procurement must be used to transform value chains across the economy.” BMF deputy president Tasneem Fredericks says the stimulus package did not focus on developing black women and SMEs. “The banks used the same credit granting criteria that they would have used during normal times when there was no pandemic state guarantee. There was no easing of credit or credit conditions. The banks provided loans to existing business that were already strong. This exacerbated existing racial inequalities in the economy. White businesses got loans and prospered while black businesses, especially those owned by black women, suffered.”

Busi Sibeko

EMPOWERMENT

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A DV ER T ORI A L

RISK, REPUTATION AND YOUR CLIENT BASE Building value and trust is a slow and painstaking business – and both can be destroyed in an instant. By PAT SEMENYA

Pat Semenya

ABOUT ACCA ACCA is the Association of Chartered Certified Accountants – a thriving global community of 227 000 members and 544 000 future members based in 176 countries – upholding the highest professional and ethical values.

KYC TOOLS AND THE MODERN ACCOUNTANT Conducting Client Due Diligence (CDD) requires practitioners to collect and document information about their client’s background and business; this is often referred to as know your client information or KYC information. Understanding the legal structure and nature of the client’s business enables accountants to identify behaviours that appear to be unusual and may amount to suspicious activity when considered in context with what is known about the client’s background. Additional information required for client onboarding may include source of income, the sector they operate in, previous’ years turnover, and if there’s any adverse media associated with the client. An understanding of key business partners and suppliers must be included where applicable. To enhance the CDD process for high-risk clients, practitioners may choose third-party software to assist them. Practitioners must have a sound understanding of the software’s features to ensure its suitability for their purposes. For example, if the software validates identification/passport number, does it just check the number is following the right format or that that the specific number belongs to the correct person? The software should be secure from fraud and misuse, and capable of providing an

Practitioners should keep up to date with new legislation requirements and be aware of emerging risks and trends concerning nancial crime. 8

appropriate level of assurance that the person claiming a particular identity is the person with that identity. In some scenarios involving high-risk clients, it will be necessary to conduct Enhanced Due Diligence (EDD). In addition to the information collected above, EDD measures often include, but are not limited to, obtaining proof of funds/wealth, visiting the client at their business premises to verify it is consistent with the information provided, verifying client information with a reliable third party and taking steps to understand the client’s business activities. Practitioners must ensure that the KYC information is up to date and relevant; to do so firms will have to conduct ongoing monitoring on their clients and regularly update the CDD.

THE NEXT MOVE Software houses must offer the digital tools at an affordable price – the expense of these was cited as a reason for nonadoption by 42 per cent of survey respondents. The provision of “pay-as-you-go” models was suggested as a potentially welcome development. For larger practices, where personal relationships between staff and clients do not exist, digital tools could offer additional commercial benefits – but these need to be available at a commercially justifiable cost. The lists in this article are not exhaustive: different variations of these questions and additional questions may be necessary for specific types of clients. Practitioners should keep up to date with new legislation requirements and be aware of emerging risks and trends concerning financial crime.

For more information: www.accaglobal.com

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hen assessing the value of an accounting practice, there is likely to be debate around which is more important to building sustainable value: good clients or good staff. However, one thing is certain: a single bad client can destroy the practice and its value as effectively as a rogue employee. The accounting sector is typically viewed as medium-high to high risk in Country Risk Assessments carried out under international Financial Action Task Force guidelines. To explore accountants’ perceptions of these risks and the tools to mitigate them, their value and how they might be improved, ACCA undertook a global survey of professional accountants in January 2021. The survey respondents recognised the potential value of Know Your Client (KYC) checks, but rated the regulatory and reputational implications for their practice consistently higher than the wider societal benefits of reducing crime. They also rated all three ahead of the scope for adding value to their client relationships.

EMPOWERMENT

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ACCOUN TA BIL I T Y

LEADERS MUST

be rESPONSIVE RYLAND FISHER talks to Tsakani Maluleka, newly appointed Auditor-General South Africa, about what local government can do about promoting greater accountability

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t is difficult to get a clean audit and even more difficult to maintain it year after year, says Auditor-General Tsakani Maluleke, whose office has to ensure that government departments spend taxpayers’ money appropriately. The key is to have stable leadership, especially at local government level, responsiveness from those in charge and to employ professionals with the skills and experience to deal with issues that arise, she says. “We’re seeing that happening, especially in the Western Cape at provincial government and local government level. It has been quite instructive figuring out what makes those environments earn their clean audits regularly. “One of the critical things we learned has been about the stability of key leaders in those institutions, such as the municipal manager and chief financial officer. This institutional stability has helped many of the municipalities in the Western Cape. “But you also need to be responsive. We saw this at the Unemployment Insurance Fund (UIF) where, after the first few months of audits during COVID-19, we were able to point out several weaknesses and their impact. We saw a response and, as a result, money that had been poorly or inappropriately paid out came back in quickly. We saw the minister taking action against the people leading that institution. “We saw the key controls that we said were weak being resolved so that the next tranche of payments was done far more effectively and in a much more controlled way. “That’s the responsiveness we want to see throughout government because you’re never

going to have an environment where there’s no audit finding. “Often people say to us: ‘Why would you talk about the Western Cape having a clean audit because we are worried about service delivery here?’ We reply: ‘Let’s look at the definition of a clean audit and the key indicators of how that environment is run’. “If somebody has a clean audit, at least you know that both their financial and performance reports are reliable. Now you can have a credible conversation about next year’s targets and the extent of roads, sanitation and water improvements in the area. “The Ekurhuleni Metropolitan Municipality got a clean audit this year, yet people might be concerned because there are still potholes in some areas of the city. But let us look at why Ekurhuleni was able to achieve a clean audit. “If we go back, we see how they’ve corrected matters that were raised a year or two ago. They now have professionals in place to deal with those issues, whether it is supply chain or financial reporting.”

UNDERSTANDING DISCLAIMER AUDITS AND IRREGULAR EXPENDITURE As South Africans prepare to go to the polls to elect new municipal leadership, Maluleke says that there are still many municipalities with issues. “The municipalities that worry us are the ones that, year after year, get a disclaimer audit opinion – probably the worst audit opinion you can get – where they are unable to indicate what they spend money on. This points to chaos in that administration.”

“Some of it is about local content. Government has a policy around local content and supporting local manufacturers. hen that is flouted at procurement level, it compromises the ability of the state to meet that objective.” – Tsakani Maluleke

Maluleke says there is often a misunderstanding of what irregular expenditure means. “It doesn’t mean that money is lost. It means that in a particular procurement exercise there has been some noncompliance with key laws and regulations. Some of it is about whether there was a tax certificate included in the decision-making or the assessment. “You might not have lost money as you still got value for what you paid, but then the fiscus loses what it should be collecting from this individual or the supplier. “It is a risk. You open yourself up to fraud and challenges in terms of the system of tax collection and proper fiscal management. “Some of it is about local content. Government has a policy around local content and supporting local manufacturers. When that is flouted at procurement level, it compromises the ability of the state to meet that objective. “That’s part of the irregular expenditure. When we see loss, we do what the recent amendment to the Public Audit Act requires us to do – dig a bit deeper and assess whether that noncompliance led to material financial loss.” The 2018 amendment to the Public Audit Act, gives the Auditor-General greater powers. “We have been applying these powers for two years now, and this is the first year we have applied them across a large number of institutions. During the first phase, we looked at only 16 audits for provincial and national government. In the second phase, we looked at 89. This digging deeper allows us to find instances of financial loss. “The law says that once you’ve identified that there is loss, you must highlight it to the accounting officer who must then act. Acting includes investigating what went wrong, recovering funds that are lost, reporting letters to law enforcement agencies, and enforcing discipline. “We’ve noticed, over the past two years, that accounting officers are quite responsive. Many are doing what is required. If they do not act, the matter escalates back to us for the issue of binding audits with legal action, and, ultimately, a certificate of debt. “This level of responsiveness must become the norm. When that happens, we’ll not only start to close the gaps for loss, but also quickly recover lost funds. “The biggest impact we can make is about the protection of resources, changing the culture within the public service around accountability and showing that where things go wrong, people respond decisively.”

Tsakani Maluleke

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GENDER

A DELICATE BALANCING ACT What is the status of gender parity at board level? PUSELETSO MOMPEI finds out

Anelisa Keke

“Corporate South Africa needs to focus more on ensuring that the number of women at executive and managerial level increases, as well as addressing gender pay gap inequalities.” – Anelisa Keke Out of the total number of listed companies on the JSE on 30 April 2019, only 3.31 per cent of CEOs were female. “Corporate South Africa needs to focus more on ensuring that the number of women at executive and managerial level increases, as well as addressing gender pay gap inequalities,” says Anelisa Keke, senior manager of PwC’s People and Organisation division.

IMPACT OF THE PANDEMIC Larsen says it is diffi cult to determine the impact the pandemic has had on gender empowerment. “One of the reasons for this is that the effect is so varied depending on the attitudes and the circumstances of the individual.” She points out that it is also important to understand where the organisation is on its journey and how its gender empowerment processes are structured. “Generally, we are finding that organisations are not closing down any processes just because of a change in working environment. Processes and activities continue regardless of if the employee is working from home or the office. The monitoring and evaluation will continue.” She says it is interesting looking at the current situation from the point of view of the individual. Single mums have probably been hardest hit, whereas if a husband and wife or partners are both working from home, they can share the additional burdens resulting from the pandemic. Larsen asks: “How then does the organisation acknowledge the additional strain on everyday life and the effect this will have on issues such as mental health, performance and long-term drive? Even if it acknowledges the changed circumstances, what is it doing about it? Are they even geared up to deal with these new occurrences?” The gender-related losses from the pandemic could have deep ramifications for the long-term growth of the economy. “We are aware that a number of women, some in very high profile positions, are re-evaluating their purpose in life and how the working environment and culture fits into the greater scheme of things,” says Larsen.

DID YOU KNOW?

A recent PwC Strategy& report based on economic data from Statistics South Africa and the World Economic Forum, suggests that closing the gender pay gap in both pay and representation by just 10 per cent could deliver an additional 3.2 per cent in GDP growth and a 6.5 per cent reduction in the number of unemployed job-seekers.

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ince 1 January 2017, organisations that are members of the Johannesburg Stock Exchange are required to have and report on a gender strategy at board level. This reporting is normally by way of the organisation’s issued Integrated Annual Report. “There can be no doubt that this has assisted in balancing gender on these boards,” says Colleen Larsen, chief executive of gender mainstreaming consultancy Business Engage. Business Engage has been researching the effect of this listing requirement and has concluded that not only is the topic more widely discussed at the highest levels, but there is also a tangible positive result: at a minimum, 191 board positions have been made available to women between 2017 and 2019. “However, we also have to recognise that the recycling of board positions is in itself a developmental procedure,” says Larsen. Business Engage investigated the rotation of nonexecutive directors in 100 JSE-listed companies between 2013 to 2016 and found that out of 1 000 director rotations, there were zero appointments of women to take over from their male counterparts in the boardroom. Women who were already on these boards stayed in their positions. PwC’s Executive directors: Practices and remuneration trends report, says that if looking at the composition of the top leadership at JSE-listed companies, there were no female CEOs in the top 40 at the cut-off date of the report.

“Clearly there is more to be done in this regard,” says Larsen. “It can be debated what the next steps should be. We could concentrate on getting more women in the boardroom and onto the various committees, or take the view that this process now has a life of its own and start to look at the C-suite roles.”

Colleen Larsen

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A DV ER T ORI A L

REGULATING COMMUNITY SCHEMES The Community Schemes Ombud Service is a National Public Entity established in terms of the CSOS Act No. 9 of 2011. The CSOS was instituted in 2016 as an alternative dispute resolution body designed to resolve administrative disputes in all types of community schemes

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he CSOS has a regulatory function and acts as a “watchdog” for good governance in community schemes by offering quality assurance on governance documentation and scheme rules. It also provides resolution mechanisms through conciliation and adjudication of disputes that often arise between members of the schemes and the schemes. A community scheme includes sectional title developments, share block schemes, homeowners’ associations, retirement schemes or any other arrangement in terms of which there is shared use of and responsibility for parts of land and buildings. Community schemes provide a secure and safe living environment if there is harmonious co-operation. Yet, disagreements are part of human nature, and there is often no love lost among the various stakeholders. Grievances abound in shared living spaces, and can range from complaints about neighbours being inconsiderate, trustees are authoritarian, rules are unreasonable, managing agents are incompetent … you name it. Grievances range in gravity, and what may seem like an insignifi cant matter could land up in the High Court. This is where the CSOS is an effective dispute resolution service. CSOS dispute resolution services are cost effective and efficient, and does not require

residents in community schemes to engage legal representation. The ombud is responsible for receiving and processing “applications” by members of community schemes seeking relief pertaining to their scheme. The types of relief that may be applied for relate to fi nancial issues; behavioural issues; scheme governance issues; meetings; management services; works pertaining to private areas and common areas; and general issues. In April this year, the CSOS appointed advocate Boyce Mkhize as the chief ombudsman. Boyce says he is committed to transforming the CSOS services by including value-added initiatives that will catapult the CSOS into a more modern, digitally responsive and customer-focused regulatory body.

KEY ISSUES Of the issues that the CSOS chief ombudsman will focus on, the following are key: • A commitment to the pursuit of conciliation and adjudication processes underlined by reasonableness, fairness, objectivity, independence, and justice on the part of the CSOS in carrying out its mandate. • Pursuing rigorous registration of schemes, assuring good governance, modernising CSOS into a digital age effi cient operation and aligning its organisational structure

Adv Boyce Mkhize

to strategic imperatives underlined by a culture of effi ciency and responsiveness. The CSOS interacts with the public via its regional ombud offices, currently in Centurion, Cape Town, Durban, and two satellite offices in Bloemfontein and Port Elizabeth. To register your community scheme, complete a registration form (CS1) and submit to: registration@csos.org.za. The form is accessible on the CSOS website.

REGISTER WITH CSOS It is mandatory for each community scheme to register with the CSOS and pay a prescribed monthly levy from every unit quarterly. The levy is based on a sliding scale according to levies paid by the owners. Please refer to our website for a formula of levies payable by your scheme.

For more information: 0800 000 653 www.csos.org.za

CSOS’ dispute resolution mechanism in the context of community schemes is cost-effective and e cient and does not require consumers to engage legal representation or draw on scarce judicial resources.

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TAKING BLACK-OWNED SME TO THE NEXT LEVEL Standard Bank is a proud partner in growing, scaling and supporting sustainable black-owned South African businesses by offering funding, access to markets and development

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A DV ER T ORI A L

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n times of uncertainty, businesses want partners that bring them certainty, reliability, and excellence when it comes to service, says Timothy Matlala, head of Enterprise Development at Standard Bank. “They are looking for partners who understand their needs and who are committed to helping them achieve their goals. ”Standard Bank Enterprise Development understands that every business is more than its bottom line; there is a deeply rooted understanding that businesses exist for a greater purpose, and Standard Bank is committed to helping businesses succeed in fulfilling that purpose. Standard Bank’s comprehensive Business Banking offering is an ecosystem of innovative products designed to meet even the most complex needs. As the world accelerates towards an increasingly digital way of living, working, and doing business, Standard Bank has adapted its approach to servicing its business clients, overhauling its products and services to make sure they are more effective in a digital world. “In line with this, Standard Bank Enterprise Development aims to support black-owned small and medium enterprises (SMEs) to move their businesses to the next level by providing bespoke access to development, supporting access to market initiatives, and creating alternative means for small businesses to access funding. We do this through a variety of initiatives, all aimed at working with small businesses to ensure they can succeed, grow, and have the necessary help to bridge any gaps to sustainable success,” says Matlala. “We continue to support our SME clients through financial relief and the development and implantation of innovative digital technology to aid their survival during this time.” The bank’s enterprise development goal is to be part of the business culture by turning its offerings into enablers that will equip businesses with the tools and resources to help them start, manage, and grow.

“ ur offerings extend to wor ing with small businesses across all industries, as well as wor ing with other corporate partners to support their Enterprise and upplier evelopment initiatives through partnership models that transform supply chains.” – imothy atlala LENDING A HELPING HAND In the first six months of 2020, Standard Bank collaborated with the South African Future Trust (SAFT), established by Oppenheimer Generations, to help South African small businesses impacted by COVID-19 access a limited fund to support. The SAFT funds have helped more than 20 000 employees of the bank’s customers. “We partnered with the Small Enterprise Finance Agency (Sefa) to help spaza shops purchase stock using government funding from Sefa-approved wholesalers at discounted prices. This partnership helped to address the problem of food and consumables shortage in townships and rural communities,” says Matlala. “We have continued to develop and launch new solutions and expand the digital solutions available to our clients. We have enabled customers to take their businesses online with the SimplyBlu offering,” continues Matlala. Standard Bank is encouraging clients to use platforms like BizConnect where they can learn valuable lessons from other businesses that have adjusted. It also

encourages clients to continue to look for turnaround specialists and people within the market that can help where Standard Bank may not be able to provide the requisite level of expertise. Understanding its clients and the day-to-day business challenges they face makes Standard Bank believe that its offering will be indispensable. “Our offerings extend to working with small businesses across all industries, as well as working with other corporate partners to support their Enterprise and Supplier Development initiatives through partnership models that transform supply chains,” comments Matlala. Through its latest business banking proposition titled “South Africa banks on business, business banks on us”, Standard Bank wants South Africa to understand that small businesses are the heartbeat of South Africa’s economy, and that when it comes to supporting these enterprises, Standard Bank is providing far more than banking services alone. “We are not only helping these small businesses grow, but we are also setting into motion an impact on the broader ecosystem and uplifting the economy as a whole,” concludes Matlala. To find out more about the corporate and public sector solutions, please feel free to reach out to your relationship manager.

For more information: Enterprise Development enterprisedevelopment@standardbank.co.za www.standardbank.co.za

Timothy Matlala

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BANKING ON SMALL AND MEDIUM ENTERPRISES A Standard Bank is focusing on initiatives that will include and assist small and medium enterprises to grow and contribute toward economic recovery

s society navigates the global pandemic, entrepreneurship continues to be a beacon of hope for economic recovery and a significant contributor towards employment in the country. Through various initiatives, Standard Bank seeks to inspire businesses to explore their potential as the driving force of the economy while fostering connections and increasing collaborations within their ecosystems.

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“ e want to drive tangible efforts towards achieving real transformation and the inclusion of small and medium enterprises Es within the economy while traversing the current business landscape. e want to be the partner that businesses can trust and ban on to support them.” – enine “We want to drive tangible efforts towards achieving real transformation and the inclusion of small and medium enterprises (SMEs) within the economy while traversing the current business landscape. We want to be the partner that businesses can trust and bank on to support them,” says Jenine Zachar, head of Enterprise and Direct Banking Propositions at Standard Bank. In the spirit of Standard Bank’s new business proposition titled “Africa banks on business. Business banks on us”, this reimagined approach towards business banking sees Standard Bank partnering with influential entrepreneurs and thought leaders and inviting them to share their stories on how they have managed to keep their businesses sustainable or take them to the next level. As we look towards the rest of 2021, we highlight some of the solutions that are geared towards helping businesses across the various stages of their development – from start-up, management and future growth.

SIMPLYBLU Having a digital presence has become an effective way for businesses to continue operations and reach a new audience. A digital presence includes having a registered domain, finding ways to market your business digitally, for example, using social media, and having an e-commerce/ website presence to display and sell goods and services online. Standard Bank is making it easier for business owners to take their products and services online with SimplyBlu, which enables a business to create a customisable e-commerce website with point-of-sale features, including collaboration with MasterCard and Google to give customers more visibility with free Google Ads.

achar

affordable.” The offering includes an optional PocketBiz point-of-sale device at a reduced fee for MyMoBiz customers. It is imperative for small businesses to have a business account as this inevitably aligns with running the business operations and could assist business owners in their journey of making business transactions to build a business profile.

SALARY PAYMENTS Through the Standard Bank Salary Payments solution, available on internet banking, customers can pay their employees’ salaries seamlessly and safely.

BIZCONNECT A new and improved BizConnect site provides the insights and information needed for every stage of a business’ development. It offers a wide range of guides, templates and information to equip and empower business success. “We recognise that being a business owner can be a lonely journey and that owners often wear numerous hats throughout a day. BizConnect aims to be a source of information that is with you every step of the way of your journey,” says Zachar. “We hope that through the solutions Standard Bank offers, we can lift the limitations that sometimes hamper business owners on their journey as we bank on South Africa’s SMEs for continued growth, success and hope.”

For more information:

www.standardbank.co.za

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MYMOBIZ

Jenine Zachar

“Our MyMoBiz solution focuses on simple, affordable pay-as-you-transact banking for small businesses from R5 a month,” says Zachar. “It meets the unique needs of small businesses to receive payments from their customers, pay their suppliers and staff and keep track of their business finances in a way that is simple and

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PA R T NERSHIP S

WHY COLLABORATION IS IMPORTANT

he coronavirus pandemic has decimated the globe at all levels. While South Africa has not been spared its devastating impact, the country has forged a new unity and sense of common purpose across all racial and social barriers, which has seen it weather the storm better than most. The country needed to act – and act fast – to stave off complete disaster. One of the biggest weapons in South Africa’s fight against coronavirus was the establishment of the Solidarity Fund to help the fight against the pandemic. By augmenting government’s COVID-19 response, the Solidarity fund received over R3.3-billion in the form of donations from the private and public sector. This was used to assist existing programmes and initiatives in all nine provinces, across several key sectors. “As the pandemic has proven, some things are simply too large, and the implications of failure too cataclysmic, for one body or sector to handle on its own. We have seen globally how important public, private and nongovernmental organisation (NGO) partnerships have been in tackling the pandemic from a health, economic and humanitarian perspective. Where institutions and sectors have worked together and supported one another, progress has been fast-tracked,” says Solidarity Fund CEO Tandi Nzimande. She says the fund represents a microcosm of global partnerships, demonstrating how effective solutions can be found when lines are blurred and the public, private and NGO sectors work together.

THREE PILLARS

TEAMWORK AND CO-OPERATION

“Through its three pillars of humanitarian relief, health behavioural change, the fund worked closely and extensively with numerous bodies to deliver aid and relief in areas where it was most needed,” explains Nzimande. It has been involved in workgroups and response teams, working closely with government, business, global and local NGOs, and civil society formations, to ensure inclusivity and impact across the country. “From a food security perspective, we have not only made food vouchers available, but have also distributed farming input vouchers, which allow subsistence farmers to buy equipment and seed. This has enabled them to continue providing for their families and communities and prevented them from slipping further into the poverty trap,” Nzimande says. “Through our health pillar, we have been able to bolster the national and provincial health system by providing aid to support it through the surges of COVID-19 cases, preventing absolute collapse. Besides answering the immediate need, many of these interventions have contributed to the long-term sustainability of the hospitals and clinics. Interventions include the manufacture of thousands of urgently needed ventilators and the provision of beds and other critical care equipment, all of which will have a long-term impact.” Another intervention with long-term impact is the assistance Solidarity provided for capacity development of the Gender-Based Violence (GBV) Command Centre, a

“Every activity, no matter the budget or the effort and manpower required, has a significant impact on, and importance to, those who are affected. More than individual activities, perhaps the most satisfying thing that has come from the fund’s work is the true solidarity that has been created in the response to COVID-19. It’s the teamwork and spirit of co-operation that stands out most. With each player putting aside their ego and their agenda and working for the common good. This is the true meaning of solidarity,” says Nzimande. She believes a key lesson is that teams – from NGOs, business, community organisations and the National Health Department – worked together to ensure there is no waste of funds or effort, no replication of services and that all areas are taken into consideration. “Agile and purpose-led solutions are what is needed to not only tackle a pandemic, but also to thrive in a world that is forever changing. Agility, however, must grow from a solid foundation, or else there is just chaos. From the very beginning, the Solidarity Fund has worked to do the groundwork that allows nimble, responsive thinking and action. Governance structures, a strong and committed board that meets regularly, a firm and clear mandate, and policies that ensure accountability and transparency were set up to define and guide the organisation,” explains Nzimande. “COVID-19 is still with us and continues to present new challenges that we need to respond to with agility and speed. The hard work put in upfront is allowing the fund to do this in a responsible, organised and efficient manner,” Nzimande concludes.

“It’s the teamwork and spirit of co-operation that stands out most. With each player putting aside their ego and their agenda and working for the common good. This is the true meaning of solidarity.” – Tandi Nzimande

Tandi Nzimande

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When the consequences of failure are just too catastrophic, partnerships are the only answer, writes JERMAINE CRAIG

much-needed call centre that was overwhelmed by the increase in GBV incidences during the COVID-19 lockdowns. Nzimande says Solidarity has also offered aid to help with the establishment of the National Vaccination Call Centre, together with partners from business, government and nonprofit organisations.

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SK IL L S DE V EL OPMEN T

IS SA’s YOUTH DIGITALLY SAVVY? The fourth industrial revolution is here, but is South Africa’s youth prepared for the digital age? TIISETSO TLELIMA finds out

econd-year BA Philosophy student Mmakatleho Sefatsa may have grown up in the digital era, but she went to a township school that had broken computers, making it impossible for students to learn information technology despite it being in the curriculum. For Sefatsa, her proper induction into digitisation beyond the use of social media was in 2020 when the coronavirus hit. As a first-year student at the time and a NSFAS recipient, she was given a tablet and 20G of data to assist with online learning. Suddenly lessons were conducted on Zoom. But it wasn’t long before she and fellow students encountered myriad problems ranging from network connectivity to being kicked out of Zoom due to time constraints and the limited number of people allowed on Zoom at a given time. The university then moved the Mmakatleho Sefatsa lessons to their platform, Blackboard. However, soon residences were closed and students were forced to go home. Back in the townships and rural areas, where there is often bad telecommunications infrastructure, connectivity problems worsened.

NOT ENOUGH PREPARATION

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In July 2019, during the first South African Fourth Industrial Revolution (4IR) Digital Economy summit, President Cyril Ramaphosa positioned 4IR as the messiah that will rescue the country from its economic crisis. But has the government done enough to ensure that the youth is ready for the digital future? Sefatsa doesn’t think so: “I don’t think there has been any preparation for digitisation at all; the world

has been talking about a digitisation era since 2000 and, 21 years later, we’re still unprepared. They want quick solutions to entrenched problems,” she says. Basil Manuel, executive director of the National Teachers’ Organisation of South Africa (NAPTOSA), agrees that there has been a lack of readiness in terms of ICT and 4IR in the country. He says that as much as the problems were glaring during lockdown, they predate COVID-19. He explains that an average school, whether in the township or city, doesn’t have the technology needed for the digital age. Only a handful of former Model C schools and private schools are technologically advanced, 95 per cent of schools don’t have the capacity to carry out simple things like online learning and teaching. The average child leaves school having had no access to technology or basic computer skills, which creates problems when they get to tertiary level. “In cases where there is technology at the schools, little has been done to ensure that sections in the curriculum referring to technology can be taught by the teachers, so the teachers themselves don’t know how to use the technology,” Manuel says. He adds that the education department is implementing a pilot project on coding and robotics, but this is only being done in less than one per cent of schools. The department is paying lip service to online teaching, Manuel states. “They’re always saying they have to fix the problem, but they haven’t moved an inch.” In his view, the department doesn’t need to give everyone a device, but should give everyone access. His solution is for every community centre and library to be supplied with a technological set and to have someone teaching the community how to use computers. Sefatsa shares Manuel’s sentiment, explaining that black people still write CVs

“Where there is technology at the schools, little has been done to ensure that sections in the curriculum referring to technology can be taught by the teachers, so the teachers themselves don’t know how to use the technology.” – Basil Manuel

IMPORTANCE OF DIGITAL TRAINING INITIATIVES Mamiki Matlawa, MD of Qunu Workforce, says the government is looking at creating several digital hubs in townships, which is a step in the right direction. “We need more training initiatives in digital skills because we need to curb unemployment in the country and ensure that South Africa can also compete with what’s happening globally.”

on paper and then pay someone to type it for them. “If you don’t have that R40 to pay someone, you can’t apply for a job.”

IMPORTANT SKILLS NEEDED IN THE DIGITAL AGE Mamiki Matlawa, MD of Qunu Workforce, who works with many young people entering the workforce, thinks they lack basic Microsoft skills and need to be taught how to use the programme. They also need to learn how to find information digitally, whether it’s on Google or social media platforms. “Young people don’t know how to use social media beyond taking selfies and sharing stories, they’re not interacting with the platforms effectively. There are plenty of interest groups they can interact with to nurture their creativity or learn how to improve their skills,” she says. Andrew Bourne, Africa regional manager of tech company Zoho, says that young people need to learn coding; they need to be creators of technology to survive in the digital age. Understanding technological systems such as customer relationship management (CRM) and the Cloud are also at the top of the list. Zoho has 10 000 hub offices globally and trains young people in rural areas on basic coding and how to use Zoho’s creators’ application. Zoho will be opening its first rural office in South Africa in July. “We’re building a training system in Africa so that we can send our staff out into the rural communities to train young people in coding, app building and CRM,” concludes Bourne.

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BEE

BEE IS NOT A PERMANENT

ECONOMIC CRUTCH A

fter accepting that black South Africans, who have been marginalised by apartheid, needed to be brought into the mainstream economy as owners and not consumers, government introduced Black Economic Empowerment (BEE) legislation as a vehicle for this desired change. That was 27 years ago. Today, there is acceptance that, despite the success of government in achieving its BBE goals, progress has been slow. However, BEE is a controversial issue and has been used by all political parties as a lobbying tool to win the hearts and minds of South Africans. Coca Cola’s R10-billion deal that will The national lockdowns introduced to benefit workers will now be recognised by government as genuine empowerment. stop the spread of COVID-19 devastated businesses, shrunk economic growth by four to five per cent and dented the progress management control points is still between made in bringing more black people into the junior and middle management, also noting ownership of the economy. the rotation of black executives from one The most recent survey on Broad-based measured entity to another, without utilising the Black Economic Empowerment (B-bBEE) skills development element to create a pipeline trends, The 3rd National Status and Trends of new black executives.” on B-bBEE, published three months after the first case of COVID-19 was announced, EMPLOYEE SHARE OWNERSHIP revealed that while some progress had SCHEMES RECOGNISED been made, the slow pace meant that A big development in the transformation government’s priority goals were not journey has been the clarity provided by being achieved. government that employee share ownership The B-BBEE Commission schemes are formally says that worrying trends recognised as genuine were also observed over the empowerment vehicles. 2017–2019 period. “Though Minister of Trade, Industry black ownership indicates and Competition Ebrahim slight change, the black Patel says there was ownership percentage does consensus that employee not always correspond with the ownership schemes where management control scores. shares vested in the names of For instance, an entity can individuals constituted genuine Ebrahim Patel score full points for ownership black ownership. and very low on management “Everyone agrees that control. This gives the impression that despite (they) fall squarely within the definition of BEE. black ownership recorded, black people are Regarding broad-based trusts that hold equity not involved in the control and core operations and their status, I think that these are the of the measured entity. Also, the saturation of pioneers of BEE and should be recognised

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SIGNIFICANT FINDINGS IN THE B-bBEE TRENDS REPORT • Only 3.3 per cent of the entities listed on the Johannesburg Stock Exchange are 100 per cent black-owned. This is an improvement from 1.2 per cent in 2018 and 1 per cent in 2017. • Overall black ownership increased by 4 per cent to 29 per cent (25 per cent in 2018). • Management control is at 39 per cent overall and JSE-listed entities board control is at 43.6 per cent (male – 23.08 per cent and female – 20.55 per cent). • Directorships on JSE-listed entities: 45 per cent overall and 38.3 per cent (male – 16.7 per cent and female – 21.6 per cent) black South African entities. • The levels of women ownership of businesses have remained at a low 10 per cent in all sectors except property, generic, transport, tourism, construction, MAC and ICT. • On average, contributions towards skills development and enterprise and supplier development ranged between 50 to 60 per cent in 2018, while 2019 reflects an average of 49–51 per cent.

appropriately, for example, companies such as Kagiso.” The recognition means that Coca Cola’s massive R10-billion deal will be given recognition. In terms of the deal, Coca Cola’s 8 000 workers will have a stake in the company, whose black ownership stands at 20 per cent. It also means that Northam Platinum Mine will get full credit for its R33-billion empowerment transactions that will benefit employees and communities. Professor Bonang Mohale, chancellor of the University of the Free State, says that BEE, while necessary to achieve economic justice, was not permanent. “Economic justice and racial fairness is the same thing. Asking for a hand up is not the same as asking for a handout. B-bBBEE is not a permanent crutch on which black people want to lean for the rest of their lives.”

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The monumental task of transforming the economy of South Africa to reflect the demographics of the country has proved difficult, writes JOVIAL RANTAO

Northam Platinum Mines have revealed a R33-billion empowerment deal that will benefit workers and communities.

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F RON T ING

STOMPING OUT

EMPOWERMENT CRIME I

n October 2020, B-BBEE Commissioner Zodwa Ntuli said that of the 822 complaints received since 2016, 687 (83.5 per cent) dealt with fronting. Bonang Mohale, chancellor of the University of the Free State, past president of the BMF and author of the best-selling book, Lift As You Rise, says Broad-based Black Economic Empowerment (B-bBEE) was designed as a tool to redress the socioeconomic inequalities in South Africa; and fronting flies in the face of that.

IT IS A CRIME “Fronting is a crime, and people who do this should face serious consequences; they should be fined, given jail time, named and shamed and barred from doing business with government and the private sector,” says Mohale. He says that 26 years into democracy, collectively as a society and as individuals, we have not been able to overturn the effects of 82 years of separate development, 48 years of apartheid and 340 years of colonialism. And, he adds, fronting is an injury to the efforts to instil change. Fronting most often appears in instances of “window-dressing” where low-level black workers, such as secretaries, gardeners or security staff, are listed as company directors or shareholders so that a company can achieve compliance and meet the empowerment requirements for securing deals. Fronting has been happening for years and an underperforming economy is a huge contributing factor, says Mohale. “A stagnant economy definitely limits the development of the country, which can be seen in the widening levels of inequality and the lack of opportunities for black youth and

PUSELETSO MOMPEI finds out how fronting affects equality and stalls development professionals, with graduates continuing to roam the streets hopelessly.” He says fronting is another epidemic facing the country, alongside the collapse of public education and public health, which continue to fail the poor and vulnerable, and rising crime. To address fronting, government and relevant stakeholders must increase their commitment to human resource development, decisively address unfair labour practices and put a stop to negative attitudes and stereotypes pertaining to B-bBEE. Fronting persists because of greed and cheap opportunism, states Mohale. Section 130 of the B-BBEE Act stipulates that any person convicted of fronting may be imprisoned for up to 10 years and an entity may be fined up to 10 per cent of its yearly turnover. However, Mohale says that perpetrators operate in the knowledge that enforcement is nonexistent. He says the combination of strong, effective institutions and society adhering to good governance creates an environment where crimes such as fronting cannot continue to flourish. The country will continue to fail in fulfilling the socioeconomic

“Fronting is a crime, and people who do this should face serious consequences; they should be ned, given ail time, named and shamed and barred from doing business with government and the private sector.” – Bonang Mohale

FAST FACT

The BEE Commission reports on BEE legislation compliance every year. Its 2019 annual report on the national status and trends on broad-based economic empowerment detailed a decrease in the number of compliance reports that had to be submitted by JSE-listed entities – from 43 per cent in 2018 to 42 per cent in 2019.

rights guaranteed in the Constitution if good governance is not practised. “Societies and economies where practices such as fronting are rife, are not able to function properly because these crimes prevent the natural laws of the economy from functioning freely,” explains Mohale. “As a result, such crimes hamper progress and cause our entire society to suffer. “Effectively addressing the practice of fronting would have a positive effect on disrupting South Africa’s patterns of inequality. If we can successfully strengthen institutions and create a system where B-bBEE can achieve what it was intended to, we can hope to see a reduction of the vast economic and social disparities we are currently living with,” Mohale concludes.

Bonang Mohale

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IN V ES T MEN T

SA’S INVESTMENT TARGETS UNPACKED South Africa has reached 64 per cent of its investment target of R1.2-trillion, with two years to go to meet the goal. DELIA DU TOIT unpacks some recent investments

PEPSICO PepsiCo also pledged R5.5-billion to expand manufacturing capacity across its Pioneer Food operations in the country after the two companies merged. Tertius Carstens, CEO of PepsiCo sub-Saharan Africa, says the total investment in Pioneer Foods of over R24-billion was a significant deal for PepsiCo. “PepsiCo has Tertius Carstens been invested in South Africa since it acquired Simba in 1999. With the acquisition of Pioneer Foods, it is demonstrating a commitment to remain in SA for the long haul.”

As part of the merger, PepsiCo has committed R1.655-billion towards an employee share ownership scheme and R600-million towards development fund programmes. “The fund will allocate R200-million to education, targeting university scholarships and learnerships as well as research partnerships in agriculture; R100-million will be invested in enterprise development as part of an incubator fund that will include a six-month incubator programme hosted by PepsiCo; and R300-million is earmarked for expanding

The export market plays a key role in international trade and investment, says Muhammad Ali of International Organisation for Standardisation (ISO) consultancy World Wide Industrial & Systems Engineers (WWISE). “However, success is heavily reliant on assurances that SA exports are of the highest standard. The results speak for themselves: Teraco Data Environments, which committed R4.4-billion at the 2020 Investment Conference, used to struggle with insecurities and compliance. After obtaining its ISO 27001 certification, it saw a staggering revenue increase and attracted international clients like Microsoft and Amazon Webservices.”

emerging farmer participation in our supply chain,” says Carstens. The company has also committed to maintain existing employment levels for five years and to create an additional 500 direct employment opportunities and 2 500 indirect employment opportunities in that time.

Filled vials at the Aspen Group’s Gqeberha site.

ASPEN In March this year, Aspen Group announced a R3-billion investment at its sterile manufacturing site in Gqeberha. This is the single largest investment in the pharmaceutical industry in SA, says Stephen Saad, chief executive. “The new facility contains state-of-the-art pharmaceutical equipment and systems that will be used to manufacture sterile medicines, including COVID-19 vaccines. “The investment enables Aspen to continue contributing to improved access to treatment (including for other conditions), respond to public health emergencies and to create

significant economic, export and job creation opportunities.” The investment will also boost the local economy and create jobs, he says. “Sterile medicine manufacturing requires employees with specific expertise. These sought-after skills have been retained in the Eastern Cape and will provide the talent base required for any new sterile production opportunities Aspen may wish to explore in the future. Employee numbers for the sterile site will increase over time. “Having seen the dire need for vaccine access and manufacturing on the continent, this facility can play an important ongoing role in ensuring vaccine access beyond the pandemic.”

Aspen Group announced a R3-billion investment at its sterile manufacturing site in eberha. This is the single largest investment in the pharmaceutical industry in SA.

IMAGES: SUPPLIED

he third annual South Africa Investment Conference late last year saw pledges of R109.6-billion – a “remarkable achievement” in the subdued economic climate, President Cyril Ramaphosa said at the conference. The two previous conferences in 2018 and 2019, however, attracted R664-billion in investments. Foreign direct investment (FDI) fell by 49 per cent in the first half of 2020 compared to 2019, according to a report by the United Nations Conference on Trade and Development. This was in line with the global drop of 42 per cent. The South African Government News Agency reports that the 2020 investments are spread across various sectors. Some of the biggest commitments include R8.4-billion by Robert Jurgens Construction Management towards property and a hospital in KwaZulu-Natal, R8-billion to expand Telkom infrastructure, R2.2-billion by Google towards a fibre optics cable that will improve internet connectivity across the country, and R32-billion, R7.25-billion and R8-billion from the New Development Bank, Sanlam and the Industrial Development Corporation respectively towards various infrastructure projects across the country.

THE IMPORTANCE OF ISO

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ECONOM Y

WE NEED ACTION,

NOT WORDS

The South African government’s post-COVID-19 economic recovery plan is fantastic on paper, but there continues to be a lack of will to put grandiose words into action to transform the economy, writes JERMAINE CRAIG

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hen launching the post-COVID-19 economic recovery plan President Cyril Ramaphosa said the end goal was to pursue an infrastructure-led economic reconstruction and recovery that will stimulate the various sectors of the economy. A particular focus, he said, would be on empowering the country’s 2.4 million to 3.5 million small, medium and micro enterprises (SMMEs), with the largest number in the informal and micro sectors. “They offer the greatest untapped potential for growth, employment and fundamental economic transformation. Through a focused support programme, we will support SMME participation in the manufacturing value chain. This will include targeting of specific products for manufacture by SMMEs for both the domestic market and export and the provision of business infrastructure support, financial assistance through loans and blended funding, facilitating routes to market, and assistance with technical skills, product certification, testing and quality assurance,” Ramaphosa explained. Wonderful words, economists and analysts say, but not backed up in reality by Ramaphosa’s administration.

IS GOVERNMENT SERIOUS? Respected economist, political analyst and founding director at Nascence Advisory and Research Xhanti Payi said while the plan was “great on paper”, he questioned government’s real will to implement it. “The plan relies largely on infrastructure projects, but currently, the big projects in the country are not Xhanti Payi

grants and assistance made possible by public funds,” said SAIBPP president Tholo Makhaola. Ramaphosa said the recovery plan will be underpinned by the need to protect vulnerable workers, households and firms; build consumer, investor and public confidence; deepen industrialisation through localisation; pursue environmental sustainability; deliver quick wins; and continue providing relief to mitigate the impact of COVID-19.

NOT CONVINCED

Seasoned political analyst Aubrey Matshiqi is unconvinced by this latest economic recovery plan presented by government. “Our national cupboard is full of these being handed to small companies. The ‘wish lists’. But what South African Banking Association recently is the relationship said that the country’s biggest companies between the lives are still being run by white males, with a few of our people and blacks in middle management. If anything, these economic we’ve seen some major black CEOs fired plans rolled out by recently, as was the case at ABSA. But, does government? In government have the will to ensure change in reality, those words the management of the biggest companies are not at all what that still get the biggest projects. Is it serious they describe. At about ensuring empowerment reaches down Aubrey Matshiqi some point, we to all parts of the economic value chain?” must start looking asked Payi. at the plan in terms of how it has materially He listed Ramaphosa’s recent endorsement changed the lives of our people. I am no of the R84-billion Mooikloof MegaCity longer policy-fatigued, I am now policyDevelopment – despite developer Balwin’s angry,” says Matshiqi. black economic empowerment status being Ramaphosa said a “game-changer” “pathetic” – as an entrenchment of the would be a focus on the economic sectors economic status quo. that drive the economy and the role black The South African Institute of Black people have in these areas. Property Practitioners (SAIBPP) slammed the “Sometimes we talk in broad terms endorsement as “a slap in the face to all patriotic about the economy, we South Africans committed to now need to go deeper structurally transforming our into exactly what makes economy”, citing a lack of the economy work transformation and disregard of and function, and the Broad-based Black Economic participation of black people Empowerment (B-bBEE) in all areas of economic policies in the property and activity. This is the year that construction sector. we should be able to move “Black ownership within the needle of economic the R6-trillion property sector empowerment for women, is less than seven per cent. Tholo Makhaola young people and black Black developers continue people broadly. We need to be constrained by lack of to be able to say in a few years that the access to finance and land, while companies empowerment of our people is now that demonstrate blatant disregard for becoming a reality,” Ramaphosa said. B-bBEE and transformation benefit from

“What is the relationship between the lives of our people and these economic plans rolled out by government? In reality, those words are not at all what they describe.” – Aubrey Matshiqi

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AU T OMO T I V E INDUS T RY

ON THE RIGHT ROAD

TO EMPOWERMENT Development (ESD) programme. “MBSA has funded numerous black-owned enterprises, including a Tier 1 black-owned supplier in the automotive sector,” says Kgotle. “Through the Employee ESD and incubation programme, MBSA also funds and supports employees who will form 100 per cent black-owned Emerging Markets & Africa at Deloitte, says enterprises that will supply services and that the industry should be complimented components to MBSA”. for establishing AITF. “It’s an innovative Ford Motor Company of SA (FMCSA) mechanism to invest in transformative focuses on transformation ventures around the among its dealers and industry and value chain in component supplier a nonpolitical way,” he says. network – which is why “Instead of transferring equity it also supports AITF. to local partners, the big FMCSA’s Incubation Centre, OEMs have clubbed together established in partnership to invest in the industry and with the Automotive Industry downstream suppliers in a Development Centre in 2011, well-managed way.” Deloitte supports the development of advised on the establishment Dr Martyn Davies fully black-owned suppliers of the fund, which Davies says to the automotive industry. will see the OEM value chain It assists black entrepreneurs to build small receiving equity injections in the form of truly service and manufacturing businesses with developmental capital on the back of solid the ultimate goal of integrating them into supply contracts with the OEMs. “There’s an Ford’s national supply chain. established pipeline of investment and the Davies warns of the need to implement capital is being deployed in a fair, competitive, ATIF and SAAM urgently and with renewed rewarding and nonpolitical fashion into those focus as business opportunities have parts of the industry that need it,” he says. shifted due to the pandemic. “COVID-19 has amplified the acceleration of the tech INTERNAL INITIATIVES industry, part of that is related to climate Many OEMs have their own internal change and the recognition of the need empowerment initiatives. Executive director for more electric vehicles (EVs). Despite its of Human Resources and Corporate thriving automotive industry, South Africa Affairs at Mercedes-Benz South doesn’t produce EVs, and since we’re so Africa (MBSA) Abey Kgotle says reliant on export markets, that will need to that the company has focused on change quite urgently,” says Davies. “That ownership, preferential procurement should set alarm bells ringing – we’re at the and management control in the point the world was 200 years ago when the B-bBEEspace, achieving 15 related smart people saw the rise of the automobile, ownership points. Though MBSA decided to get rid of horses and started is a contributor to AITF, it has its building roads.” own Enterprise and Supplier

he South African automotive industry is waiting on the empowerment boost promised by the Automotive Industry Transformation Fund (AITF), a R6-billion fund built by contributions from the country’s largest Original Equipment Manufacturers (OEMs) – BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota and Volkswagen. The AITF’s mission is to accelerate the empowerment of black South Africans within the automotive sector; upskill black employees and automotive entrepreneurs; expand black-owned dealerships, authorised repair facilities and workshops; increase the contribution of black-owned automotive component manufacturers within the supply chain; and create sustainable employment opportunities for young and female black South Africans. It will effectively usher in meaningful participation and compliance with all fi ve elements of the generic Broad-based Black Economic Empowerment (B-bBEE) scorecard. AITF will also play a major role in the implementation of the South African Automotive Masterplan (SAAM). Launched in 2019 to roll out from early this year, SAAM has been postponed to at least July on the back of the industry’s COVID-19 lockdown-related challenges. SAAM aims to achieve a globally competitive and transformed industry that actively contributes to the sustainable development of South Africa’s productive economy, creating prosperity for industry stakeholders and broader society. Dr Martyn Davies, managing director of

“Instead of transferring equity to local partners, the big OEMs have clubbed together to invest in the industry and downstream suppliers in a well-managed way.” – Dr Martyn Davies

IMAGE: SUPPLIED

Through the Automotive Industry Transformation Fund, the South African automotive industry looks to be getting empowerment right. By TREVOR CRIGHTON

Abey Kgotle

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OPINION

WEDNESDAY 24 MARCH 2021:

LIVING IN TWO WORLDS

n this single day, I once again experience life and living in two worlds. In the one world, I receive accolades and awards. There is recognition for work done and appreciation for counsel given. You are that professor of education, the one every media house calls for expert commentary on everything from a university’s language policy to student indebtedness in higher education. You chair board meetings of world-renowned companies and trusts, and you write scholarly books released by some of the leading international publishing houses. Companies pay you big money for talks to the corporate elites. In the other world, I receive insults and experience harassments daily. In this world, you are a nobody. I tried out a new dentist in Stellenbosch this morning. He knows me and would be all respectful and kind when he arrived later. But first, I have to navigate the coloured receptionist. “Good morning,” I say cheerily. She does not greet from behind the mask and keeps staring at the screen before her. I am irritated. “I said good morning,” I tell her. “I did say good morning,” she lies. Then the phone rings. ”Goeie môre, ek help graag, geniet die mooi dag.” That caller was a white person, no doubt, for she was singing her words. “Have you been here before?” “No.”

“Fill out this form.” She pushes a clipboard towards me. She starts to speak Afrikaans when I take out my own pen for COVID-19 safety reasons. “Nee, gebruik hierdie potlood,” the receptionist instructs as she rolls her eyes. I have committed that other felony in Stellenbosch: speaking English. Later this afternoon, on my way to the local Takealot pick-up store in Stellenbosch, I misjudge the parking lot by one block. A white woman comes running out, screaming at the top of her voice: “hooi! hooi!” – Afrikaans for nonentity. I pretend not to hear her. She reaches me, grabs my shirt, and decides to walk me to my car. I remove her hand firmly and instruct her never to try that stunt again. By this time, I realised I had stopped short of the Takealot store and drive further up the road after giving the woman a lecture on how to behave towards strangers in public. Just then a university vice-chancellor calls on my cellphone seeking advice on a few matters; instantly, I am transported to that other world even as my temperature is still elevated because of the white woman who dared to grab my T-shirt. I live in two worlds. It is difficult and it is infuriating. It is race and it is class. But I have social capital. I can speak back. I can rebuke.

“In the one world, I receive accolades and awards. There is recognition for work done and appreciation for counsel given.”

“In the other world, I receive insults and experience harassments daily. In this world,you are a nobody.” I can dismiss ignorance. Imagine those living only in the second world and how their grievances accumulate day after day after day. And sometimes they explode. Jonathan Jansen is Distinguished Professor of Education at Stellenbosch University. He was formerly vice-chancellor of the University of the Free State and dean of education at the University of Pretoria. Jansen was a Fulbright Scholar at Stanford University and has won numerous awards. He is a published author of several books on the South African education system, among others.

Jonathan Jansen IMAGE: SUPPLIED

By: JONATHAN JANSEN

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