We are hearing that the B-BBEE Commissioner is becoming involved in the establishment of the Sector Codes, and is focusing on targets under all elements. We must see this in the light of the SONA statements by the President. This is contributing to the hold-up in Gazetting Sector Codes that were signed off by the Industry representatives months ago. Some are querying this in terms of the Commissioner’s legislated role, but the DTI is at liberty to seek her input and this is what seems to have happened.
However, we are beginning to observe a BEE fatigue within the sectors, affected by uncertainty and delays. We may expect a degree of BEE defection in the months ahead unless the situation is remedied very quickly. The standoff between the Mines and the DMR and delays in the finalization of the Financial Services Sector Code, are potential boulders that could precipitate an avalanche if not resolved.
Financial Services Sector
The Black Business Council has called for all new insurance licences to be restricted to companies with a minimum black ownership of 51% and for set-asides of up to 35% for black entrepreneurs as a condition of licences.
The current enquiry into transformation within the Finance sector must surely stem from these heightened calls for radical economic transformation.
We hear from the press reports that:
•National Economic Fund CEO Philisiwe Mthethwa said that a fundamental deficiency of the draft financial service code is lower by 10% target for direct ownership, which compares unfavourably with the minimum 25% target in the generic BEE codes. (The DTI COGP and other sector codes permit any combination of direct or indirect ownership to meet the ownership targets.)
•Zodwa Ntuli (B-BBEE Commissioner) also criticised the draft Finance Sector code, saying it did not set timelines for the achievements of the targets that were "very low". She argued that the draft financial sector code in its present form did not advance radical economic transformation but rather regressed it. If these deficiencies were not addressed, the generic codes of good practice should apply.
What is clear though, is the whole point of the sector scorecard is to measure transformation in a consistent manner and there is real difficulty in measuring transformation when the codes are changing every few years and data capture is so complicated. To give a clear picture of progress one needs consistent targets and comprehensive reporting.
So, we can expect further changes in the Draft Financial Services Sector Code as a result of this parliamentary investigation. We can also anticipate an increased focus on annual reporting by sector participants and an intense discussion on the role of licensing in the transformation of the financial services sector!