’BEE must be done right’

Rudolph Muller

Rudolph Muller is the editor at MyBroadband and covers telecoms and broadband news. Rudolph comes from an academic background, but left the University of...

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To do justice to the spirit of this national undertaking, and to ensure business efficiency, Tellumat, an early Code adopter, urges other companies to apply them to the letter.

Financial director, Graham Meyer, says while Tellumat has expended considerable effort in assessing its own BEE standing, it has been worth the effort. Today it boasts a Status Level-4 BEE rating (’Superior Contributor’), and with 32% black ownership it is officially a black-empowered company.

"A Level-4 rating allows our customers to recognise procurement from us at a 100% BEE contribution level (i.e. every Rand purchased from us contributes a Rand to their own BEE procurement statistics)," he says.

"This has obviously stood us in good stead with customers, who require our ratings before they can truly assess their own." Meyer explains that BEE assessment does not just focus on the performance of the company seeking the rating. "It also depends on their suppliers. If they also have a Codes of Good Practice scorecard rating, the customer enterprise is credited with a proportion of every rand spent with them – the higher the scorecard, the higher the proportion."

The reason for that is that Broad-Based BEE (B-BBEE) was designed to benefit a broad range of stakeholders in the economy. Small companies, for example, are greatly in need of a shot in the arm to get ahead. The codes make it more attractive to procure from small companies (EMEs), as this exempts businesses with a turnover of less than R5m from having to comply with the codes at all.

They are by default considered Level-4 contributors, although they can clearly score themselves and gain a higher rating if they meet the necessary benchmarks. Companies turning over R5m – R35m (QSEs) only have to comply with four out of seven ’pillars’ of the codes.

"It is this broad trickle-down effect of the codes that Tellumat applauds and embraces," Meyer says. "It can really make a meaningful difference, and the idea of Preferential Procurement embodied within the codes acts as a great incentive."

But as advisable as it is for a supplier to be empowered, Meyer says it is just as vital that customer enterprises apply the codes with unwavering consistency, when measuring their suppliers.

"We see a lot of inconsistency in tender specifications. Some companies ask about ownership and management control, and stop there, while others require that the shareholders also manage and control the business. This leaves a lot of uncertainty, leading to a lot of inefficiency in business dealings, such as tenders inexplicably lost, and it will almost certainly conspire against a steady groundswell of transformation in SA business," he adds.

In short, when everyone is sure what is expected of them and how they will be measured, companies will be more inclined to expend the effort on being rated for their BEE credentials. When more companies attain a rating as a result, more customers will be able to rate themselves with certainty.

The end result will be the chain reaction that everyone wants, where economic power will reach the furthest reaches of the second economy. And when the corollary benefit of compliance is felt on companies’ bottom line, the desire to better their standing as BEE companies will naturally increase.

Tellumat will focus increasingly on the issue of increased skills development, and pockets of the other pillars where it has identified room for improvement. "And we will continue to meet with our suppliers on a regular basis, to encourage them to follow suit," Meyer concludes.