When BEE backfires – Telkom CEO explains how it hurts local companies
Telkom CEO Sipho Maseko has raised concerns over the unintended consequences of BEE procurement policies that penalise Telkom for buying locally manufactured fibre cables rather than importing it.
Maseko said Telkom is one of the largest buyers of fibre in South Africa and explained that it buys its fibre from a company in Brits called CBI.
CBI manufactures the cable locally, employs about 900 people, and is a Level 4 BEE contributor. BEE scores range from Level 1 to Level 8. There is also a ninth BEE category – non-compliant.
Maseko said that while it would be better if CBI were a Level 1 BEE contributor, it is creating a problem for South Africa when government punishes companies like Telkom for buying from local manufacturers with a Level 4 BEE rating.
The BEE regulations also make it easy for an importer to set up shop in Durban with two employees and get a Level 1 BEE score.
“[By supporting an importer over local manufacturing] we are then contributing in de-industrialising the country, while helping to industrialise whichever country we are importing from,” he said.
Maseko said that he met with the powers-that-be, as part of larger discussions around Operation Vulindlela, to explain that they were disincentivising businesses from supporting South Africa’s local manufacturing sector.
Operation Vulindlela is a joint initiative of the Presidency and National Treasury which aims to resuscitate economic growth and streamline policy implementation in South Africa.
According to Maseko, it is important that Operation Vulindlela not only be used to stimulate investment, but also build and nurture the manufacturing capacity that South Africa always had over the last 30–40 years.
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