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Letter From Our CEO - June 2021

I trust you are all well and most importantly healthy during this pandemic. Times are tough in the business world of South Africa as we all know. The total number of liquidations was 158 in April 2021, following zero liquidations in April 2020. There were no liquidations reported by the Companies and Intellectual Property Commission in April 2020 due to the Covid-19 lockdown. (Stats SA) The data shows an increase of 78.6% was recorded for the three months ended April 2021 compared with the three months ended April 2020. Unemployment remains the biggest challenge for SA at this time.

Minister of trade, industry, and competition Ebrahim Patel has settled the long-running dispute on the BEE status of broad-based schemes and trusts, gazetting a notice on Tuesday to confirm that they qualify to be scored as genuine black ownership.

The notice ends the difference of opinion between Patel and his BEE Commissioner, Zodwa Ntuli, who since 2019, continually argued that investments made by collective schemes could not qualify for ownership points on the BEE scorecard as the shares they bought were collectively owned and did not vest in individuals, to whom the dividends flowed. Minister Patel has said not so and knocked the commissioner’s interpretation to leg.

The Commissioner flexed her wings at the first opportunity she had by saying at the Black Business council summit: The Broad-based Black Economic Empowerment (B-BBEE) Commission says it is time South Africa deals decisively with fronting by terminating operating licences of companies who lie about their black ownership status. She said her transformation report for 2020 would come out later this month and show that not much has changed. Economic ownership by black people in the country increased slightly from 29% in 2018/19 to 31%, as the upcoming report will show. There were slight improvements in other areas, too, including preferential procurement deals awarded to black businesses and enterprise development. While the numbers show improvement, Ntuli said the impact was not being felt on the ground, and there were questions on how authentic these numbers were because B-BBEE fronting was "so embedded" in SA's corporates.

This in my opinion is where BEE has always failed by recognising and enriching the connected instead of the people at ground level who really need it.

We welcome this clarity that now makes the commissioners practice notes null and void on their ownership opinions. For far too long we have been in the middle of the triparty arguments and interpretations between the commissioners’ notes, the DTI’S codes, verification companies and the client.

All the BEE industry has been asking for years is certainty and clarity, so this clarity is welcomed.

Times are tough for business and your BEE certification will go a long way to helping your company survive these uncertain times during the pandemic. Do not put your head in the sand and ignore it or hope that the problem will go away. Your doors will open instead of remaining firmly shut in your face with a good BEE Certification.

It is time to be proactive and not sit back and hope that all will be well. We have been assisting companies with their BEE since 2012 and are ready and willing to assist you. It is now time for a broad-based ownership structure that assists the needy, instead of the already wealthy.


Hilton Johnson

CEO – Compliance Hub

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