Ever since the initial AgriBEE charter, considered to have been drawn up without the consultation of organised agriculture, was launched in East London in 2004, AgriBEE has been going around in legislative circles. Today the industry is still waiting for the agriculture minister to appoint a charter council to approve the current Section 12 charter. But while the law is taking some time to pass, BEE is here to stay, especially for farmers with a large turnover, export businesses or farmers who rely on limited water resources or need specific trade licenses. Annelie Coleman spoke to Frans van Wyk, PricewaterhouseCoopers’ BEE and Transformation director about the progress being made.
How much transformation will be enough?
BEE is a fairly simple measurement framework that encourages enterprises to contribute towards the development of black business talent in the South African economy. The question of “sufficient transformation” or “how much is enough” is difficult, as measuring the development of black business talent is not an exact science. It will be influenced by the politics of the day, as can be seen by the challenge of land reform in the agricultural sector.
Should the goal be included in the measurement framework when an agricultural enterprise is measured?
It’s clear that the goal and time frame of the development process must be properly defined and consensus reached by stakeholders before starting the measurement. This function, as far as I’m concerned, should be performed within the sector charter committees. Unfortunately most of these committees still haven’t come forward with solutions after years of fruitless negotiations. This leaves enterprises uneasy as the goals are still undefined and there is an expectation that goal posts will shift. The AgriBEE steering committee has published a Section 12 sector charter, stating the intention and commitment of the sector towards transformation. For this Section 12 charter to become law under Section 9 of the BEE Act, it must be approved by the charter council. Unfortunately, little progress has been made by the minister of agriculture in appointing the council.
How and where should SA farmers position themselves in the current processes of BEE and transformation?
Transformation is here to stay and influences producers much like weather patterns – you can’t control it but you can plan accordingly. Producers need to look at the opportunities, understand the make-up and work together to address risks. I believe the commitment of individual producers towards transformation, even if progress is relatively slow, will be worth more than general industry initiatives with no specific outcomes. The other side of the coin is that a lack of success at grassroots will result in consumer and government impatience towards the sector.
What are the practical implications of BEE at farm level?
BEE compliance has become a business imperative especially if the enterprise exports, relies on limited water resources and needs specific trade licenses. Rather than waiting for Father Christmas, I would suggest primary producers start at a strategic level, clearly define what they see as possible development areas and communicate this road map to management, shareholders and suppliers. A pro-active approach will create positive momentum and will be perceived by
customers as a bold step towards the development of black business talent.
Where do agribusinesses fit in?
The BEE compliance levels are applicable all businesses in South Africa and through the preferential procurement element on the BEE scorecard, producers and agribusinesses depend on each other. Let me explain: if the producer purchases goods and services from the agribusiness, the BEE status of the agribusiness will directly influence the preferential procurement element on the BEE scorecard of the producer. The producer, on the other hand, will probably be a shareholder in the agribusiness and influence its ownership element of the BEE scorecard. Rather than finding solutions in isolation, producers and agribusinesses should work together to create opportunities. Producers should focus on enterprise development opportunities such as developing new farmland in joint ventures with black shareholders or share-milk schemes. Agribusinesses can provide “thought leadership” by supporting enterprise development initiatives, and provide administrative and financial support.
You said land reform and transformation are not synonymous. Please explain the difference?
Too often we miss the opportunities in the broad-based approach. When somebody mentions “transformation” – all we hear is complex ownership transactions and land reform. Not only are land reform and BEE governed by different sets of legislation, but also measured under separate frameworks. Although the ownership of economic resources by black people is a long-term imperative of the BEE framework, it’s only one of seven elements to be addressed and not necessarily the first step to economic transformation. Participation only in land reform (ownership) will not solve the challenge of obtaining an acceptable BEE score as the latter is calculated on participation and contributions to all seven elements – explaining the term broad-based empowerment.
You made mention in your presentation that transformation is a creative process. Please explain?
The writer, Antjie Krog, explains in her book ‘n Ander tongval that transformation means “a creative process with a specific end goal in mind”. In order for the agricultural sector to transform, it must firstly establish what the end result should be and secondly, show commitment to be part of this history-in-writing. At producer level the focus should be on the low-hanging fruit of the BEE scorecard and address the elements that can give maximum points in the short term. Not only is each business unique, but current contributions towards the scorecard elements might already be enough, just not properly recorded.
Sustainability of both BEE and transformation are major issues in SA. What’s your opinion on this with specific reference to the role of organised agriculture?
I agree that sustainable solutions over the long term are of the utmost importance. At a national level, addressing economic inequalities is the biggest challenge to the stability of our democracy. As a sustainable, long-term approach could also benefit the structures of organised agriculture, they will have no choice but to fully support transformation initiatives and negotiate where unresolved challenges remain.
What should the role of the government be in the transformation process of agriculture?
Several government agencies and departments are involved with the transformation process. They should urgently consider completing the work in progress: the agriculture minister appointing the charter council to approve the AgriBEE charter; SANAS accreditation agencies to issue verified BEE scorecards; and the Department of Land Affairs settling outstanding restitution claims.
What does the future hold for SA agriculture specifically land reform, BEE and transformation?
What would happen without it? The question should rather be, what could happen with it? From recent bench-marking studies, done among primary producers in the dairy industry, it’s clear perceptions have changed to the positive. The participants’ priorities for the next three years are skills development, socioeconomic development, employment equity and enterprise development. There is also an indication that the participants’ future BEE compliance can reach level four (100% recognition). Enterprises in the value chain understand the sensitivity around compliance and use a carrot rather than a stick approach by incentivising suppliers who have acceptable BEE scores. Although there is still a long way to go, good progress has been made and it should be seen as a small but significant step towards a better future for all. |fw
