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Navigating the Evolving Landscape of B-BBEE in the South African Transport Sector: A Call for Collaboration

Written by Tulani Hlabangana

The South African journey towards Broad-Based Black Economic Empowerment (B-BBEE) is a complex tapestry woven from numerous strands. Legal frameworks like the constitution and transformative legislation like the B-BBEE Act, Employment Equity Act (EEA), Skills Development Act (SDA), and Skills Development Levies Act (SDLA) provide the foundation and guiding principles. Initiatives like SARS’ S12H and the Employment Tax Incentive (ETI) act as financial drivers, further supporting inclusivity in the economic landscape. As we reflect on 20 years of B-BBEE, it’s crucial to assess progress at the national and sectoral levels, ensuring all elements effectively contribute to our collective goals.

From Humble Beginnings: Witnessing B-BBEE take Root in Transport

My personal journey intersects with the narrative of transformation, particularly within the South African Transport and Logistics sector. My formative years were spent at UTi, a homegrown success story that started as a fledgling freight forwarding company and blossomed into a global logistics powerhouse. Witnessing UTi’s (now DSV) rise firsthand instilled in me a deep appreciation for corporate citizenship and the transformative potential of B-BBEE. Back then, companies grappled with navigating the complexities of the initial leaked draft B-BBEE codes, which raised crucial questions about implementation and practicality. Witnessing the sector’s evolution, from the leaked B-BBEE codes to the formulation of the Transport sector charter, solidified the importance of active participation and leadership in driving meaningful change.

Challenges and Opportunities in Aligning with the DTi Codes:

The journey towards aligning with the DTi B-BBEE Codes amendments (2013-2015) and subsequent revisions has faced challenges. The delay in aligning the Transport sector charter with the DTi codes raises concerns about the effectiveness of the existing framework. Proactive engagement and collaboration between stakeholders and the Sector Council are crucial to ensure a smooth and comprehensive alignment process, addressing both national B-BBEE goals and sector-specific needs.

My experience attending the Transport Sector Symposium in May 2023 serves as a microcosm of these challenges. While the Council, led by Kgomotso Selokane-Maja, expressed their commitment to aligning the Integrated Transport Sector Charter (ITSC) and invited stakeholder input, the consultation sessions felt rushed and lacked opportunities for in-depth discussions and clarification of concerns. This was particularly evident at the Road Freight subsector session in October 2023, where the lack of feedback on previously raised questions and concerns created a sense of disappointment and undermined the good faith process.

The Integrated Transport Sector Charter: A Pivotal Moment for Stakeholders

In February 2024, the Sector Council held a series of “consultation” sessions, including one for the Road Freight subsector on Valentine’s Day. The Council Chair, incredibly assertive, presented what they considered a well-developed proposal, open to questions and objections. While the details deserve further analysis, one critical point stands out: the absence of a transition period for the new ITSC. This means companies in the transport and logistics sector verifying their B-BBEE status after the final gazette (around June 2024) will be subject to the stricter new standards. This compressed timeline poses significant challenges for many companies and necessitates their immediate attention and careful preparation to avoid potential complications during their 2024 BBBEE verification.

The recent consultation sessions by the Sector Council revealed significant shifts within the proposed ITSC. The Council’s intention to issue a gazette by the end of February/early March, triggering a mandatory 60-day public comment period, signifies a pivotal moment for stakeholders. Notably, the codes are set to take effect immediately upon gazetting, highlighting the urgency for companies in the Transport sector to prepare for the implications without a transition period. This accelerated timeline necessitates careful consideration, proactive engagement, and active participation during the public commentary phase.

Key Changes in the ITSC and the Call for Collaborative Action:

The proposed ITSC introduces several significant changes, necessitating close analysis to understand their potential impact:

  • Mandatory contribution to a new Economic and Social Development (ESD) Fund: The introduction of a mandatory 30% contribution of net profit after tax (NPAT) to a new ESD Fund raises several questions. While the fund’s purpose is commendable, its establishment and operational details remain unclear. The public comment document needs to explicitly address how this contribution will affect companies’ 2024 BBBEE verification process, ensuring transparency and providing adequate guidance for compliance.
  • Focus on “inclusivity” with a multi-faceted approach: The ITSC emphasises “inclusivity” through various measures, including:
    • 30% of the Socio-Economic Development (SED) target benefiting rural communities and townships: This shift aims to address historical inequalities and promote broader participation in the sector’s economic development. However, stakeholders raise concerns about the lack of a transition period, arguing that applying these stricter targets to the 2024 verification cycle unfairly disadvantages them. Without adequate time to adjust strategies and resource allocation, particularly regarding targeted support for these communities, achieving compliance becomes an immense challenge.
    • Increased emphasis on youth development: The ITSC places a strong emphasis on supporting youth in various management levels and as beneficiaries of skills development spending. While this focus is commendable, stakeholders proposed a phased implementation approach to allow for a smoother transition and capacity building. The Sector Council’s rejection of this proposal raises concerns about the potential for unintended consequences, such as tokenistic youth inclusion without genuine empowerment opportunities.
  • Potential deviations from DTi codes: As my colleague Brad Green recently pointed out, the Generic/DTI Codes provide clear guidelines (statement 003) for developing sector-specific codes. These guidelines emphasise using the same calculation methods and definitions as the DTi codes, with the only exceptions being targets and weightings. The proposed ITSC raises concerns about potential deviations from these principles in several areas:
    • Removal of the modified flow-through in Ownership: The Council’s decision to remove this provision deviates from statement 003, leading to questions about whether the new ITSC truly aligns with the established B-BBEE framework.
    • Introduction of EAP (Employee Assistance Programmes) within the Economic Interest/Ownership criteria: The inclusion of EAPs within this criterion seems like another potential deviation from statement 003. While the intention might be positive, clarity is crucial to ensure its alignment with existing B-BBEE principles and avoid confusion during implementation.
    • New terms in HR elements (Management control and Skills development): The Council introduced new terms like “advancement programs,” “specialised positions,” and “mandatory programs” within the HR elements. While they claim the industry will define these terms, the current lack of clarity contradicts statement 003, which emphasises established definitions. This raises concerns about potential inconsistencies, implementation challenges, and potential misinterpretations.

These significant changes within the proposed ITSC warrant careful scrutiny and necessitate collaborative action from all stakeholders. The upcoming public comment period provides a crucial opportunity for stakeholders to:

  • Engage actively and express their concerns and recommendations.
  • Advocate for meaningful changes that ensure smooth implementation, address practical challenges, and uphold the spirit of inclusivity and equitable growth within the Transport sector.
  • Work collaboratively with the Sector Council to ensure the final ITSC aligns with national B-BBEE objectives while addressing the unique needs and realities of the Transport and Logistics sector.

Moving Forward: Ensuring Alignment and Embracing Change

As we navigate these changes, it is crucial to prioritise alignment with the principles outlined in the Generic/DTI codes, while simultaneously accommodating sector-specific needs and challenges. The introduction of mandatory ESD Fund contributions and revised ownership criteria underscores the evolving nature of transformation initiatives within the Transport sector. Beyond the ITSC, staying vigilant of other legislative developments is equally important. The Draft Regulation gazette (50058), released on February 1, 2023, proposing new sectoral numerical targets, exemplifies the dynamic nature of the B-BBEE landscape.

A Call to Action: Shaping a More Equitable Future Together:

In the spirit of collaboration and collective progress, I encourage all stakeholders to actively engage during the public commentary phase and advocate for meaningful change. By working together, we can leverage this opportunity to shape a transformative agenda that upholds the values enshrined in the South African constitution and fosters inclusive growth for all within the Transport sector and beyond.

About the Author:
Tulani Hlabangana is the Director: Group HR and Learning Division at Signa Group. Drawing on over 27 years of experience in diverse areas like B-BBEE structuring, human resources, and education, Tulani brings a comprehensive perspective and expertise to the challenges and opportunities facing businesses in South Africa.

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