ROAD FREIGHT CHARTER B-BBEE SCORECARD

Presenter: Sibongile Zikalala

AMENDED B-BBEE CODES

PRESENTATION OUTLINE

1. OBJECTIVES OF THE SECTOR CODES

2. PRINCIPLE CHANGES ON AMENDED B-BBEE CODES

3. PROPOSED ROAD FREIGHT GENERIC CHARTER SCORECARD

4. PROPOSED QUALIFYING SMALL ENTERPRISE SCORECARD

5. IMPLEMENTATION AND MONITORING

6. CONCLUSION – THE IMPACT ON BUSINESS

OBJECTIVES OF THE ROAD FREIGHT TRANSPORT SECTOR CODES

• To advance the objectives of the B-BBEE Amendment Act No. 56 of

2013;

• To constitute a Framework and Establish the Principles upon which

B-BBEE will be implemented in the Road Freight Transport Sector;

• To create Economic growth through Ownership, Management Control,

Enterprise and Supplier Development in the Road Freight Transport

Sector;

• To ensure the Entry of women, Youth and people living in Rural

areas at all levels of the industry so as to break the stranglehold of the

industry by urban-based males;

• To provide the basis for the Sector’s engagement with other

Stakeholders including Government and Labour.

PRINCIPLE CHANGES ON THE AMENDED B-BBEE CODES

B-BBEE COMPLIANCE

AMENDED CODES PRINCIPLE CHANGES

REAL JOB CREATIONSupply chain diversificationGrowth in EME/QSE ExpenditureGrowth in 51% Black Owned Supplier Import ReplacementSupplier Development

SOCIO ECONOMIC DEVELOPMENTIncome generating ActivitiesSupporting future employees

B-BBEE CHANGESEmpowering Supplier StatusAmended ScorecardsAdjusted Recognition TableLevel Discounting

FAIR PEOPLE APPROACHEconomically Active Population (EAP)EE Act alignment and strengthening

OPEN SKILLS DEVELOPMENTIncreased targetIncreased incentive for disabilityTraining non employees is recognisedAbsorption incentives

AMENDED SCORECARD SUMMARY

B-BBEE RECOGNITION TABLE

• Automatic drop two levels down

B-BBEE PRIORITY ELEMENTS

• Ownership

– The sub-minimum requirement for ownership is 40% of Net value (40%

of the 8 points) based on the Time based graduation Factor provided.• Skills Development

– The sub-minimum requirement for Skills Development is 40% of the

Total weighting points for Skills Development.

• Enterprise and Supplier Development

– The sub-minimum requirement for Enterprise and Supplier

Development is 40% for each of the three categories, within the

Enterprise and Supplier Development element, namely Preferential

procurement; Supplier development and Enterprise Development.

– If the scorecard fails to meet any of these sub-minimum targets the acquired level will be discounted one level down.

“EMPOWERING SUPPLIER STATUS”

• Good citizen South African entity; – Complies with all regulatory requirementsMeet at least 3 of the following criteria;

1) At least 25% of costs of sales excluding labour costs and depreciation

must be procured from local producers or local supplier in SA. Labour costs

for the service industry is capped at 15%.

2) 50% of jobs created are for Black people provided that the number of

Black employees since the immediate prior verified B-BBEE Measurement is

maintained.

3) At least 25% transformation of raw material/beneficiation which

include local manufacturing, production and/or assembly, and/or packaging.

4) At least spend 12 days per annum of productivity deployed in assisting

Black EMEs and QSEs beneficiaries to increase their operation or financial

capacity.

5) At least 85% of labour costs should be paid to South African employees by

the Service Industry entities.

ROAD FREIGHT SUB-SECTOR SCORECARD PROPOSAL

B-BBEE COMPLIANCE

EQUITY OWNERSHIP

Indicators Charter Points

Charter Targets

Generic Points

Generic Targets

Voting Rights

In the hands of Black people 4 25% + 1 vote

4 25% + 1 vote

In the hands of Black Women 2 10% 2 10%

Economic Interest

In the hands of Black people 4 25% 4 25%

In the hands of Black Women 2 10% 2 10%

Black Economic interest in •Black designated groups•Participation in ESOP•Participation in BBOS•Participation in Co-operatives

3 3% 3 3%

Black new Entrants 4 15% 2 2%

Realisation points

Net Value/Net Economic Interest 8 10 year target

Graduation formula

8 10 year target

graduation formula

TOTAL POINTS 27 25

MANAGEMENT CONTROL

Indicators Charter Points

Charter Targets

Generic Points

Generic Targets

Board Participation

% Voting rights of Black people 2 50% 2 50%

% Voting rights of Black Women 1 25% 1 25%

% Black Executive Directors 2 50% 2 50%

% Black Women Executive Directors 1 25% 1 25%

Other Executive Management

% Black Executive Management 2 60% 2 60%

% Black Women Executive Management 1 30% 1 30%

Senior Management - EAP Applicable

% Black employees for all SM 2 60% 2 60%

% Black woman employees for all SM 1 30% 1 30%

SUB-TOTAL POINTS 12 12

MANAGEMENT CONTROL CONT.

Indicators Charter Points

Charter Targets

Generic Points

Generic Targets

Middle Management – EAP Applicable

% Black employees for all MM 2 75% 2 75%

% Black woman employees for all MM 1 38% 1 38%

Junior Management – EAP Applicable

% Black employees for all SM 2 88% 1 88%

% Black woman employees for all SM 1 44% 1 44%

Youth Employees – EAP Applicable

Youth in technical/professional positions 2 15% N/A

Operational staff – EAP Applicable

Black women % in Semi & unskilled levels 2 15% N/A

Employees with disability

% Black employees for all office staff 2 2% 2 2%

% Black woman employees for all office staff

1 1% N/A

TOTAL POINTS 25 19

SKILLS DEVELOPMENT

Indicators Charter Points

Charter Targets

Generic Points

Generic Targets

Skills Development Expenditure on programme specified in the Learning Programmes Matrix

Skills Development Expenditure on Black people as a % of the Leviable amount

8 6% 8 6%

Skills Development Expenditure on Black disabled employees as a % of the Leviable Amount

5 0.50% 4 0.30

Learnerships, Apprenticeships and Internships

Number of Black people participating on learnerships, apprenticeships, and internships and training specified in the learning programme matrix as a % of total employees

4 2.5% 4 2.5%

Number of Black unemployed participating on learnerships, apprenticeships, and internships and training specified in the learning programme matrix as a % of total employees

4 2.5% 4 2.5%

Bonus Points

Number of black people absorbed by the measured entity at the end of Learnership programme

5 100% 5 100%

TOTAL POINTS 21 20

ENTERPRISE AND SUPPLIER DEVELOPMENT

Indicators Charter Points

Charter Targets

Generic Points

Generic Targets

Preferential Procurement as a percentage of the Total Measured procurement spend

Procurement spend from all Empowering suppliers based on their Procurement Recognition Level.

5 80% 5 80%

Procurement spend from all Empowering suppliers that are Qualifying Small Enterprises.

3 15% 3 15%

Procurement spend from all that are Exempted Micro Enterprises

4 15% 4 15%

Procurement spend from all Empowering suppliers that are 51% black owned.

9 40% 9 40%

Procurement spend from all Empowering suppliers that are 30% black woman owned.

4 12% 4 12%

Bonus Points

Procurement spend from designated group Suppliers that are 51% black owned.

2 2% 2 2%

SUB- TOTAL POINTS 25 25

ENTERPRISE AND SUPPLIER DEVELOPMENT

Indicators Charter Points

Charter Targets

Generic Points

Generic Targets

Supplier Development

Annual value of all Supplier Development Contributions made by the measured entity as a percentage of the target

10 2% of NPAT 10 2% of NPAT

Enterprise Development

Annual value of Enterprise Development Contributions and Sector Specific programmes made by the Measured entity as a percentage of the target

5 1% of NPAT 5 1% of NPAT

Bonus Points

For the graduation of one or more Enterprise Development beneficiaries to the Supplier Development Level

1 1

For creating one or more jobs directly as a result of Supplier Development and Enterprise Development initiatives

1 1

TOTAL POINTS 40 40

SOCIO-ECONOMIC DEVELOPMENT

Indicators Charter points

Charter targets

Generic points

Generic targets

Socio economic development initiatives – % of NPAT

Annual value of Socio Economic Development contributions made by the Measured entity.

10 1.5% of NPAT 5 1% of NPAT

• List of projects for Enhanced Recognition points:

• Carbon Offset projects - Accredited green programmes (Trees for

Africa)

• Wellness programmes – Bargaining Council Wellness and Community

Clinics

• Research & Development projects - Fatigue management by DoT or

MEC

• Road Safety projects – Captain Safety, National Prayer day by DoT

• NSEWA Road Safety Learning Network – Enhancing driver skills and

health

ROAD FREIGHT GENERIC SCORECARD SUMMARY

• OWNERSHIP– No changes compared to the Generic Scorecard

• MANAGEMENT CONTROL– Additional points for Junior Management, – Additional sub-elements for Youth Employees and Operational female

employees,– The exclusion of Drivers in the calculation for Disabled employees,

• SKILLS DEVELOPMENT– 1% Skills Development Levy is included for the Transport Charter Industry

only.– List of Mandatory training has been submitted with reasons for inclusion.

• ENTERPRISE AND SUPPLIER DEVELOPMENT– List of Procurement exclusions from 51% Black owned companies submitted

to the Department of Transport for consideration at 100% on: Fuel, Oil, Maintenance Spares, Banks, Tyres, Insurance, Vehicles and Trailers.

• SOCIO-ECONOMIC DEVELOPMEMT– List of Enhanced recognition projects has been submitted for approval.

DRAFT ROAD FREIGHT QSE SCORECARD

B-BBEE COMPLIANCE

Micro Enterprises Exemption and Classification

• Exempted Micro Enterprises (EME) – R0 to R10m– 75% black beneficiaries qualifies for Level one Contributor, B-BBEE Recognition Level of 135%– 51% black beneficiaries qualifies for Level two contributor, B-BBEE Recognition Level of 125%

• Qualifying Small Enterprises (QSE) – R10m to R50m– 75% black beneficiaries qualifies for Level one Contributor, B-BBEE Recognition Level of 135%– 51% black beneficiaries qualifies for Level two contributor, B-BBEE Recognition Level of 125%

• Both 51% black owned QSEs and EMEs to obtain a Sworn Affidavit annually confirming their Total Revenue/Allocated Budget/Gross receipts of R50 million or less, and the Level of black percentage of beneficiaries.

QSE SCORECARD SUMMARY

ELEMENTS 2007 2013

BEE Scorecard Points Bonus Points Bonus

Ownership 25 3 25 0

Management Control 25 4 15 0

Skills Development 25 0 25 5

Enterprise and Supplier Development

25 0 30 3

Socio-economic Development

25 0 5 0

TOTAL 100 7 100 8

• 40% minimum threshold is applicable on three critical elements

EQUITY OWNERSHIP

Indicators Charter Points

Charter Targets

QSE Points

QSE Targets

Voting Rights

In the hands of Black people 5 25% + 1 vote

5 25% + 1 vote

In the hands of Black Women 2 10% 2 10%

Economic Interest

In the hands of Black people 5 25% 5 25%

In the hands of Black Women 2 10% 2 10%

Black new Entrants or black designated groups

3 2% 3 2%

Realisation points

Net Value/Net Economic Interest 8 10 year target

Graduation formula

8 10 year target

graduation formula

TOTAL POINTS 25 25

• No change

MANAGEMENT CONTROL

Indicators Charter Points

Charter Targets

QSE Points

QSE Targets

Executive Management

% Black Executive Management 5 50% 5 50%

% Black Female Executive Management 2 25% 2 25%

Senior, Middle and Junior Management

% Black representation at Senior, Middle and Junior Management.

6 60% 6 60%

% Black female representative at Senior, Middle and Junior Management.

2 30% 2 30%

Youth Employees

Youth in technical/professional positions

2 10% N/A

SUB-TOTAL POINTS 17 12

• The EAP Calculation is not applicable for the QSE scorecard

SKILLS DEVELOPMENT

Indicators Charter Points

Charter Targets

QSE Points

QSE Targets

Skills Development Expenditure

Skills Development Expenditure on Learning programmes specified in the Learning Programmes Matrix for Black people as a % of the Leviable amount

20 3% 15 3%

Skills Development Expenditure on Learning programmes specified in the Learning Programmes Matrix for Black females as a % of the Leviable Amount

5 1% 7 1

Skills Development Expenditure on Learning programmes specified in the Learning Programmes Matrix for Black people with disabilities as a % of the Leviable Amount

N/A3 0.15

Bonus Points

Number of black people absorbed by the measured entity at the end of Learnership programme

N/A5 100%

TOTAL POINTS 25 25

ENTERPRISE AND SUPPLIER DEVELOPMENT

Indicators Charter Points

Charter Targets

QSE Points

QSETargets

Preferential Procurement as a percentage of the Total Measured procurement spend

Procurement spend from all Empowering suppliers based on their B-BBEE Procurement Recognition Levels.

15 60% 15 60%

Procurement spend from all Empowering suppliers that are at least 51% black owned based on their B-BBEE Procurement Recognition Levels.

5 40% 5 15%

Bonus Points

B-BBEE Procurement spend from Designated Group Suppliers that are at least 51% black owned based on the B-BBEE Procurement Recognition Levels

N/A 1 1%

SUB- TOTAL POINTS 20 20

ENTERPRISE AND SUPPLIER DEVELOPMENT

Indicators Charter Points

Charter Targets

QSE Points

QSETargets

Supplier Development

Annual value of all Supplier Development Contributions made by the measured entity as a percentage of the target.

5 1% of NPAT 5 1% of NPAT

Enterprise Development

Annual value of Enterprise Development Contributions and Sector Specific programmes made by the Measured entity as a percentage of the target

5 1% of NPAT 5 1% of NPAT

Bonus Points

For the graduation of one or more Enterprise Development beneficiaries to the Supplier Development Level

N/A 1

For creating one or more jobs directly as a result of Supplier Development and Enterprise Development initiatives

N/A 1

SUB- TOTAL POINTS 30 30

SOCIO-ECONOMIC DEVELOPMENT

Indicators Charter points

Charter targets

Generic points

Generic targets

Socio economic development initiatives – % of NPAT

Annual value of Socio Economic Development contributions made by the Measured entity.

5 1% of NPAT 5 1% of NPAT

TOTAL POINTS 5 5

IMPLEMENTATION AND MONITORING

• Transport Sector B-BBEE Charter Council

– An independent body with a mandate to oversee the implementation of the Charter.

– Conduct reviews and take decisions in consultation with Stakeholders per sub-sector around the targets that will be applied from the effective date

– Undertake a comprehensive mid-term review in 2,5 years and make decisions regarding the implementation of the Charter.

– Appoint an Executive to receive, consider and approve annual audits from each measured entities within the sub-sector charter.

– Prepare an annual review which outlines progress and evaluates new areas of intervention.

– Submit the annual review to the BEE Advisory Council for publication.

The association does not believe that the industry should fund the Council but entities are allowed to voluntary contribute.

IN CONCLUSION

• The DTI issued a statement in May 2015 indicating the following;

– The Transitional period for the alignment of the Sector Codes is extended to the end of October 2015.

– All valid B-BBEE Certificates issued under the Old Codes of Good Practice gazette No 29617, as well as the relevant Sector Codes should remain valid, be accepted and treated as “Empowering Suppliers”.

– The statement on Black participants in Broad-Based Ownership Schemes and Employee Share Ownership Programmes has been withdrawn by the DTI until further notice.

– Introduced a 5th criteria for the Empowering Supplier Status

• The Proposed Draft Scorecard will be presented to the Minister for approval before submitting to the DoT for the gazetting process.

• We urge companies to make use of the extended period to prepare for compliance with the new codes.

The End