Cost and complexity issues relating to the BEE recognition process

Table 6.6: Cost implications to obtain BEE recognition

Category Responses

10 “Generally it would be a costly exercise, if it is genuinely regulated and implemented.”

“Very costly, we’ve had to call in auditors for due diligence, lawyers for agreement contracts and consultations, we have made a budget for it but we’re biting the bullet.”

“That process does cost quite a lot. Empowerdex must be getting rich by it.” “Obviously costly. It took us 5 years to put it together…”

“It certainly costs a lot of time.”

“I don’t think it was costly, in the sense of money. I think it was costly in terms of the time it took to find the right partners…”

“It was time consuming, some elements…”

“A great deal of leg work has to go in to it, that sometimes that is time-consuming which you don’t have a lot of, when you are running a tight ship against a whole lot of deadlines…”

Category 10 – Cost implications to obtain BEE recognition

Five interviewees revealed that the process was time consuming and four (one of which implied that it was both money and time intensive) were of the opinion that the BEE recognition process was costly in terms of money.

Table 6.7: Complicated process to obtain BEE recognition

Category Responses

11 “While there are the days when there is leg work to do and hammering your suppliers to get

their certificates, it can be quite tedious and you feel like you beating up on people.”

“We need to verify all our suppliers’ credentials which is a mission …”

“Further to that it is quite difficult as it goes down and down to rely on your suppliers to give you a certificate and you can’t assume. In terms of those certificates is that they have some rules and structures because in the early days no one knew how to do it…”

“We’ve had to call in auditors for due diligence, lawyers for agreement contracts and consultations…. The complication was that before we had the consulting firm everyone had their own interpretations of BEE…”

“I have seen the forms and evidence and it seems fairly onerous.”

“It was frustrating purely because of the admin involved…. It was put together by our FD who went grey in a short space of time. It was a nightmare because part of our group is owned by an international company…”

“I think with any of these measurements it took a while to understand how we structured our company and where we put certain levels of people, because that impacts on the score.”

Category 11 – Complicated process to obtain BEE recognition

A quarter of the interviewees explained that the recognition process was difficult in terms of having to obtain BEE contribution certificates from all their suppliers. Two interviewees mentioned that in the past there was little structure in terms of the certificates and/or a lack of BEE interpretations. Two interviewees implied that the administration of the BEE recognition process was burdensome. Individual interviewees conceded that the company structure was complicated and it grew in complexity when international partners were involved.

Table 6.8: Deception in BEE recognition process

Category Responses

12 “… to be honest you can play games with these things through titles as well, so you can think up the most fantastic titles and have presidents, vice-presidents, chairmen all in the upper echelons.”

“I know that in practice that is the problem with things like scorecards… I think it can be fudged quite easily and I think fudging does happen. When you begin to look at the BEE status of a company, you are sometimes enormously surprised to find they have this kind of generous position which is due to fudging.”

“…there will always be people that push the law as opposed to the spirit of the law so there’ll always be people that try use the system to their advantage…”

“In terms of those certificates, they have some rules and structures because in the early days no one knew how to do it and there was a whole lot of skulduggery behind it. At least you’ve got some credibility behind it now. I am glad that they have regulated the process…”

Category 12 – Deception in the BEE recognition process

Four interviewees believed that there was potential for dishonesty when it came to drawing up scorecards and that deceitfulness took place during the BEE recognition process.

Summary of responses

The BEE recognition process is costly in monetary terms, but most of the advertising agencies view it as an operating expense, while the fee structures of BEE verification agencies are fairly reasonable. An interesting finding was that five interviewees revealed that the BEE recognition process was initially time intensive, particularly since they needed to spend time understanding the legislation, gathering evidence and completing a hefty amount of paperwork, in addition to their daily workload. The most common difficulty in the BEE recognition process was obtaining BEE contribution certificates from suppliers that were necessary to comply with the preferential procurement. This was also a hugely time-consuming task, since some of the advertising agencies had literally utilised hundreds of suppliers. This arduous task may have a negative effect on BEE progress owing to the severe time constraints of advertising agencies. All processes are open for abuse and cheating, especially if there is potential for financial gain, but one advertising agency acknowledged that the BEE recognition process had improved since the release of the BBBEE Codes of Good Practice, which had standardised it to a certain degree.