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< Previous88 BusinessBusinessBBriefrief June/July 2022June/July 2022 TRAVEL & LEISURETRAVEL & LEISURE There can be no better spot within this mesmerising ‘place of stars’ to marvel at nature and drift to sleep under the Milky Way in safety, privacy and luxury, surrounded by the sounds of the wild. Sharing an unfenced boundary with the Kruger National Park, the pristine private Manyeleti Game Reserve is home to Tintswalo Safari Lodge. Boasting one of the lowest vehicle densities in the Greater Kruger region, Tintswalo Safari Lodge guests are spoiled with uninterrupted Big 5 game viewing experiences in an untouched African wilderness. The lodge has easy access from Hoedspruit airport or is a leisurely six-hour drive or shuttle service from Johannesburg for those who prefer a road trip through the bushveld. At the main lodge, the eight suites have been authentically designed to evoke the adventures of the 19th century explorers after which they are named. Independently from the main lodge, the 5-bedroom Tintswalo Manor House presents a fully-catered villa for families or groups of friends keen to experience a tailor- made stay, with a private chef, guide and game viewing vehicle included. It is here that a newly introduced sleep-out treehouse experience invites guests to sleep under the same stars which the Shangaan people named the Manyeleti after. The magnificent new treehouse is built under the wide crown of a Weeping Boer Bean tree within the fenced boundary of the Tintswalo Safari LodgeTintswalo Safari Lodge ...sleep under the stars of the Manyeleti at Tintswalo’s new TreehouseBusinessBusinessBBrief rief June/July 2022June/July 2022 99 TRAVEL & LEISURETRAVEL & LEISURE For more information or to book | www.tintswalo.com | reservations@tintswalo.com | +27 (0)21 773 0900 | Tintswalo Manor House camp. During the day, it provides guests with a bird’s eye view of the waterhole and its all-day, armchair- safari action with frequent visits from various wildlife such as elephants, buffalo, zebras and many more, who come for a cool drink throughout the day. At sunset the African bush comes alive with nocturnal creatures and as the night sky grows darker, the treehouse is magically transformed into a romantic, open-air sleep-out deck for two. Two inviting armchairs create an intimate lounge space for nightcaps and late-night conversations, next to a luxurious king size bed dressed in the finest linen, draped in protective insect netting and lit by the warm glow of lanterns, with easy access to bathroom facilities and modern conveniences. The Tintswalo Treehouse experience may be booked as an add- on by Tintswalo Manor House guests. Subject to availability when the Manor House is not occupied, it is also available to guests from the main camp at Tintswalo Safari Lodge. After a day of safari action, an unforgettable experience awaits the lucky couple who wish each other a good night under these star-studded skies in the heart of the bush.◼ ◼1010 BusinessBusinessBBriefrief June/July 2022June/July 2022 VIEWPOINTVIEWPOINT Broad-Based Black Economic Empowerment (B-BBEE) was intended to fulfil several critical objectives linked to transformation in the workplace, stemming from the immensely negative impact that Apartheid had wreaked on Black Civil Society in South Africa. To understand the transformative remedies agreed upon amongst social partners, one only needs to refer to the B-BBEE scorecard and its five principal redress areas. The most essential element that is addressed by a comprehensive B-BBEE strategy is ownership. The National Development and Labour Council, NEDLAC which finalised the regulations upon which B-BBEE is crafted, did not shy away from the objective that there is a fundamental need for those involved in the production process to share in the spoils of that process. When B-BBEE Legislation refers to the need to extend ownership to the dispossessed in the workplace, it refers in-particular to the benefit to be derived by black employees, who, from their productive efforts, contribute not only to turnover, but to Net Profit After Tax (NPAT) from which they should be entitled to derive a justifiable share in the dividend distribution which results. Control The founding parents of B-BBEE highlighted from its inception, that transformed ownership, is the ability of black shareholders to exert a level of control over company decision- making processes commensurate with their shareholding in a business. This control should translate into the ongoing co-determination of the cost, utilisation and deployment of resources, and income generation and profitability in a company, allowing for the amount of dividends available for distribution, to be maximised and disseminated fairly, amongst all participating shareholders and not just the founding fathers of the business. Before a tidal wave of righteous indignation ensues however, it must be emphasised that becoming a Measured B-BBEE entity, is voluntary. Nobody is holding a gun to the head of founding owners of any business forcing that business to restructure itself for B-BBEE requirements and especially to be measured against the criteria of transformed ownership. A requirement after 2000, was that every sector in this country needed to evidence necessary transformation amongst stakeholders and entrants into the supply chain of every business wanting to trade on its B-BBEE credentials. Where businesses working with local, provincial, or national government entities have set the baseline for their suppliers, needing to have measured entity status because they, the customers will be measured themselves, against who their suppliers are, then that is the cost of doing business in a particular sector or Industry. Suppliers must be B-BBEE measured entities and comply with the elements of B-BBEE. Twenty two years after implementation, B-BBEE has now been comprehensively implemented and come full circle. The circular economy means that transformation is now fully embedded in the culture of significant industries and if you want your business to play in such an industry, there is a legitimate cost of doing business, underpinned by a transformed culture of compliance with the rules of B-BBEE. There is also the rider that in some sectors, the general B-BBEE Scorecard has not been good enough and stakeholders have implemented subsidiary B-BBEE B-BBEE & ownership - who has captured & corrupted it from its original intent? Dr Ivor Blumenthal | CEO | ArkKonsult | ivorblumenthal@gmail.com | @ivorblumenthal | COVER STORYCOVER STORY PART 1 OF 2PART 1 OF 2BusinessBusinessBBrief rief June/July 2022June/July 2022 1111 VIEWPOINTVIEWPOINT ▶▶ Charters and new specific Scorecards, to better suit the culture and climate of those sectors. The rules of B-BBEE are flexible and responsive and empowering enough to make allowance for such variations. Two examples of such changes are in Marketing and Communications where a sixth Element has been added, notably that of Responsible Marketing, or in Construction where white exempt businesses are recognised at a B-BBEE Level of 5 instead of the Level 4 which is permitted under the General B-BBEE Scorecard. Both changes have been implemented to take account of the realities inherent in those respective sectors, requested by the stakeholders managing those sectors and consented to by the Ministry of Trade and Industry and Competition, where the Minister has insisted on self-governance and thereby accountability, prevailing. In the short term, where a business has elected to become a Measured B-BBEE Entity, control must be evidenced in the boardroom via trustees appointed by shareholders, which may be annoying for the founders and original shareholders having to restructure the nature of ownership in a business but are a fundamental requirement of B-BBEE compliance. Furthermore, trustees are expected to actively engage in establishing sound operational policy and in the deploying of resources, including financial budgeted allocations, to pursue maximum profitability and in the process maximise the returns via dividends which their principals expect to enjoy. It’s not easy to place your books and strategy on a table and lay it open to engagement, interrogation, and conjecture, but that is what having a black shareholding means. Evidence of sufficient control is what is needed, to justify and earn the scorecard points for ownership, contributing to an acceptable B-BBEE Measured Entity level. Permissible debt for shares No ‘Founding Shareholder’ is expected to give their shares in any business away for nothing. The process has always been for the founding shareholders to be paid out, at an assessed and agreed value, for the percentage of shares they are prepared to part with, over a specified 10-year period. That payment for re-allocated shares, is derived from dividend distribution, relative to shareholding, which vests in the hands of black owners within the company, earned from productive future contributions, over those ten years. Founders are permitted to protect their Net Equity in a business to ensure that they are suitably compensated and will not have to sacrifice anything to transformation, except their goodwill and the recognition of this cost of continuing to strive and thrive in a transformed circular economy, responsive to the will of the majority of people who have been dispossessed for too long. Minimum guaranteed dividends The B-BBEE message is clear when addressing the problem of those years when no dividend is earned. For the black shareholding to be recognised and to count for scorecard points, the company would need to guarantee a floor of dividend distribution commensurate with profitability over a five-year average, irrespective of the absence of NPAT in any particular year. Achieving transformation The re-allocation of ordinary shares to black shareholders, combined with a meaningful economic benefit and assurance of a floor in lean years where no dividend is realised, will result in consequential transformation. This is essential, because of the expectations and needs of those who partly own the means of production and who should be entitled to a percentage of the economic benefits, flowing from those means of production. There are a multitude of models and vagaries that have been dreamt up to avoid meeting the B-BBEE element of ownership, by creative accountants, consultants, and lawyers upon whom founding shareholders have always been excessively dependant for advice. These solutions have been permitted to creep in to ease the fear of the founding shareholders and the greed of external parties who sit like hyenas waiting to pounce on the insecurities and naivety of those founding shareholders. ...until the first element, namely that of ownership, is strategically re-engineered to cater to the needs of employees who are black and who contribute towards profitability which they are justly deserving of, B-BBEE will continue to deviate and be captured and corrupted...”1212 BusinessBusinessBBriefrief June/July 2022June/July 2022 B-BBEE was never intended to give rise to a completely new cohort of interfering and sabotaging external players in any sector, industry or company and yet because of the strategic gaps created when establishing this new frontier, equity houses and savage marauders have been allowed to establish themselves as the movers and shakers of B-BBEE ownership. All these machinations are to provide checkbox compliance, instead of adequately compensating black employees, who have always been the original target of the benefit, for their contribution in the simplest way possible. It bears repeating that ownership has been captured across industries and sectors and has been misconstrued and misrepresented by the accounting and legal fraternities for their benefit and purposes. Equity funders have perpetrated large-scale hijacking, black and otherwise, with no link to the company itself and only very tenuous links, primarily via race and even gender, to the employees within those companies, the true intended beneficiaries. What aggravates the situation is that government and other public sources of funding are often leveraged to purchase equity stakes in these businesses. The reality is that these new part-owners have very little to nothing, to contribute to these companies or to the black employees who work in these companies, except in siphoning NPAT for their own greedy purposes. Black employees and their families have always been the intended beneficiaries from the connected company of any economic benefit. However, over since 2020, when the first Scorecard was gazetted, they have been substituted and replaced by black equity funders, non-profit phantom organisations and black beneficiary trusts that all have nothing to do with the business or its employees. Legislative changes required to make ownership meaningful When will lawmakers accept and agree on the following general principal changes to B-BBEE legislation to make ownership meaningful? σ Black employee trusts To be true to B-BBEE, ownership needs to be restricted to one of three direct-benefit models. The first is where shareholding is given or sold directly to qualifying black beneficiaries who have a stipulated role in the company and are obviously capable of making an ongoing contribution operationally and productively within the organisation. Then there are two successful models of Trusts. Black Employee Trusts, or Beneficiary Trusts where beneficiaries are directly nominated by employee’s. Whichever vehicle is selected, it has to be professionally administered and accounted for by qualified and properly designated B-BBEE specialists, assisted by appropriately qualified and designated financial and legal expertise. In the Black Beneficiary Trust, there is a legitimate role for minority black shareholding for qualifying non-profit companies that facilitate education bursaries or welfare grants. In this regard, criteria need to be established that apply to the selection and contracting and periodic rotation of trained, empowered, and designated trustees entrusted with the proper representation of remote beneficiaries in the governing structures of a business. It may be argued that founders should have the freedom, in-terms of the first model mentioned above, to select one employee within whom the entire B-BBEE shareholding could vest. While this may very well suit the needs of the pre-existing shareholders, it doesn’t go anywhere towards satisfying the larger transformative agenda of B-BBEE. Furthermore, it continues to propagate the notion of a small elite club created to prevent access to control and economic benefit by most of the other qualifying workers within the company. σ Trade Unions The second change indicated is that Trade Unions are ▶▶ VIEWPOINTVIEWPOINTBusinessBusinessBBrief rief June/July 2022June/July 2022 1313 not adequately trained or capacitated to represent black employee beneficiaries on any board of shareholders. They often, however, end up by default representing employees within a company as a trustee because the employees feel inadequate to do the job themselves. Trade Unions should be excluded from representing the collective interests of their members as beneficiaries of a Black Employee Trust. Instead, a registered employee trust should register trustees for the trust and receive evidence of their competency and credentials to do the job effectively and a strategic plan to capacitate trustees adequately, where such trustees are selected from amongst the existing workforce. Operationalising the Economically Active Population (EAP) profile in applying trust distribution While this is a controversial notion, it is an issue which demands attention in the workplace. To achieve the true B-BBEE goals, it is necessary to acknowledge who is black and therefore qualifies to be considered as a genuine beneficiary and who is simply riding on the coattails of the true dispossessed black contingent of workplace employees. In the 2021 release of the B-BBEE Report, both the B-BBEE Registrar and the Minister of Employment and Labour commented on how over-subscribed the Indian community were as beneficiaries in the collective of B-BBEE Reporting. This is an indication that there is place for the principle of sunsetting on aspects of B-BBEE. Just as in 2010, white women and the disabled community generally were excluded from being included within the definition of B-BBEE beneficiaries, i.e. black beneficiaries, so the argument now is that the sun should set on black Indian males and females being included in the B-BBEE definition of black given the massive gains made by the Indian community in our economy since 2020. Comments made on the release of said reports were that until the real nub of the problem was reached, i.e. that African black male and female beneficiaries remained largely in the wilderness while Indian and coloured beneficiaries were prospering beyond the fair and equitable limits of proportional benefit, there would be little progress made with effective transformation in the workplace. This proposal is not racist in that these over-subscribed communities have had over 22 years to benefit and integrate themselves into the workplace and have generally done so in a spectacular fashion. It is simply time that B-BBEE meant that black beneficiaries, not other race groups, should benefit from companies seeking to become Measured B-BBEE entities. Legacy benefit Strategically, an exciting notion in creating a black shareholding solution is the splitting of allocated black beneficiary shareholding to create an avenue for the administration through a non-profit company of a legacy benefit. I have found that creating a legacy benefit with a minority of black shareholding allows, benefits older black beneficiaries and employees within a company, permitting them to pass their black ownership benefits onto their children and heirs. Doing so allows the company to extend its benefit of creating future labour pools of qualified and trained work- ready candidates, to families of those who have worked over many years and decades within the company and wish to extend the benefit to their extended communities. Whatever the conjecture and debate that ensues, the reality is that until the first element, namely that of ownership, is strategically re-engineered to cater to the needs of employees who are black and who contribute towards profitability which they are justly deserving of, B-BBEE will continue to deviate and be captured and corrupted by those who intend simply to self-enrich with no true claim on any of the participating workplaces.◼◼ VIEWPOINTVIEWPOINT1414 BusinessBusinessBBriefrief June/July 2022June/July 2022 Since the outbreak of the pandemic, recovery and growth have been timid and fragile globally. The situation has been no different for emerging markets like sub-Saharan Africa. In fact, according to the World Bank,[1] [1] in 2022–23, the region is projected to grow at rates below 4% - a weaker pace of recovery compared to other emerging market economies. Currently, only 16%[2] [2] of the population is fully vaccinated against COVID-19 in Africa – a low rate compared to the rest of the world. James Wood | Head of Security Solutions | International SOS | james.wood@internationalsos.com | @IntlSOS | Recalibrating the duty of care VIEWPOINTVIEWPOINT The pandemic has also exacerbated other health risks on the continent with a disruption in screening and monitoring when it comes to non-communicable diseases for example, or treatment and prevention programmes for infectious diseases such as malaria and tuberculosis. In a World Health Organisation survey[3] [3] of 41 countries in sub-Saharan Africa, hypertension management has been disrupted in 59% of the countries. The region also accounted for about 96% of all malaria deaths[4] [4] in 2020. For employers to ensure business resilience, these emerging risks should be taken into consideration. Since the pandemic, organisations have also had to find and adopt new ways of operating, ensuring business continuity and protecting their workforce. While Duty of Care has always been a fundamental pillar across a number of sectors and industries, the landscape has evolved quickly as new regulations, new threats and new requirements and expectations for work need to be considered, now more than ever. An expanding scope In light of these robust and challenging circumstances, there is a clear case for a holistic approach to Duty of Care. For those organisations that are getting it right, we are observing four distinct areas of change: σ Responsibility No longer just seen as a policy or human resources role. Today all functions and roles in organisations have been impacted with the Duty of Care shift, with the need to reinvent their frameworks in line with the post-pandemic world. Induced by this change, we observe more stakeholders responsible for this area, including human resources, risk managers, health and safety executives (HSE) and the C-Suite. σ Population covered Although Duty of Care was primarily a concern and focus for mobile workers, the pandemic has changed this perception. Today it is relevant for an entire workforce, onsite or offsite, especially for domestic employees, a new point of focus throughout the pandemic. σ Growing scope Challenging times due to COVID-19 and lockdowns raised new challenges within the Duty of Care umbrella. Historically Duty of Care might have solely focused on employees’ Rita Dayoub | Health Consultant | International SOS | rita.dayoub@internationalsos.com | @IntlSOS | [1] https://openknowledge.worldbank.org/handle/10986/36332 [2] https://africacdc.org/covid-19-vaccination/ [3] https://www.afro.who.int/news/noncommunicable-diseases-increase-risk-dying-covid-19-africa [4] https://www.who.int/news-room/fact-sheets/detail/malaria [5] https://africacdc.org/covid-19/ [6] https://www.internationalsos.com/services/consulting/crisis-management-gap-analysisBusinessBusinessBBrief rief June/July 2022June/July 2022 1515 physical health and safety, but now mental health, wellbeing, and safety within the workplace are a critical part of the framework. What’s more, addressing physical health risks requires a more preventive and proactive approach (e.g. Education on COVID-19 prevention and vaccination is becoming a norm as it used to be every year for seasonal flu). σ Evidence-based approach The pandemic has shown the importance of following scientific evidence for the best outcomes of Duty of Care implementation. As evidence emerges on the effectiveness of certain interventions, it is crucial not only to translate this evidence into practice, but also to communicate it to the workforce to challenge widespread misinformation. A catalyst for value creation With over 11 million cases[5] [5] and over 250,000 deaths in the African region, the pandemic has certainly initiated a number of relevant health and safety changes, but over and above that, it has created a positive spotlight on the role of Duty of Care within African organisations. More than a legal requirement, Duty of Care is now a catalyst for value creation, leading to talent attraction and retention. Those looking to redefine their strategies should reflect and analyse their key challenges, set a clear strategy to concentrate their efforts on those and redefine responsibilities. Knowing your workforce and their needs is critical here. Moreover, it’s about assessing your workforce’s current health and wellbeing and their associated expectations from the organisation - a fundamental part before implementing any appropriate actions. A good starting point is getting your workforce to take a mental health assessment or by conducting a health risk profile to evaluate your unique vulnerabilities. Businesses can also look at an expert-led gap analysis[6] [6] of their crisis management structures and processes currently in place to help anticipate, adapt, and respond to major disruptions, ensuring that employees and assets are safeguarded while supporting operational continuity. At the end of the day, organisations need to remain aware of underlying risks – both internally and externally. The pandemic has exacerbated already fragile risk environments. Coupled with the changing legislative and regulatory environment, as well as the need for timely, informed decision making, it is essential that understanding existing health and security risks in operating locations remains a core part of an organisational approach to Duty of Care. The landscape is evolving quickly - new threats lurk in COVID-19’s shadow and African businesses need to recalibrate their Duty of Care agendas.◼ ◼ When you need to mitigate all risk from your business and ensure compliance, we’re there Our regulatory, compliance and investigations practice advises a range of clients on business ethics, anti-bribery, anti-corruption and other compliance matters, while our investigations o ering provides assistance in conducting internal investigations and in navigating external investigations by regulators and enforcement agencies. We o er bespoke guidance on systems and controls for managing legal, financial and reputational risk with strategically focused advice that helps clients assess and mitigate the risks inherent in doing business in Africa. We have extensive regulatory capability and knowledge of the legislative landscape. We leverage our experience by drawing from the regulatory compliance know-how of each of our global practice groups to provide in-depth knowledge of the legal and regulatory challenges facing your business. With o ices in more than 50 cities worldwide, we are well positioned to help clients wherever they conduct business, o ering our experience and knowledge of regional and international regulations and laws. Law around the world nortonrosefulbright.com1616 BusinessBusinessBBriefrief June/July 2022June/July 2022 VIEWPOINTVIEWPOINT South Africa is suffering from a multiplicity of turmoils, one of which has been COVID-19, the others being totally homegrown. South Africans have been battered mercilessly, and in many ways, unnecessarily. Before COVID-19 arrived on the scene, our own elected government had presided over a steady deterioration in the economy. There are a large number of problems, many of them appearing almost daily in the news. Who has not heard of the troubles experienced by the large state corporations and the massive losses they have incurred? Let’s look at Eskom as one of the examples. This state-owned enterprise functions on the basis that whatever costs it experiences, for whatever reason, electricity customers and taxpayers foot the bill. When Eskom’s expenditure far exceeds its available resources, it goes cap in hand to the National Energy Regulator of South Africa (NERSA), to approve an increase in the price it can charge the long-suffering buyers of South Africa is suffering unnecessary turmoils Eustace Davie | Director | Free Market Foundation | eustacedavie@fmfsa.org | @FMFSouthAfrica | electricity. And if that is not enough, the taxpayer pays through the Treasury. In the meantime, Eskom borrows money wherever it can find it. By all accounts, the electricity company is over-staffed, inefficient, not providing a reliable service and allowed to charge above-inflation increases year after year. It regularly switches off the electricity supply to customers at short notice, causing havoc in the economy and in people’s lives. While South Africa has been clinging to a government-owned and managed electricity monopoly most other countries of any size have been liberalising their production, transmission, distribution, and sale of electricity. The process has led to increased efficiency and economic growth. The wording in the Constitution and in the other South African aspirational document, the Freedom Charter, have clearly been forgotten by decision-makers who are responsible for policy decisions in Parliament and government. The Freedom Charter said: “We, the People of South Africa, declare for all our country and the world to know: that South Africa belongs to all who live in it, black and white, and that no government can justly claim authority unless it is based on the will of all the people; that our people have been robbed of their birth-right to land, liberty and peace by a form of government founded on injustice and inequality; that our country will never be prosperous or free until all our people live in brotherhood, enjoying equal rights and opportunities; that only a democratic state, based on the will of all the people, can secure to all their birth-right without distinction of colour, race, sex or belief; And therefore, we, the people of South Africa, black and white together equals, countrymen and brothers adopt this Freedom Charter; And we pledge ourselves to strive together, sparing neither strength nor courage, until the democratic changes here set out have been won.” In talking about America, Thomas Jefferson made the following famous statement: “An elective despotism was not the government we fought for; but one that should not only be founded on free principles, but in which the powers of government should be so divided and balanced among several bodies of magistracy, as that no one could transcend their legal limits, without being effectually checked and restrained by others….” What the Freedom Charter and Jefferson were talking about goes to the root cause of the kind of problem that Eskom is experiencing. Decisions taken relating to matters that have a significant impact on the lives of the people are not the result of the people’s choices but of their elected representatives. If there were competing generators and distributors of electricity in South Africa, they would be vying through the quality of their service and their prices to become the first choice of the buyers of electricity. In that way the people would govern. They BusinessBusinessBBrief rief June/July 2022June/July 2022 1717 VIEWPOINTVIEWPOINT would decide who should be generating and distributing electricity in the country and at what price. Imagine how the retailing of food would be handled if the government took all the decisions regarding the food distribution process. Would they have competing retail stores such as the ones we have currently, where the ‘Customer is Queen’ as Raymond Ackerman of Pick n Pay once described the situation? Not likely! Anyone who visited East Berlin during the Russian occupation would have been shocked at the poor quality of the goods displayed in the stores and to experience the poor service from the officials in charge. The difference between the day-to-day lives of those Germans living in East and West Berlin were as different as night and day. When the Berlin Wall came down the lives of the people living in East Berlin changed dramatically for the better. It is competition between providers of goods and services that results in the greatest choices for customers, in the quality of goods and services available, and the prices they pay. And the highest level of competition comes about in the countries where the people have the greatest levels of individual freedom. The best governance of countries occurs where the people have the greatest level of say over the day- to-day decisions that affect their lives. The quality of service, choice, and prices of electricity would change as dramatically as the fall of the Berlin Wall if the entire process of generation, transmission, distribution, and sale of electricity was thrown open to competing providers. There has been a worldwide liberalisation of the various aspects of the electricity business with considerable benefit to the citizens of the countries where this has occurred. It is surely time for South Africa to take a similar positive step.◼ ◼ ... South Africa has been clinging to a government-owned and managed electricity monopoly most other countries of any size have been liberalising their production, transmission, distribution, and sale of electricity.”Next >