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Mthobisi Masinga, a young forward-thinking town and regional planner from Pretoria, has been invited to present his innovative research on rural land development to a high-level international city planning congress in the US. He is currently seeking sponsorship to represent South Africa at the event.

"There are a lot of grants available when you are dealing with government – from the dti, and from other development agencies – but the information is not available to the SMMEs at their fingertips." Julius Mojapelo

Moneyweb's Nastassia Arendse interviewed Julius Mojapelo, who is a senior executive at Saica’s public sector division.

The practice by BBBEE ratings agents and practitioners clearly discriminates against African and Coloured mothers

While it is well established that one of the purposes of broad-based black economic empowerment (BBBEE) is to address historical imbalances or patterns of past discrimination in SA, the fact that it is based on a flawed race-based categorisation from the apartheid era means there will always be challenges in applying it.

Black participation in the Johannesburg Stock Exchange continues to be the topic of heated debate in South Africa. This guide explains the different estimates and the methodologies used to arrive at them.

When the president’s estimates of the share of the Johannesburg Stock Exchange (JSE) owned by black people jumped from 3% to 10%, a South African commentator took notice.

Black entrepreneurs need to start owning real assets and manufacturing companies and not just shares in enterprises they did not establish.

The President sold the country. We should return the favour by making him part of a trade-off between black people who want white people to share economic power, and white people who want black people to share political power.


I wish this weren’t about race. But black social media users have accused white people of protesting only when Zuma jeopardises the economy, but never over high tuition fees, minimum wages, or other matters that impact on black people whose economic worlds are permanently in junk status.


Likewise, a lot of white people say if black people don’t join the call for new leadership, those issues won’t be solved even if white people tried to help solve them.

Each of these “sides” has to give something to get something back. Let’s call this the #ZumaTradeOff.


White people could share economic power, not by having their land and assets “expropriated without compensation,” but through Broad-Based Black Economic Empowerment (B-BBEE). This legislation hasn’t failed; it hasn’t been tried. Instead, it’s been abused by the politically connected.


At a layman’s primer on BEE by BEE Novation, consultant Lee du Preez spoke of what he felt was a kink in the Act — its New Entrant provision. A company that takes on a black owner with a net worth of less than R50-million may get bonus BEE points for enabling a “new entrant” to the economy a greater level of participation. Once that person’s net worth exceeds R50-million, the company continues getting up to full points for transformed ownership; they just don’t get bonus points. Du Preez paused his lesson to share his personal opinion on this. “R50-million is way, way too high.”


At the time, I had no idea what was at stake. Still, du Preez argued that once a person’s net worth exceeds R50-million — heck, R10-million! — he should no longer be considered black for BEE purposes because he’d be wealthier than the average white South African. In his experience, the abuse of this high “new entrant” threshold, among other provisions, had led to people distrusting BEE; specifically, it had led to black people believing the slowness of economic transformation was white people’s fault, and white people believing Zuma’s political stronghold was black people’s fault.


Now that I understand, I think the fault line in both instances was that Zuma used tools like BEE to fund a patronage network beholden to himself instead of accelerating real economic transformation. It’s classic divide-and-conquer. The reasons for racial mistrust were two sides of exactly the same coin. You can’t get rid of the one without getting rid of the other. Hence, #ZumaTradeOff.


While Wilmot James was the Shadow Minister of Trade and Industry, he observed that the DTI would “increase the threshold of the value of equity previously held to qualify as a ‘new entrant’ from R20-million to R50-million”:

“The DA believes that steps must be taken to ensure that B-BBEE does not become a tool for elite enrichment — we therefore argued for lowering the threshold in the definition of ‘new entrants’ to R10-million and increasing the points that can be earned by involving new entrants and workers in empowerment transactions.”


Put differently, imagine disaster survivors being triaged for emergency medical assistance. How would we feel if the medical service personnel knew some of the victims personally, and decided to first give those spa treatments and pedicures before moving on to patients who urgently needed life-saving help?


The purpose of medical emergency intervention is to get people fixed enough so they can get their own spa treatments in the future. BEE’s purpose is to give black people a leg-up so they can someday go on to making their millions. Without a cap on the wealth an individual can make through BEE deals, we’ll never get around to benefiting those who aren’t politically connected. Someone with a net asset value of R49-million isn’t a new entrant; he’s an Ancient of Days.


What we have under Zuma’s watch is Bribe-Based Black Elite Enrichment. Zuma is not the way, the truth and the life without which none may come to radical economic transformation. He’s the broad and crowded gate to economic hell for black, Indian, coloured and white people.


Very simply put, if more black people step up to work for Zuma’s removal from the presidency, we’ll have an economy that works. If white people step up to drive lobbying for revisions to BEE, we’ll have an economy that works for black people as well.


To break past our mutual distrust, we need to serve ourselves less and fight for one another more. We need a trade-off with Zuma as a sacrificial peace offering. Jesus has returned. One practical way this can play out is in the lead-up to Parliament’s no-confidence vote on Tuesday the 18th of April. We must publicise and discuss the #ZumaTradeOff to one another – and then fight for it like our country’s future depends on it. Because it does. We can’t win unless we’re clear on what we all stand to win.


By the 18th, our Members of Parliament must have heard of the scandal: in return for selling the country, our whole president would have been sold off to political slaughter for a pro-forma 30 pieces of silver he isn’t worth. And they must vote accordingly.


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Thursday, 06 April 2017 16:17

Bar all multinationals from state accounts

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Congratulations on your Cabinet reshuffle Mr. President. The appointment of the Honourable Malusi Gigaba as Finance Minister, in particular, is rather encouraging. His performance at Public Enterprises led to the creation of the largest black audit firm and the third largest in the country, Sizwe Ntsaluba Gobodo, through progressive procurement practices.


He also awarded a landmark fuel supply tender worth R15.5 billion to black and female-owned companies through Transnet in 2013. And of course the list goes on. We are looking forward to more of the same because of the strategic nature of the Finance Ministry.


This letter, Mr. President, is not a dismissal, rejection or a form of undermining the ANC and the Government’s vision of Radical Economic Transformation. If anything, I am a firm believer in the party’s stance in this regard since Radical Economic Transformation is South Africa’s last hope at a truly just society. This letter is mere constructive criticism which I believe if taken to heart can go a long way in helping our current situation.


The past 22 years have been characterised by various meaningful breakthroughs in the social and political life of our country. By and large the humanity of black people is recognised in many, if not all public spaces. The indignity of segregated living through separate development as championed by the apartheid government has all but disappeared from South African public life.


What remains stubbornly unchanged, however, Mr. President, is segregation in our economy. We may have, to a large extent, solved the problem of social apartheid but it is now economic apartheid that needs to be dealt with. Someone might say I am merely preaching to the choir since Radical Economic Transformation is the current preoccupation of the ANC and the ANC-led Government. However, some questions have to be asked since the party’s behaviour, and indeed that of Government, seems to suggest some inconsistencies.


In my industry, Advertising, we are saddled with the reality of multinational companies being overwhelmingly dominant. Their dominance has the net effect of raking in profits locally and shipping them offshore. This is of course not unique to my industry since most sectors in South Africa share the same fate. Having said that, this phenomenon of our country being an extractive economy is what is really responsible for poverty, unemployment and inequality.


Our own sector charter, MAC (Marketing, Advertising and Communication Charter), spells out the rules of engagement with regards to the BBBEE Act. In as much as the charter is meant to curb the industry’s exclusionary tendencies, it falls dismally short because of its many imperfections. The charter is in fact the wrong tool to use in an attempt at transformation.


The reason for that is, multinational companies have their own internal safeguards that ensure they extract as much profit from South Africa as possible in spite of local legislation. In our industry, these companies have what can be loosely regarded as a franchise model.


The local office pays the international office royalty fees, licence fees, name usage fees, intellectual property fees, patent fees and goodwill. All these costs are deducted before tax and therefore before profit sharing with BBBEE shareholders. When BBBEE legislation increases the quota from 25% to 45%, the international office also increases their fees accordingly to offset the increase in quota requirements to ensure their profits are not affected by local legislation.


We have a case where the local office made close to R1 billion in revenue. After the international office had taken their pound of flesh, the local office was left with less than R5 million to share with their BBBEE partner.


Even though the BBBEE partner was instrumental in securing the R1 billion and should have been remunerated accordingly, he only walked away with 25% of R5 million (R1,25m) instead of 25% of R1 billion (R250m) while the international office pocketed R995m.


You can impose a 90% BBBEE requirement on multinational agencies and they will ‘comply’, only to inflate their fees to offset the increase demanded by local legislation. If this is not corruption, Mr. President, I don’t know what is.  This is the reality of BBBEE in our industry. Multinational corporations are making a mockery of local legislation because they have no interest in transforming our economy, their only interest is to keep us as an extractive economy by bypassing our laws. In other words, BBBEE does not work. If anything, it not only works to lock local players out of the industry but it also marginalises the very people it aims to empower.

With this in mind, please consider that the African National Congress’ advertising and marketing account is handled by Ogilvy and Mather, a multinational advertising agency headquartered in New York, USA.


What that means is, even though O & M services the ANC’s account, most of the monies paid by the party for services rendered disappear offshore with local shareholders seeing very little of it.


Please also consider, Mr. President, that the South African Tourism account is handled by Foote, Cone and Belding (FCB), a white multinational advertising agency headquartered in Chicago, Illinois, USA.


Further consider, Mr. President, that the South African Tourism advertising and marketing account is handled by Havas Worldwide, a white multinational advertising agency headquartered in New York, USA.


But possibly most upsetting, Mr. President, the South African Revenue Services (SARS) advertising and marketing account is handled by the following white multinational corporations: Foote, Cone and Belding (FCB), headquartered in Chicago, Illinois, USA; M&C (Maurice and Charles) Saatchi Abel, headquartered in London, England; and Havas Worldwide, headquartered in New York, USA.


Our hard-earned taxes that could be used at home to build the local economy only serve to enrich Americans and Britons. This is an outright contradiction.


It is therefore pertinent to ask the following questions:

1. If the ANC and Government are serious about Radical Economic Transformation, why are they doing business with white American and British multinational corporations when all these companies are interested in is retaining our status as a colonial extractive economy?

2. Why should we believe in the ANC and Government’s vision of Radical Economic Transformation when the party’s mouthpiece is not local but white American and Government has appointed so many foreign-owned agencies?

3. Does the ANC and Government not think that employing white international agencies to handle their accounts makes the their Radical Economic Transformation vision lose credibility and come across as mere politicking and double-talk?

4. Does the ANC and Government not think that amounts to breach of trust?

5.Why should we then still vote ANC in the next election and continue to trust the ANC-led government when the champions of Radical Economic Transformation are themselves not acting in line with transformation?


I know these are very direct and confrontational questions, Mr. President, but in the spirit of radically changing our economy, they have to be tackled head-on for us to start making meaningful progress. The real root cause of poverty, unemployment and inequality in South Africa is the structure of our economy which has been extractive since the 1650s. The elements responsible for the wholesale looting, raping and pillaging of local resources are multinational corporations.


It is time to send a strong message to multinational corporations operating in South Africa that in as much as they can do business locally, they cannot, however, continue to own our economy. South Africa is not a colony but a sovereign country.


I would therefore like to suggest that the ANC and Government must demonstrate their commitment to Radical Economic Transformation by moving their advertising and marketing accounts from white-owned American and British multinational corporations to local black-owned companies. Black-owned agencies not only understand the market because they are the market, but they will also keep profits locally and spend them locally thus growing the local economy.


What we need therefore, Mr. President, is a strongly-worded piece of legislation that bars all multinational corporations from handling all Government and State-Owned-Enterprises accounts. This legislation must state that all Government and State-Owned-Enterprises accounts must be handled exclusively by black-owned agencies and no one else. That Mr. President is Radical Economic Transformation.


Thank you for your consideration, Mr. President.

Yours truly,

Taelo Immanuel

A member of the Black Communicators Network (BCN) and the Association of Black Communication Practitioners (ABCP)


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Thursday, 06 April 2017 16:00

Vodafone supports Vodacom BEE plans

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Vodafone group CEO Vittorio Colao has thrown his weight behind plans to sell shares in Vodacom to black investors, saying that the deal should be broad-based.

A new black economic empowerment deal (BEE) would further boost Vodacom’s empowerment credentials and help it meet the government’s revised requirements.

Vodafone owns a 65% interest in Vodacom and has no intentions of losing control of the business, said Colao.

"We support any decision regarding BEE. We would also like it to be broad-based."


Vodacom is working on a new BEE deal that is likely to be finalised before its existing empowerment agreement at its South African operations expires in 2018. Vodacom sold shares in the South African operations in 2008 to black members of the public, Thebe Investments and Royal Bafokeng Holdings for R7.5bn.

It is not clear, however, whether the new deal would involve the sale of equity at group level. Another option would be for a deal to be concluded in the South African operations.

Vodacom CEO Shameel Joosub said Vodacom was evaluating options.


"When the BEE deal at SA expires, we have to have a new deal," he said.

The Public Investment Corporation (PIC) was reported to be in discussions to sell a portion of its 13% stake in Vodacom to black investors.

In January, Bloomberg reported that Vodacom planned to buy back part of the PIC’s stake. The shareholding could then be listed as a separate entity restricted to black investors.


The Vodacom BEE deal was estimated to be R15bn, which would make it one of the biggest BEE deals in the country.

In 2016, MTN sold a 4% stake for about R10bn to black investors through a scheme called MTN Zakhele Futhi.


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Thursday, 06 April 2017 15:13

BEE share schemes 101

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We investigate the risks and rewards of investing in Black Economic Empowerment share schemes


Black Economic Empowerment (BEE) share schemes are various initiatives undertaken and typically facilitated by companies to introduce BEE shareholders to their shareholder base.


Broadly speaking, there are public and restricted BEE schemes. In a public scheme, qualifying individuals are invited to invest in the structure. By contrast, an example of a restricted scheme is an individual participating in an employees’ share scheme at their company.


Riaz Gardee, Principal at MMI Holdings, says BEE schemes are aimed at empowering previously disadvantaged individuals (PDIs).


“The company typically raises debt, issues shares at a discount and raises capital from PDIs to purchase equity. This block of shares is then owned by BEE shareholders and qualifies for points in terms of government’s BEE scorecard and other BEE legislation,” he explains.




There are many arguments for and against the effectiveness of BEE share schemes as a means of creating wealth for PDIs and diversifying corporate ownership, says Samke Ngwenya, a Private Banker at Investec. One viewpoint is that they’ve have had the positive impact of increasing black ownership in parent companies to a level that couldn’t have been achieved without the funding and discounts afforded by BEE schemes.


“Sadly, not all share schemes have created shareholder value for the BEE investors, usually when the value of the BEE share is equal to or lower than the debt portion of the share,” says Ngwenya.


“This also happens when the BEE share price upon maturation of the scheme is lower than the purchase price. The success and effectiveness of a share scheme depend not only on the parent company’s performance, but also on the investors’ ability to maintain their shareholding long-term.”
READ MORE: Stock exchange for lower income earners gets approved


What should you know?


A potential investor should clearly understand their investment objectives and risk appetite, as these will dictate when they should invest and how much, says Gardee. “Understanding the company and markets in general is a good starting point.”


Who qualifies?


BEE schemes are open only to PDIs who are classified as black per the BEE Act.


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Small and medium enterprises tend to underestimate the power of branding. This must rank as one of the deadliest mistakes in the world of making business. The Conversation


You have most likely read about the branding failures of large businesses in the news – those massive errors that spelled doom for once successful ventures. While not making headlines the collapse of small businesses are more common. Studies reveal that 63% of all South African businesses fail within the first two years of trading.


Many of the errors behind the collapse of small and medium enterprises are branding errors – or the result of business owners not understanding the importance of it. Many people think of “brands” as being large, important identities everybody knows about like Nike, Coca-Cola, and Harley Davidson. But building a credible identity for a small business is just as vital, and one of the first steps along the path to success.


Branding need not be a headache or anybody’s worst nightmare but it’s essential to make sure you have a little know-how before you start your business. Ensuring that you have the basics down will allow you to steer clear of avoidable errors and take a significant amount of stress out of running a small business or start-up. Plus, if you do it right, you’ll likely find you enjoy it! And the value of a good brand is quite simply, beyond measure.


Across the board, there are five common branding mistakes committed by small businesses. All can be avoided with a little thought and planning.


Bad business name


We’ve all driven past them: those businesses called “Bob’s lawnmowers” or “The very best nuts and avocadoes”. With the possible exception of The No. 1 Ladies’ Detective Agency, few of these achieve fame and fortune. And the latter is fictitious!


Branding can’t be generic. It can’t be hackneyed. It can’t be repetitive, or something we’ve all seen before. Your business is your baby, so give its identity the same care you would give to naming a child. Recognise that naming your business is a strategic process and requires thought. The name must reflect your purpose, identity and promise. And please, no clichés!


Penny pinching


Many small businesses try to scrimp and save wherever possible, and the first place they do this is in the office. Bad idea! You may be glad to save on your overheads, but in the long run it could turn out to be an expensive branding mistake. If I walk into your offices as a prospective client and you offer me a broken chair to sit on, what am I going to think?


But this doesn’t only apply to your customers. Treat your staff well, too. If your staff are sitting in uncomfortable chairs or don’t have proper tools or are dying of heat because you don’t have an air conditioner (or at least a fan) they’re going to be grumpy. You need your staff to be brand ambassadors and to be proud of working for you. How you treat your staff will turn into how your staff treat your customers. Make sure you create a courteous, respectful brand from the inside out.


Too good to be true


One of the most common mistakes made by new business owners is taking bad advice. It may stand to reason that if you’re not a marketing expert, you should outsource marketing, and this certainly does make sense if you need a little help. However, you should put effort to know enough that you can distinguish between good and bad advice. Otherwise you may end up worse off than you were before. A consultant who doesn’t have your best interests at heart – or who simply isn’t an expert – can easily sink your business with a hearty dose of poor advice. And you would have paid them to do it! Empower yourself.


Complicating your brand


Ever heard of the award-winning “clown pants” design? Nope, me either. That’s because many of the most iconic and memorable brands understand the importance of keeping it simple. This doesn’t mean you should make your brand identity completely generic – it’s a fine line to tread between keeping it simple and making it forgettable. But as a rule, be bold, make a statement, but keep it clear. And in order to keep it clear, you should stay away from unnecessary bells and whistles. Keep your choice of colours, words and icons to a minimum. And once you have a clear, simple brand, ensure that you enforce it consistently throughout your company.


Remember – you can rebrand at some stage, or launch a new product with its own distinct brand. But beware of walking before you run, as rebranding is a challenging exercise. So, too, is running multiple brands successfully. Be sure it’s really what you want to do, and perhaps call on a little expert advice before you go ahead.


The herd mentality


Be original, Following the crowd is a fatal error. The ultimate key to your success will be identifying a unique or intriguing selling point and aligning your brand with that, so don’t go with the flow.


You’re hopefully planning to keep your business going for a while, so steer clear of following popular trends – you don’t want your brand to date. If you consider the Coca-Cola logo, it hasn’t changed all that much since the 1800s. Ask yourself: Will your brand still stand up to scrutiny in 10, 20 or 100 years’ time?


Raymond van Niekerk, Adjunct Professor, with expertise in Branding, Marketing, Business Strategy, Corporate Citizenship and Social Responsibility, University of Cape Town

This article was originally published on The Conversation. Read the original article.

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