Small business codes ‘due this week’

Business
Small business codes ‘due this week’
BY SAMUEL MUNGADZE, 06 OCTOBER 2014, 10:56

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Companies and organisations: Department of Trade and Industry

THE long-awaited black empowerment codes which aimed to boost small business participation in the mainstream economy would be published this week, Nomonde Mesatywa, the Department of Trade and Industry’s acting deputy director-general for broadening participation, said on Friday.

There was no need for business to panic, Ms Mesatywa said.

The codes, which are also referred to as the qualifying small enterprises (QSE) codes and their amended codes, are due to come into effect on May 1 next year.

The QSE is one of the categories that requires black empowerment in businesses that have a turnover of between R5m and R35m. It is measured using a scorecard.

The scorecard would require companies to comply with empowerment targets on ownership, management control, skills development, preferential procurement, enterprise development, and social economic development.

“Phase two of the codes is coming out next week,” Ms Mesatywa said. “There is no negative impact, as we are still in the transitional phase, thus everything will be done and completed by 1 May 2015.”

However, black empowerment advisory firms said repeated delays in publishing the codes would have slowed the pace of transformation and prejudiced black entrepreneurs and shareholders.

They said the delays were disrupting the transformation plans of small businesses, especially white-owned companies that needed the codes to guide them.

Daniel Hatfield, MD of Edge Growth, which provides enterprise and supplier development solutions to businesses, said the biggest “casualties” of the delays would be young black entrepreneurs and black shareholders.

“The obvious negative impact of this is planning; it affects both big and small enterprises. Alternatively, it’s going to slow down transformation,” Mr Hatfield said.

EconoBEE CEO Keith Levenstein said: “Business doesn’t want to guess. We don’t have the rules. If the codes are not ready, we need to know how the Department of Trade and Industry will react and what they expect of businesses wanting to support the transformation process.”

Those in the industry who had raised their concern said the department had been promising to publish the codes since October last year. Then it was the first quarter of this year, then June; then it had said it would be before the end of the third quarter, he said.

The transformation goals had been difficult to achieve due to the delays, Mr Levenstein said.

“We cannot do this without the minister issuing a notice guiding businesses,” he said.

Veri-Com CEO Deon Oberholzer said businesses needed clarity.

“It’s much better to get clarity sooner. The best thing for small business is to understand the law,” Mr Oberholzer said.

However, he was optimistic that companies would comply. “The delay is unfortunate but it won’t cause massive problems.”

The new regulations were bound to mostly affect white-controlled companies, he said.

“For black business it will be fine, actually better. Only white-controlled companies will need to comply,” Mr Oberholzer said.

But Mr Levenstein said it was too late for companies to start planning for the amended codes.

“They could be excused for saying they were awaiting their sector code prior to planning for it,” he said. “By delaying the issuing of some of the codes and not thinking through the process, the (department) has painted itself into a corner.”

“This really means that short of scrapping the codes completely, the (department) has to get the QSE codes out in time.

“This is an important policy for all businesses.

“We expect that many detailed and positive submissions will be given to the (department) for consideration,” Mr Levenstein said.

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