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PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES Broad –Based BEE 31 AUGUST 2005. Table of Contents. Introduction Policy instruments to achieve Broad-Based BEE Roles and objectives of the Department Broad- based BEE Past Transactions Performance
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PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES Broad –Based BEE 31 AUGUST 2005
Table of Contents • Introduction • Policy instruments to achieve Broad-Based BEE • Roles and objectives of the Department Broad- based BEE • Past Transactions Performance • Challenges and lessons learned • Way forward
Introduction • DPE’s vision is to ensure SOEs : • Facilitate economic growth through locating them in an optimal industry structure and ensuring the efficiency of their operations and the economic effectiveness of their investment Programmes
Introduction continued • Play a leadership role within the economy in the areas of corporate governance and national policy implementation; • Catalyse sector and regional economic development opportunities.
Policy instruments to achieve BBBEE • Policy framework : Accelerated Agenda towards the Restructuring of State Owned Enterprises ( 2000) • Triple bottom line reporting ( TBL) in line with the King II Report on Corporate Governance. • Broad-based Black Economic Empowerment Act of 2003
Policy instruments to achieve BBBEE continued • As part of Governance the Department expect SOEs to lead in the following : • Employment Equity • Skills development • Preferential Procurement • Sectoral Charters and in the absence will be guided by the Code of Good Practice
Role & Objectives of DPE’s BBBEE • Leverage the procurement spend to promote SMMEs, BEE and people with disability , youth and women empowerment . • Enhance economic inclusion by HDIs.
Role & Objectives of DPE’s BBBEE continued • To ensure accelerated progress in relation to skills development. I.e Spoornet Academy ( 2006), Transwerk Training and Eskom Up scaling Programme.
Role & Objectives of DPE’s BBBEE continued Departmental level Socio economic unit : • Monitoring of socio economic performance of SOEs against government socio economic objectives. • Lead in the identification of socio economic KPIs and targets .
Role & Objectives of DPE’s BBBEE continued Departmental level • Report on quarterly and annual basis performances of SOEs in relation to empowerment. • Provide inputs to shareholder compacts.
Going forward DPE will actively seek ways to bring in BBBEE players when : • Entering into Public -Private Partnerships ( PPPs) • Concession • The disposal of non core business of SOEs • In the execution of the above the Department will be guided by the following: • The Broad-based Economic Empowerment Act • The Preferential Procurement Policy
Restructuring transactions Past Performance • Telkom IPO ( ESOPs, Ucingo BEE Consortia, Retail offers ( PDIs) 2003 • Transnet Virtual Care ( MBO) 2003 • ACSA ( BEE consortium ( 4%) and ESOP (1% ) 2000) • Transnet, Connex ( SEP/ BEE 80 %) • Transnet Production House 2001
Restructuring transactionscontinued Completed transaction under Forestry: • Siyaqubeka ( BEE shareholding 10%) • Singisi ( BEE shareholding 10%) • Amatole ( BEE shareholding 25%) • Mountain to Oceans ( BEE shareholding 50%) • Komatiland ( BEE shareholding 30 % )
Challenges and lesson learnt • Concentration of suppliers to SOEs • Inadequate disclosure in the SOEs Annual reports • Identification of real Economic Empowerment beneficiaries i.e Denel
Challenges &lesson learnt continued • Lack of funding • Skills development is not well targeted • The SOEs Procurement policies regarding conflict of interest , fronting and Fraud Preventation Plans are not well spell out
Way forward • Need to create a standard framework for SOEs reporting on socio economic issues • SOEs should communicate their successes on Broad-base black economic empowerment • Submission of the SOEs Broad-Based Black Economic Empowerment as part of their three corporate plan.
Way forward continued • DPE to tightened oversight in relation to Broad- Based Black Economic Empowerment • Need to create a standard framework for SOEs reporting on socio economic issues • SOEs should communicate their successes on Broad-base black economic empowerment
Way forward continued • Submission of the SOEs Broad-Based Black Economic Empowerment as part of their three corporate plan. • DPE to tightened oversight in relation to Broad- Based Black Economic Empowerment • The Publication of socio economic booklet ( September 2005)
Way forward continued • The DPE is discussion with SOEs toward common framework in addressing the skills shortage of the country particularly in technical fields. • Review procurement policies of SOEs to leverage investments spend to promote SMMEs, BEE and youth, people with disability and women empowerment
The end Thank you