Scrap useless AgriBEE
South African agriculture received a hail of criticism at the first National Agricultural Marketing Council Symposium (NAMC) held in Pretoria amongst others for a lack of transformation and keeping the status quo for a conglomeration of a few people. Mr Mzwanele Manyi, President of the Progressive Professionals Forum ripped into AgriBEE, describing it as a practice “codified to keep the current practices”.
“I hope it fails (AgriBEE). All these charters are a waste of time. Why should there be a standardised code for all farmers? It is time for the current landowners to face the music one-by-one,” he said. Manyi was part of a panel who debated a theme titled, “Measuring and tracking the development of smallholder farmers in South Africa: Are we making progress?”
Mr Ishmael Motala, a fruit grower from the Western Cape Province who was part of the panel, described agriculture as the “least transformed sector” in South Africa. The session was moderated by Dr Moraka Makhura from the Land Bank and attended by various stakeholders, including Minister Senzeni Zokwana, of the Department of Agriculture, Forestry and Fisheries.
Last year farmers and producers organisations questioned government’s commitment to transformation in the agricultural industry. In 2014 about R230 million allocated to AgriBEE was returned to the National Treasury, as there was “seemingly” no use for it. The AgriBEE Charter Council is also battling to align its scorecard to the amended Codes of Good Practice of the Department of Trade and Industry, due to contentious issues such as thresholds and land transformation. With land transformation proving to be a political hot potato.
The AgriBEE Sector Code was published in the gazette on December 2012 under section 9(1) of the B-BBEE Act of 2003. This was after many years of negotiations by different stakeholders in the agricultural industry. The first draft was published as the AgriBEE Transformation Charter in 2008 under section 12 of the B-BBEE Act of 2003. The difference between publishing under section 9 (1) and section 12, is that the B-BBEE Act of 2003 is merely a statement of intent and not binding under section 12, whereas section 9 (1) is binding to all entities within the sector code’s scope of operation.
Back to the drawing board
The B-BBEE Act stipulates that all entities within the scope of operation of the gazetted sector code can only be measured for BEE compliance using that sector code, in this case the AgriBEE Sector Code. Barely a year down the line after the AgriBEE Sector Code gazette in 2012, the Department of Trade and Industries (DTI), which is the custodian of the B-BBEE, issued amended Codes of Good Practice (generic codes) in October 2013.
These had major differences from the Codes of Good Practice that were issued in February 2007, on which the AgriBEE Sector Code was negotiated upon and based. It meant the AgriBEE Charter Council, whose responsibility it was to align the AgriBEE Sector Code with the amended Codes of Good Practices, had to go back to the drawing board.
The previous Codes of Good Practice had seven elements on the scorecard, whereas the amended Codes of Good Practice had merged some of these elements so that there were only five. It also introduced priority elements, increased thresholds that took inflation into account as well as sub-minimums and discounting principles. Entities were given a year as a transitional period to comply with the amended code. Companies were however unable to comply, resulting in another six month extension, and a further six month to October 2015.
Thresholds are the levels of annual turnover at which entities need to start complying with BEE. In the amended Codes of Good Practice micro enterprises are exempted if they have an annual turn-over of less than R10 million. Two other categories were introduced, Qualifying Small Enterprises (QSE) with an annual turn-over of R10m to R50m and Large Enterprises with an annual turn-over of R50m and above.
What to comply with?
Many entities in the sector often ask what to comply with under these uncertain circumstances? The answer is very simple. The sector has a Code that was gazetted in 2012 and that Code is still effective until repealed, possibly by the gazette of another Code. Also, entities in a sector with a Sector Code can no longer use the generic codes (Codes of Good Practice) for compliance according to the B-BBEE Act.
The AgriBEE Charter Council has to develop means to monitor transformation and the implementation of the AgriBEE Sector Code. One way is to have entities report their verified AgriBEE Certificates into the portal or any system that the Council will be able to view and generate reports from periodically. There is no way to monitor transformation progress or the lack of it, if there are no reports. The question still remains, why should entities report? Is there a willingness on the part of entities and farming enterprises to report?
One of the enablers of AgriBEE as stipulated in the undertakings by government within the AgriBEE Sector Code is the provision of funding, in the form of an equity fund named the AgriBEE Fund. However, not much of the fund has been used over the years resulting in an amount of about R230 million being returned to the National Treasury in 2014, according to a report in Parliament by the Department of Agriculture, Forestry and Fisheries.