AgriBEE Transformation Charter AgriBEE Transformation Charter AgriBEE Transformation Charter AgriBEE Transformation Charter

Presentation to the Public Hearings on AgriBEE

DATE: 17 September 2010VENUE: Parliament – Cape Town

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Introduction

Scope of Application for the AgriBEE Charter

AgriBEE Elements

AgriBEE Beneficiary Base

Scorecards Variations: AgriBEE versus BBBEE

AgriBEE Scorecard: All Elements - Weights, Indicators &Targets

Enterprises Classification versus Compliance to the Scorecard

Enterprises’ Indicate AgriBEE Status and Procurement Recognition

Levels

SANAS Accredited Rating and Verification Agencies for Scorecard

Calculation

Presentation OutlinePresentation OutlinePresentation OutlinePresentation Outline

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Composition of the AgriBEE Charter Council

Progress made by the AgriBEE Charter Council

Progress report on the Study for EMEs and QSEs Thresholds

Challenges experienced by the AgriBEE Charter Council

Implementation of the AgriBEE Equity Fund

BBBEE compliance in the Agricultural Sector

Concluding Remarks

Way Forward

Presentation Outline (cont…)Presentation Outline (cont…)Presentation Outline (cont…)Presentation Outline (cont…)

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IntroductionIntroductionIntroductionIntroduction

• The AgriBEE Sector Charter is a statement of intent wherein stakeholders expressed their commitment towards the goals for broad-based transformation of the agricultural sector.

• It is the product of extended consultations and deliberations amongst sector and related stakeholders over a number of years, initiated by the launch of the AgriBEE Framework in July 2004.

• AgriBEE Charter was developed as guided by the Phase 1 & 2 BBBEE Codes of Good Practice, taking into effect:

- BBBEE Act No. 53 of 2003

- South African Strategic Plan for Agriculture of 2001

- Unique aspects specific to sector i.e. Land

• AgriBEE Charter was gazetted on 20 March 2008.

• AgriBEE Charter was then launched on 4 April 2008.

• AgriBEE Charter Council was inaugurated on 5 Dec 2008.

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Scope of Application for the Scope of Application for the AgriBEE Charter AgriBEE Charter

Scope of Application for the Scope of Application for the AgriBEE Charter AgriBEE Charter

The primary production of agricultural products;

The provision of inputs and services to enterprises engaged in the production of agricultural products;

The beneficiation of agricultural products whether of a primary or semi-beneficiated form; and

The storage, distribution, and/or trading and allied activities related to non-beneficiated agricultural products.

The scope of the AgriBEE Transformation Charter shall include any Enterprises which derives the majority of its turnover from:

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6

AgriBEE ElementsAgriBEE ElementsAgriBEE ElementsAgriBEE Elements

Transforming the

Commercial sub-sectors

Addressing challenges of the commercial & developing sectors

Addressing challenges of

developing sector

Ownership

Management

EmploymentEquity

SkillsDevelopment

PreferentialProcurement

EnterpriseDevelopment

Direct participation in

EconomicActivities

(Shareholders & Management

Team)

Development of Human

Capital(Current &

prospective employees)

Development & Investment in

Affirmable Enterprises

(Suppliers & communities)Poverty alleviation

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The Poverty Barrier

The Skills Barrier

The Business Barrier

The Opportunity Barrier

EmploymentEquity

RD, PA & CSI

Skills Development

PreferentialProcurement

Ownership& Management

Equitable Economic Opportunities

EnterpriseDevelopment

Emerging black middle class &

investors

Black entrepreneurs

Black workers, professionals,

graduates, school-leavers

Black unemployed &

rural poor

AgriBEE Beneficiary BaseAgriBEE Beneficiary BaseAgriBEE Beneficiary BaseAgriBEE Beneficiary Base

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No EmpowermentIndicator

AgriBEE Indicative Scorecard

Variance BBBEEGeneric

Scorecard

1 Ownership (Land and Equity) 20 points 0 20 points

2 Management Control 10 points 0 10 points

3 Employment Equity 10 points - 5 15 points

4 Skills Development 20 points + 5 15 points

5 Preferential Procurement 20 points 0 20 points

6 Enterprise Development 10 points - 5 15 points

7 Rural Development, Poverty Alleviation and CSI

10 points + 5 05 points

Scorecards Variations:Scorecards Variations:AgriBEE versus BBBEEAgriBEE versus BBBEEScorecards Variations:Scorecards Variations:AgriBEE versus BBBEEAgriBEE versus BBBEE

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Weight

Ownership

Management Control

Employment Equity

Skills Development

Preferential Procurement

Enterprise Development

Socio-Economic Development

20%

10%

10%

20%

10%

100%

20%

10% The environment

Your supply chain

Your company

AgriBEE ScorecardAgriBEE ScorecardAgriBEE ScorecardAgriBEE Scorecard

1010

Ownership (20 points)Ownership (20 points)Ownership (20 points)Ownership (20 points)

1111

Management Control (10 points)Management Control (10 points)Management Control (10 points)Management Control (10 points)

1212

Employment Equity (10 points)Employment Equity (10 points)Employment Equity (10 points)Employment Equity (10 points)

1313

Skills Development (20 points)Skills Development (20 points)Skills Development (20 points)Skills Development (20 points)

1414

Preferential Procurement (20 points)Preferential Procurement (20 points)Preferential Procurement (20 points)Preferential Procurement (20 points)

1515

Enterprise Development (10 points)Enterprise Development (10 points)Enterprise Development (10 points)Enterprise Development (10 points)

1616

Rural Development, Poverty Alleviation and Rural Development, Poverty Alleviation and Corporate Social Investment (10 points)Corporate Social Investment (10 points)

Rural Development, Poverty Alleviation and Rural Development, Poverty Alleviation and Corporate Social Investment (10 points)Corporate Social Investment (10 points)

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Exempted Micro Enterprises (EMEs) have an annual turnover of less than R5 million. They are FULLY EXEMPTED from complying with the Codes, and are considered fully empowered. They automatically have a Level 4 Contribution Level or status, and are considered at Level 3 if they are also black-owned.

Qualifying Small Enterprises (QSEs) have an annual turnover of more than R 5 million, but less than R 35 million. They can CHOOSE any four out of the seven elements of the scorecard, and each element is weighted equally at 25%.

Large enterprises have an annual turnover of more than R 35 million, and they have to comply with ALL seven components of the Scorecard.

Enterprises Classification vs. Enterprises Classification vs. Compliance to the AgriBEE ScorecardCompliance to the AgriBEE Scorecard

Enterprises Classification vs. Enterprises Classification vs. Compliance to the AgriBEE ScorecardCompliance to the AgriBEE Scorecard

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Enterprises’ Indicate AgriBEE Status and Enterprises’ Indicate AgriBEE Status and Procurement Recognition LevelsProcurement Recognition Levels

Enterprises’ Indicate AgriBEE Status and Enterprises’ Indicate AgriBEE Status and Procurement Recognition LevelsProcurement Recognition Levels

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AgriBEE Contribution LevelsAgriBEE Contribution LevelsAgriBEE Contribution LevelsAgriBEE Contribution Levels

Contribution Levels % Points on Scorecard Procurement Recognition (R1.00 spent =)

Level 1 greater than 100 points R1.35

Level 2 from 85 to 99 points R1.25

Level 3 from 75 to 84 points R1.10

Level 4 from 65 to 74 points R1.00

Level 5 from 55 to 64 points 80 c

Level 6 from 45 to 54 points 60 c

Level 7 from 40 to 44 points 50 c

Level 8 from 30 to 44 points 10 c

Non Compliant from 0 to 39 points 0 c

2020

SANAS accredited Rating/Verification SANAS accredited Rating/Verification Agencies for Scorecard calculationAgencies for Scorecard calculation

SANAS accredited Rating/Verification SANAS accredited Rating/Verification Agencies for Scorecard calculationAgencies for Scorecard calculation

2121

Composition of the AgriBEE Charter CouncilComposition of the AgriBEE Charter CouncilComposition of the AgriBEE Charter CouncilComposition of the AgriBEE Charter Council

Government,

Agribusinesses,

Agricultural Processors,

Farmers Organisations,

Labour Unions

Civil Society Organisations, and

Farmers Unions.

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Progress made by the Progress made by the AgriBEE Charter CouncilAgriBEE Charter CouncilProgress made by the Progress made by the

AgriBEE Charter CouncilAgriBEE Charter Council

Council drafted a detailed workplan and already met 6 times to discuss and agree on the workplan activities.

Council agreed to migrate the section 12 into 9 Sector Codes for Agricultural Sector

Council established 3 Working Groups as follows:Working Group 1: responsible for the alignment of the Sect.12

Charter with the final DTI Codes, check the 7 elements of the Generic Scorecard and their points’ allocation with the indicative AgriBEE Scorecards.

Working Group 2: responsible for drawing up a Budget for the Activities of the Council.

Working Group 3: responsible for the investigation and development of a cost-effective monitoring & reporting system on AgriBEE implementation.

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Progress (cont…)Progress (cont…)Progress (cont…)Progress (cont…)

Council agreed to commission a study to review thresholds for Exempted Micro Enterprises (EMEs) and Qualifying Small Enterprises (QSEs).

Council made a commitment to complete a Draft Sector Code by next Council Meeting and agreed to gazette it parallel to the study.

Council completed the alignment of AgriBEE Scorecard and the Development of AgriBEE IT Portal is in progress.

Council investigated options for structure and funding after Section 9 follows:

- STRUCTURE: Council Executing Authority remaining under wing of Government (currently Secretariat to Council) or Independently Established Office with appointed CEO and staff.

- FUNDING: 50-50 or 60-40 (Government-Private Sector).

- Not yet finalized the decision on the structure and funding.

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Progress report on the Study for Progress report on the Study for EME and QSE ThresholdsEME and QSE Thresholds

Progress report on the Study for Progress report on the Study for EME and QSE ThresholdsEME and QSE Thresholds

Following the Departmental Supply Chain processes, a tender was advertised two times to appoint a suitable service provider, however all Bidders did not meet the requirements.

BID Evaluation Committee evaluated various options to undertake the study given unsuccessful tender option and recommended a proposal to engage the NAMC to undertake the study for Council’s consideration.

Council supported the proposal to appoint NAMC to do such study and tasked the Secretariat to facilitate the appointment modalities.

NAMC appointment is still in progress.

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Challenges experienced by Challenges experienced by AgriBEE Charter Council AgriBEE Charter Council

Challenges experienced by Challenges experienced by AgriBEE Charter Council AgriBEE Charter Council

Reporting on sector’s transformation is a difficult task under current Section 12 Charter status

Unable to give statistics on Scorecard Targets & Indicators other than the basis information in the DTI’s BEE Portal

Statistics/ information on AgriBEE not available and not coordinated

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Implementation of the AgriBEE Equity FundImplementation of the AgriBEE Equity FundImplementation of the AgriBEE Equity FundImplementation of the AgriBEE Equity Fund

• Fund Objective: To provide funding for equity deals that promote the entry and participation of black people in the entire agricultural value chain.

• DAFF entered into an MOA with Land Bank, as the Fund Manager.• About R195 million was transferred to the Bank: 2006/07 – 2009/10.• About R85 million was spend between 2006/07 and 2007/08 to

finance 13 equity projects and 6 AgriBEE opportunity studies & database .

• About R110 million has been frozen due to the allegations of mismanagement of the fund by the Land Bank.

• In order to unfreeze the fund, DAFF and Land Bank have developed a new MOA on the AgriBEE Equity Fund and also revised the AgriBEE Fund Operational Manual, which are on route for signature by both parties.

• Once the MoA is signed, the AgriBEE Fund will be operational and the applications will be considered by the Land Bank in line with the revised operational manual

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Agricultural Sector BBBEE Compliance: Agricultural Sector BBBEE Compliance: Registered Entities and Ownership StatusRegistered Entities and Ownership StatusAgricultural Sector BBBEE Compliance: Agricultural Sector BBBEE Compliance: Registered Entities and Ownership StatusRegistered Entities and Ownership Status

• According to the DTI IT Portal as at 30 June 2010, there are 612 entities registered in the Agricultural Sector as follows:

299 are Exempted Micro Enterprises (EME’s)

231 are Qualifying Small Enterprises (QSE’s)

82 are Large Enterprises (Generics)

278 were not yet rated.

• Ownership status of the Registered Agricultural Entities:

Average black ownership is 23%

Average black women ownership is 10%

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Agricultural Sector BBBEE ComplianceAgricultural Sector BBBEE Compliance: : Status of the Registered Agricultural EntitiesStatus of the Registered Agricultural Entities

Agricultural Sector BBBEE ComplianceAgricultural Sector BBBEE Compliance: : Status of the Registered Agricultural EntitiesStatus of the Registered Agricultural Entities

Contribution Levels Number of Agricultural Entities

% Points on Scorecard

Level 1 31 greater than 100 points

Level 2 20 from 85 to 99 points

Level 3 74 from 75 to 84 points

Level 4 161 from 65 to 74 points

Level 5 12 from 55 to 64 points

Level 6 16 from 45 to 54 points

Level 7 6 from 40 to 44 points

Level 8 6 from 30 to 44 points

Non Compliant 8 from 0 to 39 points

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Concluding RemarksConcluding RemarksConcluding RemarksConcluding Remarks

“We must be the change we wish to see in the world. I was born in India, but made in South Africa”: Mahatma Gandhi

“Socio-economic transformation is difficult but not impossible”: Nelson Mandela

Given these remarks, AgriBEE Charter (Section 12) is currently on the transformation roadmap to AgriBEE Sector Codes (Section 9)

This transformation roadmap has lot of turbulences and therefore require more than 100% commitment from all the stakeholders in the Agricultural Sector: Working together we can do more.

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Way ForwardWay ForwardWay ForwardWay Forward

Council will facilitate the gazette of AGRIBEE Sector Codes from December 2010.

Council will facilitate the signing off of the Section 9 Code by the key agricultural stakeholders before the end of March 2010.

Council will facilitate reporting by all agricultural stakeholders who falls under scope of the AgriBEE Charter.

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History confirms that people don’t believe the MESSAGE until they

believe the MESSENGER.

I THANK YOU