I think we are plagued by technocratic over-elaboration. A very cogent example of this is the procedural minefield that has to be negotiated by those companies that wish to be accredited as BEE Verification Agencies. There is considerable concern within the business community that this accreditation process is taking an inordinate length of time during which confusion reigns and the Codes of Good Practice and the Scorecard – very smart and potentially highly effective strategic guides – are losing credibility as patience wanes. This confusion is exacerbated by the fact that few government departments at any level, on which the codes are binding, have so far aligned their procurement practices to the strategy. Companies seeking government work, therefore, are finding themselves confronted by demands and expectations which the codes have modified quite considerably.

Within the private sector, however, the objectives of the system are playing out as companies seek BEE information from their vendors. In some cases, questionnaires must be completed while in others a verification certificate is requested. Vendors, who are often small or medium entities, in line with the desired trend that larger companies should procure from smaller ones, remain quite perplexed, for no agency which is able to provide a certificate has been accredited yet. There is an understandable reluctance to engage the services of an agency whose certificate might be void of validity when its application for accreditation fails. In fact, what is more likely considering the nature of the process as it unfolds, is that the aspirant agency may withdraw from the accreditation process. The promise of easy money has been blunted by the cost, effort and rigorous demands of accreditation.

The body charged by government to accredit the agencies is the South African National Accreditation System (SANAS). This body, whose previous experience in accreditation has had little or nothing to do with business structures, has developed (is developing, is more accurate) a procedure which takes many months to be concluded. An agency with several years of experience in the sphere had to wait at least three months for SANAS to approve its processes only to find that, in the meantime, the accreditation procedure had been extended by the addition of a second phase which is likely to take several more months. Thus far, the agency has submitted all the documents required by SANAS and then undergone the on-site evaluation. Every stage has involved the listing by the accrediting body of matters that required attention before any further progress was possible. The agency, having passed muster so far, will receive another on-site visit when SANAS representatives will sit in on the agency’s evaluation of a client company. Phase one alone has cost nearly R50 000.

I’m told that CIPRO has in excess of a million companies and CCs registered. Of these, some will no longer be operational and others will be small enough to be classified as Exempt Micro Enterprises. Let’s assume that half a million entities will require the verification of their BEE status each year (certificates are valid for one year only). At the present time, no more than fifty-five agencies have applied to SANAS for accreditation and joined the Association of BEE Verification Agencies (ABVA) as full members. I leave readers to do the arithmetic and consider the consequences. It is equally clear that the cost of verification is going to be a good deal higher than expected and that many smaller enterprises, that may wish very earnestly to comply, are going to be severely strained by its demands.

This is not, by any means, the only sphere in which unintended consequences will severely undermine the value of the exercise. Had SANAS consulted with the business community, some of these might have been foreseen. Of course we want a verification system which is reliable, but is it worth such cumbersome, long-winded and stringent effort? The answer is, I suppose, that it is necessitated by the corrupt and fraudulent practices which are being perpetrated by companies seeking to exploit the system. If companies were not listing black minor children as directors, or claiming the status of office manager for the black secretary, or claiming points on the scorecard for paying for one’s own child to attend university, we could manage with a less cumbersome, much slicker (and perhaps no less accurate) process. It is regrettable, indeed, that our laws and regulations are too often required to close the loopholes rather than empower and enable those who are essentially compliant.

Andrew Layman: PCB CEO

This article appeared in The Mercury on the 2 July 2008