Physical Asset Management Company scores for Enterprise Development

June 29, 2016

Leading physical asset management company, Pragma, has achieved a Level 1 Broad-Based Black Economic Empowerment (B-BBEE) rating. The company, which was founded 26 years ago in South Africa, scored close to full marks for preferential procurement and enterprise development and qualified as an Empowering Supplier.

According to Kolosa Madikizela, Cape Regional Manager, preferential procurement and enterprise development were very important aspects of Pragma’s B-BBEE scorecard. “ESD, as it is often referred to, is simply a merger between preferential procurement and enterprise development and weighs 40 points out of 105 points on the new scorecard, more than any other element.” (Equity ownership is 25 points, management control 19 points, skills development 20 points and socio economic development 5 points.)

Qualifying as an Empowering Supplier is a critical differentiator. “The critical differentiator is that if you do not qualify as an empowering supplier, your certificate cannot be used towards your clients’ procurement score, therefore deeming it useless,” explains Madikizela.

An Empowering Supplier within the context of B-BBEE is a B-BBEE compliant entity, which is a good citizen South African entity, complying with all regulatory requirements of the country. The entity is required to be compliant with tax law, company law and with occupational health and safety law. In addition, the company must also ensure that it has complied with employment equity regulations and the skills development legislation. In addition, depending on the size of the entity, there the entity also has another set of requirements to report on. These elements include, Local content, Job creation, Transformation of raw materials, Skills transfer and Labour costs.

Madikizela continues that the spirit of enterprise development is embodied in the growing of small and medium sized businesses through the provision of finance and support. “This support can help these businesses to overcome obstacles and increase their competitiveness in the market, with the end result being job creation and poverty alleviation. Measured enterprises are now required to spend 2% of their net profit after tax annually on supplier development and a further 1% of the net profit after tax on enterprise development and sector specific programmes.”

Madikizela adds that it was one of the most critical sections Pragma had to focus on in order to achieve Level 1 on the new codes. “Due to the scarcity of 51% black owned and 30% black women owned suppliers in our industry, it was also the most challenging aspect and pivotal to our reaching Level 1 certification. I’m very proud of the fact that Pragma earned a total of 38.30 points out of 40.”

In order to effectively assist these small black owned companies and the economy as a whole, Pragma needed to take an all-inclusive approach that was deliberately aimed at ensuring growth whilst also providing skills transfer, helping to achieve sustainability, skills development, employment and job creation. Says Madikizela: “We approached this in a very pragmatic manner, with an action plan that we monitored on a weekly basis. We also used various platforms to source 51% black and 30% women owned suppliers, in particular for enterprise development. Finding the suppliers was very challenging, but through our supplier and customer database (network) and ensuring that we were doing this for the right intent and not just to tick a box, we were able to identify good new suppliers to work with.

“We looked at our existing service providers that we had excellent working relations with and actively assisted them to improve on their B-BBEE status, leading to some becoming 51% black owned and 30% women owned. We also communicated our B-BBEE strategy through roadshows. During these roadshows we offered our assistance where required in ensuring that our non-compliant suppliers were upskilled. We approached it as a great opportunity to ensure that we deliver on the true intent of B-BBEE, which is to realise the country’s full economic potential while helping to bring the black majority into the economic mainstream. By empowering and working with 51% black owned suppliers and 30% black women owned suppliers, we enabled these businesses to actively participate in the growth of our business through expanding our supplier base diversity and thus making a meaningful contribution to our direct market. We also further expanded their references and added to their growth opportunities. In the end it took dedication, commitment, team work and ultimately wanting our organisation to be a champion of transformation and fulfilling the true intent on B-BBEE to succeed.”

Madikizela explains that done properly, ESD is designed to ensure that the economy is as inclusive as possible by ensuring that procurement spending is directed at promoting skills development and job creation. “Ultimately, creating a sustainable and economically sound future for South Africa is of benefit to every business in the country, and should form part of responsible business strategy. ESD goes beyond the traditional corporate social investment where companies typically just pumped money in a black owned enterprise without really considering the effects of that investment in that entity”.

Madikizela concludes: “I’m truly happy to be part of a company with such a good B-BBEE rating. Pragma has grown into a global leading asset management service provider, offering permanent employment to more than 400 employees on 4 continents. Our Level 1 certification means that we have an excellent opportunity to gain more clients and attract an effective workforce. Transformation is definitely the right thing to do.”

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