How BEE can hurt local businesses – Telkom CEO Sipho Maseko

Unintentional consequences of BEE policies are harming local businesses. That’s according to Telkom CEO Sipho Maseko, who has expressed concern over procurement polices which penalise the telecommunications provider for buying SA produced fibre cables instead of importing it. According to MyBroadband, Telkom purchases its cables from a SA-based company called CBI. While the company – which employs 900 people – is rated as a Level 4 BEE contributor (on a scale of 1-9, with 9 being non-compliant) the CEO said “it is creating a problem for South Africa when government punishes companies like Telkom for buying from local manufacturers with a Level 4 BEE rating.” To get around the regulations, he notes that it’s very easy for an importer to set a business up with just “two employees and get a Level 1 BEE score.” Maseko’s fears – shared with many South Africans – is that this is contributing to other economies, and not South Africa. “We are then contributing in de-industrialising the country, while helping to industrialise whichever country we are importing from. This article was first published on MyBroadband. – Jarryd Neves

When BEE backfires – Telkom CEO explains how it hurts local companies

By Jan Vermeulen

Telkom CEO Sipho Maseko has raised concerns over the unintended consequences of BEE procurement policies that penalise Telkom for buying locally manufactured fibre cables rather than importing it.

Maseko said Telkom is one of the largest buyers of fibre in South Africa and explained that it buys its fibre from a company in Brits called CBI.

CBI manufactures the cable locally, employs about 900 people, and is a Level 4 BEE contributor. BEE scores range from Level 1 to Level 8. There is also a ninth BEE category – non-compliant.

Maseko said that while it would be better if CBI were a Level 1 BEE contributor, it is creating a problem for South Africa when government punishes companies like Telkom for buying from local manufacturers with a Level 4 BEE rating.

The BEE regulations also make it easy for an importer to set up shop in Durban with two employees and get a Level 1 BEE score.

“[By supporting an importer over local manufacturing] we are then contributing in de-industrialising the country, while helping to industrialise whichever country we are importing from,” he said.

Maseko said that he met with the powers-that-be, as part of larger discussions around Operation Vulindlela, to explain that they were disincentivising businesses from supporting South Africa’s local manufacturing sector.

Operation Vulindlela is a joint initiative of the Presidency and National Treasury which aims to resuscitate economic growth and streamline policy implementation in South Africa.

According to Maseko, it is important that Operation Vulindlela not only be used to stimulate investment, but also build and nurture the manufacturing capacity that South Africa always had over the last 30–40 years.

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