The number of black economic empowerment (BEE) verification agencies and BEE consultants is expected to double, even quadruple, in the next few months as an association focusing on the BEE verification industry gets off the ground, EmpowerDEX has noted.
This follows the Department of Trade and Industry’s approval of the formation of a BEE verification-industry watchdog — the Association of BEE Verification Agencies (Abva) — to accelerate the accreditation of ratings agencies. Accreditation of BEE ratings agencies is a requirement of the Broad-Based Black Economic Empowerment Codes of Good Practice released by the department last year.
“This is a momentous step in the implementation of BEE,” said Vuyo Jack, chief executive of BEE research and ratings agency EmpowerDEX.
According to Jack, Abva will introduce transparency as well as uniformity in the measurement and reporting of BEE.
“Regulating the standards of the BEE verification process will give rated companies the assurance that their rating is valid and legitimate, and by providing further clarity on the standardisation of BEE measurement as contained in the codes, it should go some way towards allaying local and international fears about BEE being an imperative for doing business in South Africa,” Jack added.
Abva’s eight founding members are EmpowerDEX, Empowerlogic, Exceed, NERA, On Track, Sasda, Tokiso BEE and Verify Solutions.
It is envisioned that the accreditation process will get under way in March, with the first accreditation awarded by June.
The Department of Trade and Industry has not limited the number of verification agencies that may be accredited. Up to 125 parties are believed to have expressed an interest in becoming part of the industry and more may emerge after the public invitation process, which gets under way mid-February.
The invitation process is a recruitment exercise to include as many stakeholders as possible in the formulation of the new watchdog’s constitution and the setting of industry standards and minimum auditor qualifications.
“The development and maintenance of high-quality standards and best practice that this body is intended to monitor will result in reliable verification services that will culminate in more black South Africans participating in the mainstream economy of this country,” said Empowerlogic’s director, Loyiso Majija.
Abva will ensure that all firms measured are subjected to the same verification standards, while agencies will adopt similar reporting criteria.
According to Lenhle Daka, of Verify Solutions, Abva will ensure that an industry code of conduct is implemented. The watchdog will also protect companies undergoing the ratings process from falling victim to the so-called fly-by-night BEE verification agencies.
These agencies are expected to help the government deal with so-called fronting — a practice that falsifies BEE credentials. The potential cost of fronting is so severe that the government has threatened to withdraw accreditation should an agency fail to identify fronting.
BEE rating, while not compulsory, is essential for any firm aiming for government and private-sector contracts in the future. — I-Net Bridge