Transport your company to Level 1

Under the Current Transport Sector Black Economic Empowerment (BEE) Codes it is fairly simple to comply and as it stands, a QSE can be a Level 1 contributor with no black ownership and a large company with as little as 10 per cent Black Ownership.

Yet there are deep complexities that call for a seasoned BEE expert to be your navigator through different viewpoints. In this article, Gestalt investigates key roadmap checkpoints to reach, as we believe that now is the time for companies in this sector to empower BEE to be their competitive edge by getting to Level 1.

Get in the fast lane

The transport sector is the mover of the economy.

With a contribution to GDP of R342 billion in the fourth quarter of 2021 (up from R335 billion in the third quarter) and a national commitment to improve logistics infrastructure efficiencies to help to grow exports, we also cannot discount its value to effect economic progress.

While BEE is not the sole license to operate in the transport value chain, compliance with the Codes can be a competitive strategy for companies of all sizes, particularly if it is aligned with and integrated within the core strategy of a business.

The cross section of Transport business sizes presents just one dimension from which to consider pure exponential transformation potential of the sector.

As one report by Research and Markets (2021) notes:

“Businesses in this industry range from large companies to small family businesses and owner-driver operations. Owner-driver schemes offer opportunities for new entrants to the industry. Increasing use of e-commerce opens opportunities for the parcel and courier industry, while there are also opportunities in the removals industry and for companies that provide flexible and customised services to meet specific needs.”

There is also a projected growth rate of over 8% between 2020-2025 for SA’s Third-Party Logistics (3PL) market, which is foreseen to be “driven by the growth in intra-continental trade.” Such projections bring to the fore the need for strategic thinking and innovation to support transformation.

Take people on your journey

What is clear is that empowerment should not be considered a tick box exercise as it links directly to Human Capital, to people, who need to bring their energy and skills to the company.

A good BEE strategy optimises business benefits together with scorecard benefits, and as such, optimises the associated investment by the company.

As such it is key that you begin by defining what success looks like for your business. At this stage Level 1 should be a serious objective for Transport companies. Based on setting such goals, there are then strategically aligned investments required to enable you to achieve these objectives but at the core is the enablement of people to grow in the business.

Be upfront and do not front

What is also clear is stated in the obvious, namely steer clear of fronting.

The BEE Commissioner continues to actively investigate such schemes. The main principle is that a 51% shareholder is defined as the controlling shareholder and any structure that removes or attempts to remove those inherent rights from such controlling shareholder is by definition a misrepresentation of the base concept of control, therefore a front.

Fortunately, there are many ways in which you can ensure that transformation is a competitive asset, including qualifying as a Black Owned or Black Women Owned Company that would not put you on the wrong side of the law.

Align with your cultural route

A slightly less obvious point in the BEE strategy journey is that it is an important consideration to ensure that the changes and initiatives within your plan are a cultural fit for the business. This is often underrated and yet a regular cause of the failure of such strategies. In simple terms, you want to be able to do things with which your staff will be happy.

Business leaders need to not see BEE as another tax but rather as an effective strategy to futureproof the business. What if your BEE Partner is a developmental organisation that uses its dividends to develop the next generation of leaders and innovators in supply chain management and logistics?

There is no time to idle in the carpark of uncertainty. The Transport industry must accelerate its BEE impact. Not only does it ceaselessly turn the wheels of trade for South Africa but it holds great potential to create to a truly inclusive market.