BROAD-BASED BLACK ECONOMIC EMPOWERMENT: TRANSFORMATION CHARTER FOR AGRICULTURE

AgriBEE

AgriBEE Steering Committee: 2006-05-11

1. INTRODUCTION

This Charter is the outcome of a widely consultative process culminating in the AgriBEE Indaba ('the Indaba') held in December 2005. It takes into account opinions expressed at the Indaba and the most recent drafts of the Codes of Good Practice for Broad-Based Black Economic Empowerment ('the Codes'Las published by the Department of Trade and Industry ('the dti').

While the Broad-Based Black Economic Empowerment Act, No 53 of 2003 ('the Act') has guided the development of the AgriBEE Charter, its conception is linked to the joint vision as contained in the Strategic Plan for South African Agriculture ('the Sector Plan') of a united and prosperous agriculture Sector designed to meet the challenges of constrained global competitiveness and low profitability, skewed participation, low investor confidence, inadequate

support and delivery systems and poor and unsustainable management of natural resources. This AgriBEE Charter derives directly from the Sector's core objective to ensure increased access and equitable participation in the Sector.

This document has been developed as a Transformation Charter for the agricultural Sector in terms of Section 12 of the Act and provides guidelines for empowerment in the Sector. It includes a Scorecard that is intended to form the basis for a Section 9 agricultural Sector Code. Where there is doubt, uncertainty or ambiguity with respect to the interpretation of this Charter, the content of the Codes of Good Practice, as published by the dti, will prevail.

The diversity and uniqueness of sub-sectors within the agricultural Sector is acknowledged. In this respect, where sub-sector charters are developed, these must not be in conflict with this charter and, in turn, are encouraged to be consistent and in alignment with the AgriBEE Charter.

Targets contained in the AgriBEE and AgriQSE Scorecards are based on those contained in the final version of Phase I of the Codes of Good Practice and those contained in the draft Phase II Codes of 20 December 2005, as well as on stakeholder inputs, comments and recommendations. Where no substantive reasons for deviation from targets contained in the Codes of Good Practice was put forward by stakeholders, targets have largely remained aligned with those contained in the above mentioned versions of the Codes. However, it should be noted that targets contained in Phase II of the Codes are subject to change, following a public commentary process. In this regard, the AgriBEE charter will align its targets to those contained in the final version of Phase II of the Codes, except where justification for deviation can be adequately provided on the basis of sound economic rationale and! or Sector development needs as part of the Sector Code development process.

2. SCOPE OF APPLICATION

2.1. The scope of the AgriBEE Transformation Charter shall include any Enterprise which derives the majority of its turnover from:

 

·         The primary production of agricultural products;

 

·         The provision of inputs and services to Enterprises engaged in the production of agricultural products;

 

·         The beneficiation of agricultural products whether of a primary or semi-beneficiated form; and

 

·         The storage, distribution, and/or trading and allied activities related to non-beneficiated agricultural products.

 

2.2. Where an Enterprise trades in more than one sector i.e. falls under more than one Sector Code or Section 12 Transformation Charter, the Measured Enterprise must be guided by the principles embodied in Statement 103 of the Codes of Good Practice.

2.3. This Charter applies to multinational businesses or South African multinationals whose business falls within the scope of the Charter as defined in this section. Where a specific regime for multinationals exists in the Codes of Good Practice, this regime will apply.

2.4. Enterprises as defined in paragraph 2.1, are encouraged to measure their contributions to the seven elements of broad-based BEE as contained in the AgriBEE Scorecard, with the exception of Enterprises which qualify for BEE compliance measurement in terms of the AgriQSE Scorecard by nature of the fact that the Enterprise has a 5 year moving average turnover of less than the threshold indicated in the relevant Scorecards. This is an indicative threshold and will be aligned with the dti's Codes of Good Practice for Qualifying Small Enterprises ('QSE's').

2.5. Notwithstanding paragraph 2.4, Enterprises with a 5 year moving average turnover of less than the threshold indicated in the relevant Scorecards, will be classified as Exempted Micro Enterprises ('EME's'). This is an indicative threshold and will be aligned with the dti's Codes of Good Practice for QSE's. EME's will enjoy a deemed BEE recognition level of Level 4 (as defined in the Codes of Good Practice), without proof of contribution through BEE verification. However, EME's are encouraged to contribute to transformation in agriculture, particularly in the areas of skills development and corporate social investment and are therefore incentivised to increase their BEE status by:

 

·         Contributing to any two of the seven elements of broad-based BEE, with the exception of the employment equity element. In this event, each element will have a weighting of 50%, and if the Enterprise obtains between 50% and 70% on the AgriQSE Scorecard, it will be regarded as a Level Three Contributor to BEE. In the same way, if the Enterprise obtains 70% or more on the AgriQSE Scorecard, it will be regarded as a Level Two Contributor to BEE; or

 

·         Contributing to any three of the seven elements of broad-based BEE, with the exception of the employment equity element. In this event, each element will have a weighting of 33.3%, and if the Enterprise obtains between 45% and 65% on the AgriQSE Scorecard, it will be regarded as a Level Three Contributor to BEE. In the same way, if the Enterprise obtains 70% or more on the Agri­QSE Scorecard, it will be regarded as a Level Two Contributor to BEE.

 

·         The BEE status of an Enterprise must be raised to the next highest BEE status level to the one at which it is evaluated, when Black People hold more than 50% of the Exercisable Voting Rights and more than 50% of the Economic Interest in that Enterprise.

 

It must be noted that a status above Level 4 can only be granted to an EME once the Enterprise has obtained a BEE verification certificate.


2.6. The AgriBEE Council will review and adjust the turnover thresholds for QSE's and EME's periodically in line with relevant inflation indicators.

3. OBJECTIVES

3.1. The objectives of the Broad-Based Black Economic Empowerment Act No. 53 of 2003 are to facilitate Broad-based Black Economic Empowerment by:

 

·         Promoting economic transformation in order to enable meaningful participation of Black People in the economy;

 

·         achieving a substantial change in the racial composition of ownership and management structures and in the skilled occupations of existing and new Enterprises;

 

·         increasing the extent to which communities, workers, co-operatives and other collective Enterprises own and manage existing and new Enterprises and increasing their access to economic activities, infrastructure and skills training;

 

·         increasing the extent to which Black women own and manage existing and new Enterprises, and increasing their access to economic activities, infrastructure and skills training;

 

·         promoting investment programmes that lead to broad-based and meaningful participation in the economy by Black People in order to achieve sustainable development and general prosperity;

 

·         empowering rural and local communiti.es by enabling access to economic activities, land, infrastructure, ownership and skills; and

 

·         promoting access to finance for black economic empowerment.


3.2. The objectives of AgriBEE are to facilitate Broad-based Black Economic Empowerment in the agricultural Sector by implementing initiatives to include Black South Africans at all levels of agricultural activity and Enterprises by:

 

·         Promoting equitable access and participation of Black People in the entire agricultural value chain;

 

·         De-racialising land and Enterprise ownership, control, skilled occupations and management of existing and new agricultural Enterprises;

 

·         Unlocking the full entrepreneurial skills and potential of Black People in the Sector;

 

·         Facilitating structural changes in agricultural support systems and development initiatives to assist Black South Africans in owning, establishing, participating in and running agricultural Enterprises;

 

·         Socially uplifting and restoring the dignity of Black South Africans within the Sector;

 

·         Increasing the extent to which communities, workers, co-operatives and other collective Enterprises own and manage existing and new agricultural Enterprises, increasing their access to economic activities, infrastructure and skills training;

 

·         Increasing the extent to which Black Designated Groups own and manage existing and new agricultural Enterprises, increasing their access to economic activities, infrastructure and skills training;

 

·         Empowering rural and local communities to have access to agricultural economic activities, land, agricultural infrastructure, ownership and skills;

 

·         The improvement of living and working conditions and promotion of decent living and working conditions for farm workers; and

 

·         Improving protection and standards of land rights and tenure security for labour tenants, farm workers and other vulnerable farm dwellers and addressing the inherently paternalistic nature of relationships associated with insecure tenure by promoting more permanent forms of tenure with the emphasis being on the transfer of ownership of land.


4. DETERMINATION OF AgriBEE STATUS

4.1. The indicative BEE status of an Enterprise which falls within the scope of application of the AgriBEE Charter will be determined by the Enterprise's score on the AgriBEE Scorecard. The Scorecard consists of the following seven key elements:

 

·         Ownership

 

·         Management control

 

·         Employment equity

 

·         Skills development

 

·         Preferential procurement

 

·         Enterprise development

 

·         Rural Development, poverty alleviation and corporate social investment ('CSI')

 

4.2. The Scorecard will apply until such time as Sector Codes are published in terms of Section 9 of the Act, whereafter these Sector Codes will apply.

4.3. An Enterprise's indicative BEE status will determine the proportional indicative BEE procurement recognition level that the Enterprise will enjoy as a supplier to other entities applying the AgriBEE Charter.

 

BEE Status

Qualification

BEE procurement

recognition level

Level One Contributor

>100 points on the AgriBEE/ AgriQSE Scorecard

135%

Level Two Contributor

> 85 but <100 points on the AQriBEE/ AQriQSE Scorecard

125%

Level Three Contributor

>75 but <85 on the AgriBEE/ AQriQSE Scorecard

110%

Level Four Contributor

>65 but <75 on the AgriBEE / AgriQSE Scorecard

100%

Level Five Contributor

>55 but <65 on the AgriBEE/ AQriQSE Scorecard

80%

Level Six Contributor

>45 but <55 on the AgriBEE/ AgriQSE Scorecard

60%

Level Seven Contributor

>40 but <45 on the AgriBEE AgriQSE Scorecard

50%

Level Eight Contributor

>30 but <40 on the AgriBEE/AgriQSE Scorecard

10%

Non Compliant Contributor

>30 on the AgriBEE/ AgriQSE Scorecard

0%


4.4. The gazetting of a Transformation Charter for the agricultural Sector, in terms of Section 12 of the Act is evidence of the commitment by all stakeholders to promote Broad-Based Black

Economic Empowerment in the agricultural Sector. In its interactions with the private sector, Government is legally bound by the Codes of Good Practice in terms of Section 10 of the Act, until such time as agricultural Sector Codes have been released.

5. ELEMENTS OF EMPOWERMENT

5.1. OWNERSHIP

The objective of this element is to increase the participation of Black People in the Agri-Industry by increasing the level of entitlement of Black People to participate in the Economic Interest and Exercisable Voting Rights of Enterprises in the Sector. This element is divided into two sections namely 'General Ownership' and 'Agricultural Land Ownership' to account for the unique challenges facing the Sector in this respect.

5.1.1 GENERAL OWNERSHIP

In line with the Strategic Plan, the mission of this element is to enhance equitable access and participation in the agricultural Sector; to de-racialise land and Enterprise ownership; and to unlock the full entrepreneurial potential in the Sector.

Historically, the interpretation of ownership in agriculture has been understood to be dependent upon ownership of land. This AgriBEE framework makes a distinction between land and Enterprise ownership.

AgriBEE is fundamental to the long-term growth and competitiveness of the agricultural Sector. AgriBEE activities and processes should ultimately lead to the creation of viable and sustainable Enterprises in the agricultural Sector.

Stakeholders in the Sector will work towards the development and implementation of a diversity of Enterprise ownership models in support of AgriBEE.

All Sector Stakeholders should endeavour to source sufficient financing in order to ensure the establishment of viable and sustainable Enterprises.

Agri-Industry undertakes to: -

5.1.1.1. Further Black participation through ownership in the Agri-Industry by increasing the level of entitlement of Black People to participate in the Economic Interest and Exercisable Voting Rights in existing and new Enterprises. This includes the sale of equity in a Measured Enterprise, sale of assets through Qualifying Transactions and/or through share equity schemes and other forms of joint ventures with farm labourers and other Black entrepreneurs;

5.1.1.2. Further Black ownership in the agricultural Sector though the sale of assets. This is achieved by selling equity in Associated Enterprises in a Qualifying Transaction. Qualifying Transactions must be scored in terms of Statement 101 of the Codes of Good Practice, which states that equivalency points may be earned under the ownership element through this mechanism. In order for an Enterprise to enjoy continued recognition for ownership on the Scorecard through a Qualifying Transaction, the Transaction must ultimately result in:

 

·         the creation of sustainable businesses or business opportunities for Black People; and

 

·         the transfer of specialised skills or productive capacity to Black People; and

 

−        it must not result in unnecessary job-losses;

 

−        it must involve a separate Associated Enterprise which has:

 

·         no unreasonable limitations with respect to its clients or customers;

 

·         clients, customers or suppliers other than the Enterprise with which the Qualifying Transaction was undertaken; and

 

·         no operational outsourcing arrangements with the initiating Enterprise that were not concluded at arms-length on a fair and reasonable basis.

 

Government undertakes to:-

5.1.1.3. Implement all legislative and other measures at its disposal to facilitate black ownership.

5.1.1.4. Facilitate access to state BEE funds that are made available by government departments, State-Owned Enterprises, and financial institutions.

5.1.2. AGRICULTURAL LAND OWNERSHIP

5.1.2.1. It is important to deal efficiently with land reform to ensure

rural stability and market certainty. The process of economic empowerment in South African agriculture starts with improved access to land for Black People and the vesting of secure tenure rights with Black People in areas where these do not exist.

5.1.2.2. The target set by government for Land Reform is 30% of commercial agricultural land by 2014. This is also the RDP target set in 1994. It is understood that government's delivery on land transfer targets is fundamental to the achievement of other objectives in this Transformation Charter. For this reason, the AgriBEE Scorecard incentivises contributions to the national objective of 30% land transferred to Black People. To this end, farming Enterprises which transfer more than 25% of total land value can progressively score up to a maximum of 5 bonus points, in proportion to the percentage of total land transferred, up to a maximum of 30% total land transferred. (Land transferred as a consequence of expropriation by government will not be eligible for bonus points).

5.1.2.3. Productive and sustainable agricultural use of land must be ensured in accordance with the relevant agricultural policies and Acts. Studies should be done to provide a substantive scientific basis for the development of land (also refer to the Sustainable Resource Management Act).

5.1.2.4. Given the need to transfer land in support of national objectives, the nature of farming and the need to support Black People in establishing viable commercial farming Enterprises on the land that they receive, Measured Enterprises are encouraged to sell land in accordance with the principles and criteria attached to Qualifying Transactions outlined in paragraphs 5.1.1.1. However, these criteria and principles will only apply for a period of 5 years following the sale of land, whereafter the Measured Enterprise will enjoy continued recognition for ownership contributions. This refers exclusively to title deed land transfer.

5.1.2.5. Measured Enterprises will be recognised for the sale of land to Black People 5 years preceding the date of the commencement of the Section 9 Codes for the Agricultural Sector with respect to ownership contributions.

Farming Enterprises undertake to: -

5.1.2.6. Sell agricultural land to Black People and farm workers in market based transactions on a voluntary basis in Qualifying Transactions. (using the ownership element of the Scorecard as a vehicle to achieve this).

5.1.2.7. Lease agricultural land to Black persons in Qualifying Transactions. (using the enterprise development element of the Scorecard as a vehicle to achieve this).

5.1.2.8. Make available agricultural land to farm workers (using the corporate social investment element of the Scorecard as a vehicle to achieve this)

Government undertakes to: -

5.1.2.9. Contribute to increasing access and acquisition of agricultural land by Black People, through its existing programmes;

5.1.2.10. Proactively acquire suitable agricultural land that comes onto the market for land redistribution;

5.1.2.11. Use above mentioned land (5.1.2.10) and agricultural land that reverts to the state through foreclosure of indebted farmers, for redistribution, including through long lease arrangements (e.g. 99 year lease);

5.1.2.12. Promote sustainable management and use of natural resources;

5.1.2.13. Finalise the land restitution process by 2008;

5.1.2.14. Encourage the development of a land lease and land rental market;

5.1.2.15. Promote the consolidation and tenure on traditional community land in terms of the Communal Land Rights Act of 2004; and

5.1.2.16. Secure the ownership, access and tenure rights of Black Designated Groups through the registration of old order rights or new order rights into freehold ownership.

5.2. MANAGEMENT CONTROL

The objective of this element is to increase the participation and levels of control of Black People and Black women at board and executive management levels in the Agri-Industry. This will be achieved by increasing the absolute and relative number of Black People in these positions and by implementing mechanisms under the skills development element to ensure that secondary, tertiary and in-house training and development programmes are designed to meet the targets set under the Management Control element.

Agri-Industry undertakes to: -

5.2.1. Promote participation by Black People in board positions;

5.2.2. Promote participation by Black People in executive management positions;

5.2.3. Promote participation by Black women in board and executive management positions; and

5.2.4. Promote participation by Black People as Independent Non-executive Board Members.

5.3. EMPLOYMENT EQUITY

Employment equity and skills development targets should be achieved within the ambit of the Employment Equity and Skills Development Acts.

The objective of the employment equity element is to increase the representation of Black People, Black women and Black Designated Groups at Senior Management level, at Professionally Qualified, Experienced Specialist and Mid-Management level and at Skilled Technical and Academically Qualified, Junior Management, Supervisory, Foremen and Superintendent level, in the Agri-Industry.

This will be achieved by increasing the absolute and relative number of Black People in these positions and by implementing mechanisms under the skills development element to ensure that secondary, tertiary and in-house training and development programmes are designed to meet the targets set under the employment equity element.

Agri-Industry undertakes to:-

5.3.1. Proactively employ members of Black Designated Groups at Senior Management, Professionally Qualified, Experienced Specialist, Mid-Management, Skilled Technical and Academically Qualified, Junior Management, Supervisors, Foremen, and Superintendent levels as prescribed in the Scorecards.

5.4. SKILLS DEVELOPMENT

Commercial viability in agriculture demands sustained productivity, high levels of entrepreneurship, long term commitment, resources and skills. The transformation demands of the Sector and rapid changes in the global environment require that more resources should be mobilised for expanding the existing human capital pool through investing in people, employment equity, skills development and institutional transformation.

Black Designated Groups are targeted under the skills development element. In addition, a focus on the development of scarce and critical skills, as identified by FoodBev and AgriSET A, must be ensured. In this respect, skills development spend on proposed learning interventions which address these skills shortages will enjoy enhanced recognition at a multiple of 1.3 of the Rand value of the actual contribution. Enterprises should engage with the relevant Sector Education and Training Authority('SET A') for information on such learning interventions.

Agri-Industry undertakes to:-

5.4.1. Identify gaps in workers' training needs so as to co-operate with and complement teaching and educational institutions and to allow their workers to receive skills and in-service training;

5.4.2. Dedicate resources to provide for experiential training, internships, in-service training and training infrastructure for prospective agribusiness entrepreneurs, farm managers and farm labourers;

5.4.3. Ensure maximum use of resources provided by the Skills Levy of the relevant SETAs (AgriSETA and FoodBev);

5.4.4. Institute a sector-wide young professional employment and mentoring programme, which targets Black unemployed and underemployed graduates in all disciplines. Mentorship programmes shall be accredited by the relevant SETA or other agreed authority; and

5.4.5. Implement quantifiable and measurable in-house mentoring programmes as part of the skills development of black employees.

AgriSET A and FoodBev undertake to:-

5.4.6. Establish SETA-funded training programmes for farm and Enterprise workers in appropriate technical and management skills;

5.4.7. Fast-track the registration of learners on NQF-aligned learning programmes;

5.4.8. Fast-track the implementation of appropriate learnership, internship, apprenticeship, in-service and mentorship programmes required by the Sector;

5.4.9. Fast-track the accreditation of appropriate sectoral service providers;

5.4.10. Encourage, support and monitor such programmes in the private sector;

5.4.11. Ensure the transformation of agricultural training institutions to accelerate preferential recruitment and admission of black trainees;

5.4.12. Encourage quantifiable and measurable in-house mentoring programmes as part of the skills development of black employees;

5.4.13. Encourage the implementation. of sector-wide young professional employment and mentoring programmes, which target Black unemployed and underemployed graduates in all disciplines. Mentorship programmes shall be accredited by the relevant SETA or other agreed authority; and

5.4.14. Provide support to QSE's and EME's in the implementation of relevant skills development initiatives, including Enterprises which are exempted from the payment of the skills development levy.

Government undertakes to:-

5.4.15. Provide primary education and training. This includes adult literacy and numeracy training. The State, in conjunction with the governing bodies of educational institutions and similar structures, must ensure that quality training is offered by all primary, secondary and tertiary institutions;

5.4.16. Encourage agricultural and agro-processing training at schools and agricultural colleges. A focused, formal agricultural and agro-processing training system which adequately equips future agriculturalists and agro-processors should be developed;

5.4.17. Promote agriculture and agro-processing as a competitive career option;

5.4.18. Undertake a review of the effective demand for human resources in the agricultural Sector;

5.4.19. Lead and co-ordinate a targeted programme in collaboration with education authorities, farmers' organisations, labour and the agricultural private sector to review existing education and training curricula in order to enhance technical, entrepreneurial, and management skills for Black entrants into the Sector;

5.4.20. Ensure the inclusion of a substantial number of Black persons from the Sector as the nucleus of strategic partners in Government overseas trade missions, technical assistance, study visits and training opportunities;

5.4.21. Promote functional literacy and numeracy through ABET programmes;

5.4.22. Encourage quantifiable and measurable in-house mentoring programmes as part of the skills development of black employees; and

5.4.23. Encourage the implementation of a sector-wide young professional employment and mentoring programmes, which target Black unemployed and underemployed graduates in all disciplines. Mentorship programmes shall be accredited by the relevant SETA or other agreed authority.

5.5. PREFERENTIAL PROCUREMENT

The success of the Sector's commitment to AgriBEE will largely be determined by the extent of the implementation of preferential procurement initiatives which will influence contractual relationships within the value chain. The objective of the preferential procurement element is to reward Enterprises which contribute towards broad-based BEE and to promote and encourage sustainable procurement from QSE's and EME's.

In the event of a natural disaster that has a significant impact on the structure of food supply, the AgriBEE Charter Council shall be empowered to revise any of the provisions, including import exclusions or mechanisms, in terms of this element in consultation with the Ministers of Agriculture and Trade and Industry.

Agri-Industry undertakes to:-

5.5.1. Proactively identify and implement targeted procurement strategies and policies to realise AgriBEE objectives and to meet preferential procurement targets;

5.5.2. Report annually on all preferential procurement spent;

5.5.3. Calculate preferential procurement spend on a proportional recognition basis, from suppliers with a BEE status of 30% or more on any broad-based BEE scorecard which has undergone a consultative process. The proportional recognition mechanism is contained in the table below:

 

BEE Status

Qualification

BEE procurement recognition level

Level One Contributor

>100 points on a broad-based BEE Scorecard

135%

Level Two Contributor

>85 but <100 points on a broad-based BEE Scorecard

125%

Level Three Contributor

>75 but <85 on a broad-based BEE Scorecard

110%

Level Four Contributor

>65 but <75 on a broad-based BEE Scorecard

100%

Level Five Contributor

>55 but <65 on a broad-based BEE Scorecard

80%

Level Six Contributor

>45 but <55 on a broad-based BEE Scorecard

60%

Level Seven Contributor

>40 but <45 on a broad-based BEE Scorecard

50%

Level Eight Contributor

>30 but <40 on a broad-based BEE Scorecard

10%

Non Compliant Contributor

<30 on a broad-based BEE Scorecard

0%


5.5.4. Progressively provide preferred supplier status to QSE's and EME's, including the supply of services and goods, in accordance with the requirements of the AgriBEE Scorecard.

Government undertakes to: -

5.5.5. Align their procurement practices with AgriBEE when procuring goods and services from the agricultural Sector, once Sector Codes for the agricultural Sector have been gazetted;

5.5.6. Provide Black People and QSE's preferred supplier status in the procurement of goods and services;

5.5.7. Identify, prioritise and target Black entrepreneurs and Enterprises which contribute to broad-based BEE when awarding tenders and contracts to entities in the private sector; and

5.5.8. Utilise all legislative and other measures available to it, including preferential procurement, to influence the attainment of broad­based BEE objectives.

5.6. ENTERPRISE DEVELOPMENT

Enterprise development refers to the establishment, support and integration of Black entrepreneurs in mainstream business processes. Support services such as access to finance, infrastructure, information and knowledge systems, are core pillars of sustainable empowerment initiatives.

Agri-Industry undertakes to:-

5.6.1. Strengthen and accelerate the development of the operational and financial capacity of Black entrepreneurs;

5.6.2. Provide mentoring, access to inputs, credit, infrastructure, markets, technology and extension services where applicable. Mentoring, as part of the enterprise development element, refers to the provision of technical and/ or general business assistance and support to Black emerging farmers, land reform beneficiaries and Black entrepreneurs.

5.6.3. Support land reform beneficiaries and Black persons to create sustainable businesses through the transfer of specialised skills in mentorship programmes. Such support (as well as the types of support described in paragraph 5.6.2 above) will be eligible for points under the enterprise development element provided it is quantified to a Rand value in terms of the opportunity cost of time spent on mentoring and/or other enterprise development endeavours. Support to land reform beneficiaries will enjoy enhanced recognition at a multiple of 1.3 of the Rand value of the actual contribution. Enterprises should engage with the relevant SETA for information on such learning interventions;

5.6.4. Commit cumulative enterprise development contributions which assist and accelerate the development of black entrepreneurs, as a percentage of cumulative net profit after tax measured from the Inception Date to the date of measurement as a criterion for measurement;

5.6.5. Lease agricultural land to Black entrepreneurs which meets the criteria for qualifying transactions in terms of paragraph 5.1.1.2.

5.6.6. Enhanced Recognition will be enjoyed for certain types of enterprise development initiatives, at a multiple of the Rand value of the actual contribution. These initiatives and their corresponding multipliers are listed below:

5.6. ENTERPRISE DEVELOPMENT

Enterprise development refers to the establishment, support and integration of Black entrepreneurs in mainstream business processes. Support services such as access to finance, infrastructure, information and knowledge systems, are core pillars of sustainable empowerment initiatives.

Agri-Industry undertakes to:-

5.6.1. Strengthen and accelerate the development of the operational and financial capacity of Black entrepreneurs;

5.6.2. Provide mentoring, access to inputs, credit, infrastructure, markets, technology and extension services where applicable. Mentoring, as part of the enterprise development element, refers to the provision of technical and/ or general business assistance and support to Black emerging farmers, land reform beneficiaries and Black entrepreneurs.

5.6.3. Support land reform beneficiaries and Black persons to create sustainable businesses through the transfer of specialised skills in mentorship programmes. Such support (as well as the types of support described in paragraph 5.6.2 above) will be eligible for points under the enterprise development element provided it is quantified to a Rand value in terms of the opportunity cost of time spent on mentoring and/or other enterprise development endeavours. Support to land reform beneficiaries will enjoy enhanced recognition at a multiple of 1.3 of the Rand value of the actual contribution. Enterprises should engage with the relevant SETA for information on such learning interventions;

5.6.4. Commit cumulative enterprise development contributions which assist and accelerate the development of black entrepreneurs, as a percentage of cumulative net profit after tax measured from the Inception Date to the date of measurement as a criterion for measurement;

5.6.5. Lease agricultural land to Black entrepreneurs which meets the criteria for qualifying transactions in terms of paragraph 5.1.1.2.

5.6.6. Enhanced Recognition will be enjoyed for certain types of enterprise development initiatives, at a multiple of the Rand value of the actual contribution. These initiatives and their corresponding multipliers are listed below:

 

 

Enterprise Development Initiative

Multiple

Initiatives which directly contribute towards the creation of employment opportunities in rural communities and, in particular, in any geographic areas identified in government's integrated sustainable rural development and urban renewal programmes

1.5

Initiatives which assist and accelerate the development of EME's

1.25

Initiatives which assist and accelerate the development of beneficiary entities which produce or sell goods and/ or services not previously produced or manufactured in South Africa

1.5

Contributions in respect of warehousing funds (provided these funds do not own an equity interest in the Measured Enterprise)

1.25

Support to Land Reform beneficiaries in terms of mentoring or extension services, capital provision, input supply and market access opportunities, access to technology and infrastructure

1.5

 

Government undertakes to:-

5.6.7. Ensure the creation of an enabling environment to support agriculture;

5.6.8. Continue with, and further develop, the implementation of the Comprehensive Agricultural Support Programme ('CASP') and other government programmes;

5.6.9. Implement MAFISA (Micro-Agricultural Financial Institutions of South Africa) and other government financing facilities to further enterprise development;

5.6.10. Establish Public-Private Partnerships to improve service delivery; and

5.6.11. Activate Land Bank funding opportunities and financial products for black farmers.

5.7. RURAL DEVELOPMENT, POVERTY ALLEVIATION AND CORPORATE SOCIAL INVESTMENT (CSI)

Rural development, poverty alleviation and corporate social investment refers to contributions that are related to the agricultural industry and contributions actually initiated and implemented in favour of Black People with the specific objective of facilitating access to the economy.

These initiatives should be motivated by the objective of providing Black People with social and economic opportunities and to establish a socio-economic environment conducive to these opportunities.

Farming Enterprises undertake to:-

5.7.1. Contribute to corporate social investment initiatives in respect of rural community members, workers and their families and seasonal workers, in particular. The following is a non-exhaustive list of examples:

5.7.1.1. Provision of good quality housing, including access to clean water, sanitation and electricity;

5.7.1.2. Provision of recreational facilities as well as running costs in this regard;

5.7.1.3. Provision or implementation of, health care programmes and related services (with due consideration for HIV/AIDS programmes);

5.7.1.4. Meeting the transport requirements of workers and their dependents, such as transport to clinics and hospitals, transportation of workers' products to the market, etc. in' line with transport legislation and regulations;

5.7.1.5. Implementation of retirement, funeral and related schemes;

5.7.1.6. Investment in, and/or provision of support to, farm and/or rural schools;

5.7.1.7. Engagement in collective contributions to social development;

5.7.1.8. Provision of ABET to seasonal workers, rural community members and family of staff members (whether casual or permanent) to increase literacy levels amongst rural South Africans;

5.7.1.9. Maintenance of bursary schemes to enable Black People to gain access to tertiary education institutions.

5.7.2. Make land available to farm workers (the land made available under this commitment falls outside the ambit of ESTA claims), or

5.7.3. Contribute to a combination of corporate social investment initiatives and land accessibility for farm workers. I n such cases, the Measured - Enterprise will be awarded points in proportion to the target achieved for the respective contributions.

Agribusiness Enterprises undertake to:-

5.7.2. Contribute to social development and industry specific initiatives. The following is a non-exhaustive list of examples:

5.7.2.1. support for community education facilities; education programmes aimed at promoting the agricultural industry; and bursaries and scholarships to encourage learners to study agricultural sciences;

5.7.2.2. contributions to community training programmes aimed at skills development for the unemployed and ABET;

5.7.2.3. participation in development programmes for the youth and other designated groups;

5.7.2.4. support for programmes in conservation projects; community clean-up programmes and preservation of the natural environment;

5.7.2.5. promotion of job creation programmes in the agricultural and agricultural related Sectors, external to the business;

5.7.2.6. support for development programmes to develop new talent for arts and culture;

5.7.2.7. support community clinics and community health programmes (with due consideration for HIV/AIDS programmes); and

5.7.2.8. participate in- and support sports development programmes

6. GOVERNANCE

6.1 An AgriBEE Charter Council will be established and will report to the Black Economic Empowerment Advisory Council, appointed in terms of the Act and the Minister of Trade and Industry on progress made by the Sector in terms of the AgriBEE Charter.

6.2 The fundamental principles of the AgriBEE Charter Council are as follows:

 

·         The AgriBEE Charter Council will be established as an independent body with a mandate to oversee the implementation of the AgriBEE Charter;

 

·         The AgriBEE Charter Council will address issues of principle relating to the implementation of the Charter;

 

·         The AgriBEE Charter Council will conduct reviews and take decisions;

 

·         The AgriBEE Charter Council will consider whether the targets and implementation strategies are still appropriate, and if not how they should be varied should there be a material change in the circumstances or the environment in which the Charter has to be implemented;

 

·         There will be equalitable composition of Stakeholders in the members of the AgriBEE Charter Council.

 

·         Decisions of the Charter Council will be taken on a consensual basis. If, on any issue, the Charter Council is unable to achieve consensus, there will be a dispute-breaking mechanism in the Charter Council either by some agreed mechanism within the Charter Council, or by reference to arbitration or mediation.

 

6.3 The Charter Council should be tasked with ensuring that the verification of BEE contributions in the agricultural Sector:

 

·         consists of a valid and reliable process that is practical and legally defensible;

 

·         is an accessible, flexible and cost effective system for the industry which may include electronic systems such as e-filing of BEE contribution data and self assessment tools;

 

·         is subject to audit by agencies appointed in terms of the Codes of Good Practice;

 

·         includes the issuing of qualified and unqualified BEE verification certificates, which respond to the unique needs of the Sector; and

 

·         is universal and generally accepted and nationally recognised standards.

 

7. DEFINITIONS

For the purposes of clarification and to avoid ambiguity, the following terms apply to this Charter:

7.1. The Act is the Broad-Based Black Economic Empowerment Act 53 of 2003.

7.2. Agricultural Products are as defined by the Marketing of Agricultural Products Act No. 47 of 1996.

7.3. Agriculture refers to all the economic activities associated with the production and processing of agricultural products as defined in section 2.1.

7.4. AgriBEE is a Sectoral Transformation Charter as defined in Section 12 of the Broad-Based Black Economic Empowerment Act 53 of 2003.

7.5. AgriBEE Scorecard means the broad-based BEE scorecard contained in the AgriBEE Charter and should be regarded as an indication of what is likely to be included in possible, future Sector Codes for agriculture;

7.6. AgriQSE Scorecard means the broad-based BEE scorecard for Qualifying Small Enterprises, contained in the AgriBEE Charter and should be regarded as an indication of what is likely to be included in possible, future Sector Codes for agriculture;

7.7. Agri-Industry refers to the combination of Farming Enterprises and Agribusiness Enterprises.

7.8. Associated Enterprise refers to an asset which has been transferred to Black People by means of a Qualifying Transaction.

7.9. Black Designated Groups is as per the definition in the Codes of Good Practice which defines black designated groups as:

7.9.1. Black workers;

7.9.2. Black unemployed people;

7.9.3. Black aged people;

7.9.4. Black People with disabilities; and

7.9.5. Black People living in rural areas.

7.10. Black People means African, Coloured or Indian persons who are natural persons and:

7.10.1.are cititzens of the Republic of South Africa by birth or descent; or

7.10.2. are cititzens of the Republic of South Africa by naturalisation before the commencement date of the Constitution of the Republic of South Africa Act of 1993; or

7.10.3. became citizens of the Republic of South Africa after the commencement date of the Constitution of the Republic of South Africa Act of 1993, but who, but for the Apartheid policy that had been in place prior to that date, would have been entitled to acquire citizenship by naturalisation prior to that date

7.11. Board means those persons appointed by the Participants of a Measured Entity to undertake the management control of the Measured Entity. The Board is distinguishable from the Senior and Other Top Management by virtue of the fact that Senior and Other Top Management are primarily active in the operational day-to-day management while the Board is primarily active in the control function of the Measured Entity. This does not imply that members of the Board cannot also be Senior and Other Top Management. The term Board does not include persons appointed to that body as alternates.

7.12. Broad-based Black Economic Empowerment (as defined in the Act) means the economic empowerment of all Black People including women, workers, youth, people with disabilities and people living in rural areas through diverse but integrated socio-economic strategies that include, but are not limited to-

 

·         increasing the number of Black People that manage, own and control Enterprises and productive assets;

 

·         facilitating ownership and management of Enterprises and productive assets by communities, workers, cooperatives and other collective Enterprises;

 

·         human resource and skills development;

 

·         achieving equitable representation in all occupational categories and levels in the workforce;

 

·         preferential procurement; and

 

·         investment in Enterprises that are owned or managed by Black People;

 

7.13. Charter means the AgriBEE Transformation Charter, including the AgriBEE Scorecard and the AgriQSE Scorecard

7.14. Economic Interest means a Participant's claim against the Enterprise representing a return on ownership of the Enterprise, measured in accordance with the Flow-Through and Modified Flow-

Through Principles. In this regard, a Participant's entitlement to receive any payment or part payment on the Participant's Claim from a Measured Enterprise that is not in the nature of a return on ownership in that Measured Enterprise, will be treated as an Economic Interest is such payment is:

7.14.1 not arms-length

7.14.2 not market-related

7.14.3 mala-fide;

7.14.4. without a commercial rationale; or

7.14.5. intended to circumvent the provisions of this charter or the objectives of the Act

7.15. Enterprise means the person(s) conducting a business, trade or profession in the Republic of South Africa. Unless the context otherwise indicates, Enterprises include, without limitation, a Measured Enterprise and an Associated Enterprise. Different types of Enterprises within the Sector are defined as follows:

 

·         Agribusiness Enterprises means those individuals, groups, cooperatives or companies engaged in other agricultural activities as defined in the scope

 

·         Farming Enterprises means those individuals, groups, co-operatives or companies engaged in primary agricultural production activities as defined in the scope.

 

7.16. Executive Members of the Board mean those members of the Board who fall within the definition of "executive director" specified in the King Report;

7.17. Exempted Micro Enterprise means an Enterprise which qualifies for BEE compliance exemption as defined in the AgriQSE Scorecard and meets the principles of non-circumvention as defined in the Codes of Good Practice Code 1000 Statement 1000.

7.18. Exercisable Voting Right means a Voting Right of a participant that is not subject to any limitation;

7.19. Government means the national, provincial and local spheres of government which are distinctive, interdependent and interrelated.

7.20. Inception Date means a date specified by the Measured Enterprise as being the date from which its enterprise development contributions should be measured where that Measured Enterprise has initiated such contributions prior to the date of the commencement of the Section 9 Codes for the Agricultural Sector. The Inception Date shall not be a date earlier than 5 years prior to the commencement of the Section 9 Codes for the Sector.

7.21. Independent Non-Executive Board Members means those members of the Board who fall within the definition of "independent director" specified in the King Report.

7.22. leviable Amount bears the meaning as defined in the Skills Development levies Act of 1999 as determined in accordance with the provisions of the Fourth Schedule to the Income Tax Act;

7.23. Manager Controller means Employees of a Measured Entity who are appointed by the Participants of that Measured Entity to undertake the day-to-day management of that Measured Entity. For the avoidance of doubt, Manager Controller may include persons in the occupational levels of top and senior management as well as the occupational level of professionally qualified, experienced specialists and mid-management as specified in form EEA9 issued under the Employment Equity Act

7.24. Measured Enterprise means an Enterprise as well as an organ of state or public entity subject to measurement under the Codes or this Charter Other Top Management means Employees of a Measured Entity, other than Senior Top Management who are appointed by or upon the authority of the Board of that Measured Entity to undertake the day to day management of that Measured Entity and who are actively involved in the development and/or implementation of the Measured Entity's strategy insofar as it relates to their area of responsibility. This definition should be read in conjunction with the Occupation levels, having specific regard to the Occupational level of Top Management.

7.25. Owner-Manager means an individual who holds equity representing at least 5% of all equity in the Measured Enterprise (both in relation to Voting Rights and Economic Interest) and who is also an Executive Manager.

7.26. Professionally Qualified, Experienced Specialists and Mid-management" in terms of the Employment Equity element, is as per the EEA9 Form issued as a regulation under the Employment Equity Act

 

·         Qualifying Small Enterprise means an Enterprise which qualifies for BEE compliance measurement in terms of the Agricultural Qualifying Small Enterprise Scorecard.

 

7.27. Qualifying Transaction means a sale of asset, land or business division which qualifies for ownership contribution points on the Scorecard by meeting the criteria in specified in 5.1.1.3

7.28. the Scorecard refers to the Indicative AgriBEE Scorecard or the Indicative AgriQSE Scorecard - whichever is applicable in the context in which the term is employed

7.29. Sector means the Agricultural Sector as defined in the Scope in paragraph 2.1.

7.30. Sector Code means a Code in series 800 gazetted by the Minister under section 9 of the Act with a view to giving effect to the specific requirements and circumstances applicable to a particular Sector.

7.31. Sector Plan means the Strategic Plan for South African Agriculture developed jointly by the Government of the Republic of South Africa, Agri SA (including Agribusiness Chamber) and NAFU, signed on 27 November 2001.

7.32. Senior Management in terms of the Employment Equity element, is as per the EEA9 Form issued as a regulation under the Employment Equity Act

7.33. Senior Top Management means Employees of a Measured Entity who are appointed by or upon the authority of the Board of that Measured Entity to undertake the day to day management of that Measured Entity and who have individual responsibility for the overall management and for the financial management of that Measured Entity and who are actively involved in the development and/or implementation of the Measured Entity's strategy. Common examples of Senior Top Management include, without limitation, chief executive officers, chief operating officers and chief financial officers. This definition should be read in conjunction with the Occupation Levels, having specific regard to the Occupational Level of Top Management.

7.34. Skilled Technical and Academically Qualified Workers, Junior Management, Supervisors, Foremen, Superintendents in terms of the Employment Equity element, is as per the EEA9 Form issued as a regulation under the Employment Equity Act

7.35. Stakeholders is used as a broad term to describe participants in the entire agricultural value chain as well as current and potential beneficiaries of AgriBEE including government.

7.36. State-Owned Enterprise: State-Owned Enterprise means National Public Entity defined as-

 

·         a national government business Enterprise; or

 

·         a board, commission, company, corporation, fund or other entity (other than a national government business Enterprise) which is o established in terms of national legislation;

 

−        fully or substantially funded either from the National

 

−        Revenue Fund, or by way of a tax, levy or other money imposed in terms of national legislation; and

 

−        accountable to Parliament;


7.37. Target means the Targets attributed to the various criteria in the

            AgriBEE and AgriQSE Scorecards

7.38. Transformation Charter means the Sectoral transformation charters referred to in section 12 of the Act;

7.39. Voting Right means a voting right attaching to an instrument owned by or held on behalf of a Participant, that may be exercised at a general meeting of the shareholders of a company having share capital or any similar rights in any other form of Enterprise measured in accordance with the Flow-Through Principle or the Control Principle.

7.40. Youth people between the ages of 14-35 as defined in the National Youth Commission Act 19 of 1996.

The definitions in the B-BBEE Act (53 of 2003) and the Codes of Good Practice as published by the Department of Trade and Industry will prevail in cases where clarity regarding definitions is required.