The proposed new Broad-Based Black Economic Empowerment (BBBEE) codes could see tourism businesses lose their current BBBEE ranking, members of the tourism trade have warned.
Speaking on a panel at the SATSA Conference in Stellenbosch last week, Marc Corcoran, President of the Southern African Vehicle Rental and Leasing Association (SAVRALA) said that some businesses in the tourism sector that had spent the past few years investing in transformation would be hurt if the proposed codes were implemented in their current from.
In the current from, the codes include amendments to the BBBEE scorecard that is used to certify businesses. Corcoran cited the example of companies that were initially rated level six under the BBBEE scorecard currently in place and moved up to level two, but will be rated level seven under the amended scorecard.
Businesses in the tourism sector will also be affected by new scorecards in other industries, Corcoran warned. He explained that because the scorecard applies to procurement, tourism businesses will be affected by the downgrading of their suppliers. To illustrate this point he used the example of the manufacturing sector.
“Car rental companies rely on the manufacturers,” said Corcoran. He added that the manufacturing industry was already constrained because of its BBBEE rating. “They are a significant element of our procurement and they will therefore impact most of the car rental companies,” said Corcoran. “Our early estimates are that the industry has moved from level six to level two and three on average and will drop to level seven and eight.”
Speaking on the same panel, Victor Tharage, Deputy DG at the National Department of Tourism, acknowledged that the new codes could see businesses downgraded.
However, Tharage told the trade the proposed codes were still under discussion and urged the trade to provide feedback to the department on these codes. The process of consultation will take place during August and September, he said.
Clifford Ross, City Lodge CEO, called on the trade to engage on the new codes. “NDT has opened up this process and it is one on which everyone should contribute,” he said. “If you want changes to the alignment of the current scorecard, these changes need to be informed to NDT.”
Ross added that the industry in general had performed well in terms of transformation. “The state of transformation within the industry is at a good level,” said Ross, adding that large enterprises had reacted to the codes and the principles of transformation proactively and sustainably. “As an industry we aim to continue to contribute to the economic growth through implementation and transformation strategies which will contribute to direct and indirect empowerment.”