Business Unity South Africa One Voice of Business

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3 Contents BUSA at a glance: Page 8 President s Report CEO s Report Performance Report Operating Environment Economic Policy Trade Policy Social Policy Page 16 Transformation Policy Media & Communications Trade Investment Promotion BUSA Parliamentary Office Annual Review Steering Committee: Ms Nomaxabiso Majokweni BUSA CEO Ms Masego Lehihi Senior Communications Manager Page 17 3

4 Strategic Role and Positioning BUSA leadership elected at AGM in 2012 BUSINESS Unity South Africa (BUSA) is the apex business organisation that represents organised business in South Africa. Established in 2003, the organisation boasts a good membership mix of about 45 chambers of commerce and industry, unisectoral organisations, corporate associations and professional associations as well as 62 leading companies. The organisation promotes full and equal enjoyment of all rights and freedoms for all its members across industry sectors, business sizes, gender interests, and professional specialisation. Built into BUSA s constitution are the founding provisions of the South African Constitution of non-racialism and non-sexism. Members of BUSA are unanimous in their support for the principle of consensus decision-making as a guiding principle on the way the organisation operates. promoting the development of an economic and social system based on the principles of justice, a marketorientated economy, individual entrepreneurship and equal opportunities; influencing appropriate legislation and policy to create an enabling environment for a thriving and dynamic private sector; giving attention to the role of small and medium business enterprises in all sectors and to the development of linkages between large, medium and small businesses to the benefit of the economy as a whole; and advancing private sector initiatives aimed at economic transformation and job creation. Vision: BUSA aims to be a unified and fully representative organisation that contributes to a vibrant, inclusive and growing economy in South Africa. Mission: BUSA, as an inclusive apex business confederation, aims to ensure that organised business plays a constructive role in ensuring a macro-economic policy environment conducive to economic growth, development and economic transformation. Such an environment is critical for businesses of all sizes and in all sectors to thrive, expand and be competitive at both national as well as international levels. We deliver on our mission by: promoting South African business interests domestically and internationally; 4

5 President s Report The organisation review focussed on the following areas: BUSA s unifying vision Governance structures and policies Constitutional implications of the organisational review Sustainable funding model Optimum membership mix for an apex organisation Registration of BUSA as a non-profit company Memorandum of Incorporation This organisational review process is now nearing completion. COMING into my presidency it was very clear that we would continue on the trajectory of BUSA s vision to be a unified effective apex business organisation that contributes to a vibrant, inclusive and growing South African economy. To this end, we continued to engage both on a bilateral basis with government as well as at National Economic Development and Labour Council (Nedlac). In order to achieve this, it was critical for business to continue to engage with government and other social partners to find ways to collectively strengthen the economy. At the time, our economy was also under pressure due to the unabating wave of strikes that engulfed the country. It is for this reason that as business we welcomed and contributed towards the success of President Jacob Zuma s timely intervention in the form of the high level compact of the social partners entered into in October In the interest of South Africa Inc, BUSA and the Black Business Council (BBC) made great strides in forging a working partnership on various key areas. This was a decisive leadership intervention at a time that the country was experiencing violent strikes which did not only have a negative impact on the country s mining and agricultural sector but on the overall investor sentiment. The integrity of the collective bargaining system needs to be preserved. In the interest of South Africa Inc, BUSA and the Black Business Council (BBC) made great strides in forging a working partnership on various key areas. Key among these was the memorandum of understanding signed by BUSA and BBC to maintain a single business caucus at Nedlac, with the BBC participating in that caucus. In the area of SME supplier and market development, BUSA also entered into a cooperation agreement with the BBC and the United Nations Development Programme. Our high levels of youth unemployment continue to be problematic for the economy. Alleviating this challenge also formed part of the October 2012 High Level Compact of Social Partners. As business we made commitments on a number of game changers in this regard, including skills development, work exposure opportunities, work placement and enterprise development. As BUSA we continue to facilitate, monitor and evaluate progress being made in this regard. I would like to thank the BUSA Council, our member organisations and companies, BUSA Office Bearers, the Chief Executive Officer, the executives and staff for their contribution to the strides made by the organisation in JABU MABUZA PRESIDENT In our quest to ensure a strong, inclusive and effective apex organisation, BUSA continued with the organisational review process started in Members were surveyed by an independent consultancy, BAIN & Company. 5

6 CEO s Report In the year under review we also vastly improved communication with our members. These improvements were reflected in the form and content of our communication with members. To ensure that our members were consistently informed about the key decisions taken by MANCO, we began allocating space in our monthly newsletter to announce MANCO resolutions. We also intensified our external strategic communications - both at the level of targeted media campaigns on key issues such as the review of labour legislation, etolls and electricity rate hikes - as well as in a thought leadership role such as running a monthly column in the Business Times, leading to greater visibility and positive feedback from readers. Due to the challenges experienced in social dialogue in 2012, a review exercise to improve the effectiveness of Nedlac was undertaken. An independent study on this review is currently under way and some internal administrative and business process improvements have already been introduced was one of the most turbulent years since 1994 as labour unrest in the mining, agriculture and transportation sectors shook the South African economy to its very foundations. To make matters worse, the eurozone, the country s major trading partner, slid into a recession. Under these circumstances the role of organised business, as it finds expression in Business Unity South Africa (BUSA), was challenged. Business input towards the finalisation of the Labour Relations Amendment Bill and the Basic Conditions of Employment Amendment Bill became even more critical under these trying circumstances. BUSA stood firm in articulating the importance of conducting a Regulatory Impact Assessment (RIA) before the passing of any legislation in Parliament. To this end, we conducted our own mini impact assessment that confirmed the negative effects some of the provisions of these bills would have on business and the economy as a whole. To maintain an acceptable level of cost competitiveness for the economy, BUSA continued to engage on all major issues with a potential to increase the cost of doing business. In the main, these issues included electricity rate hikes and etolls. In both instances, BUSA commissioned comprehensive studies to assess the impact of these costs to the economy. In the case of etolls, the necessity of conducting a comprehensive RIA before legislative and policy changes was once again highlighted. With respect to the electricity rate hikes, our study convincingly showed that the 16% increase Eskom applied for would have adverse effects on the economy and revealed that Eskom could actually do with half the tariff increase it had applied for. Another key milestone with regards to Nedlac was BUSA s successful engagement with the Black Business Council on their participation at Nedlac. This resulted in a Memorandum of Understanding that effectively maintained a single business caucus at Nedlac. One of the key focus areas for 2012 was ensuring operational and financial stability for the organisation. The prevailing economic conditions put a lot of pressure on our members budgets, forcing them to curb expenditure. This, in turn, forced BUSA to look at alternative sources of revenue for specialised projects such as research, coordination of implementation of some of the accords as well as secondment of skills. We are grateful for the additional special funding we received from Sunday Times Business Leadership South Africa (BLSA). Another key milestone was BUSA s successful engagement with the Black Business Council on their participation at Nedlac In conclusion, I would like to express my sincere gratitude to the staff of BUSA and their families posed enormous challenges on the organisation, some of which resulted in current capacity being stretched to the limit. The commitment and dedication shown by all BUSA staff in these challenging times, which saw them putting in long hours at the office, is highly appreciated, making sure that BUSA remains effective and continues to deliver on its mandate. NOMAXABISO MAJOKWENI CHIEF EXECUTIVE OFFICER 6

7 Operating Environment OVER and above the effects of weak global economic growth, developments in the South African economy arguably contributed to a weak domestic economic performance during Real gross domestic product (GDP) at market prices grew by 2.5% in 2012 compared with 3.5% in Growth was generally aligned to the size of the industry (excluding government services) and was mainly supported by finance, real estate and business services followed by manufacturing industry and the wholesale, retail and motor trade, catering and accommodation industry. Although the mining and quarrying industries were the worst performers this did not come as a surprise given the challenges these industries face. While economic growth was sluggish in 2012, recording a low of 1.2% in the third quarter, inflation grew at a faster pace compared with the previous year. The year-on-year inflation rate as measured by the consumer price index (CPI) for all urban areas was 5.7% in December Inflation expectations remain anchored at the upper end of the inflation target range. The subdued pace of employment creation in the private sector has been further undermined by the fractious nature of recent wage negotiations and the announcement of further possible restructuring in the mining sector that would involve the closure or mothballing of mines or shafts. The rand exchange rate continued to pose an upside risk to the inflation outlook. The exchange rate has been affected by the widening deficit on the current account of the balance of payments during 2012 and changing global and domestic risk perceptions, particularly relating to the adverse developments in the South African labour market and the downgrades by the various ratings agencies. The latter has drawn concerns from both authorities responsible for monetary and fiscal policies respectively and has, therefore, had an impact on BUSA s work and approach in these areas. Rand exchange rate continued to pose an upside risk to the inflation outlook. 7

8 Economic Policy IN 2012, BUSA had engagements with the South African Reserve Bank Governor Gill Marcus who encouraged labour and business to work together and ensure a common understanding of the issues facing the country s economy. Of specific concern was the level of trust between business, labour and government. Constituencies were encouraged to demonstrate a shared vision in the interests of the country. To this end, senior government officials, business people and labour representatives were encouraged to show caution when making public statements as it was acknowledged that reckless statements aggravated negative investor sentiment. The Reserve Bank also raised concerns with regard to administered prices a view shared by BUSA as demonstrated by our opposition regarding the magnitude of the 16% rate hike proposed by Eskom. We also weighed in on the controversial etoll debate and we were clear in our support for the user-pay principle. Fearing the potential devastation the increase would have on business and the economy as a whole, BUSA commissioned a quantitative study to assess the impact of the proposed tariff increases and propose reasonable increases. The results were used as the basis for BUSA s presentation at the National Energy Regulator of South Africa public hearing held in Midrand, Gauteng, in early The efforts by BUSA and other stakeholders opposed to the proposed increase finally yielded results as the regulator approved an 8% increase, a decision that BUSA endorsed. On the international trade front, BUSA raised concerns that the outlook for South Africa s manufactured exports was increasingly becoming less encouraging, particularly due to weak recovery in traditional export destinations. On the imports side, business raised concerns around illegal imports that have largely benefitted from weaknesses in the system. For instance, products may be sent to other countries first, get registered over there and then enter South Africa thus effectively bypassing the system. Such practices result in revenue losses of 25% of import tariffs, causing damage to local industries. In the main it was noted that industry must become more involved and maintain a better relationship with government. In terms of further support for South African industry, during the period under review, BUSA submitted its comments on the Manufacturing Competitiveness Enhancement Programme s production incentive guidelines and, among others, reiterated concerns raised during bi-lateral engagement with the Department of Trade and Industry (DTI). These included fears that retaining base-year employment levels was a difficult condition to meet, particularly when productivity gains were part of the objectives of the investment. Overall, BUSA supports government s strategic objectives of job creation, but stressed that realities need to be faced in order for productivity to be improved in the short-term. To this end, jobs may initially be lost and the structure of sectors may need to adapt. 8

9 Comments on the above-mentioned bill were submitted to the DTI during the first half of This was followed by participation in the National Economic Development and Labour Council (Nedlac) engagements, which resulted in more areas of consensus than disagreements on the draft bill. BUSA went ahead and presented its views to the parliament portfolio committee on trade and industry to ensure that the voice of business was heard. It was heartening to note that the presentation was well received and hopefully our concerns will be addressed. BUSA also made submission of formal comments in mid around the Spatial Planning and Land Use Management Bill, a Nedlac engagement was initiated with a four-aside, a process that was concluded in Furthermore, a memorandum of understanding was signed on behalf of BUSA and South African Shippers Council to seal the formal working relationship between the two organisations. Effectively, the parties committed to constructively engage in joint decision-making and consult each other on strategic aspects within their specified focus areas. This also included sharing of views and documents on matters of mutual interest and waiving membership fee charges between the organisations. BUSA also weighed in on the controversial etoll debate. BUSA was clear that it supported the user-pay principle but believed there was a need to engage further with social partners on how to put this into practice and under what circumstances in order to limit the impact on transaction and administrative costs for the economy. BUSA continued to engage with government on the etolling system with the aim of developing a suitable platform to discuss alternative funding methodologies to support this initiative and other future infrastructural projects. Finally, and with an eye to the sustainability challenges increasingly facing business in South Africa, BUSA attended a Carbon Tax Seminar hosted by law firm Edward Nathan Sonnenbergs in December The seminar highlighted the need for business to prepare for the impact and efficiently manage exposure, especially because South Africa is the 12th largest emitter of air pollutants in the world. With the country committed to reducing its carbon footprint to 34% by 2020, the imperative for business is to invest more in alternative renewable energy, otherwise punitive measures in the form of penalties and taxes will be imposed. It was also noted that there are also carrot instruments to encourage the reduction of carbon footprint and these include: tax incentives, the Renewable Energy Independent Power Producer Purchase Programme and the Green Fund. 9

10 Trade Policy IN 2012, BUSA continued to encourage government to take stock of South Africa s current trade policy strategic framework, especially in light of the prioritisation of regional integration and the increased focus on general trade facilitation issues. With the world still battling to recover from the global economic slowdown, South Africa has experienced an associated shift in its trading patterns from the more traditional often Western trading partners to solidifying relationships with fast-growing developing economies. Partnerships such as South Africa s membership of the BRICS bloc with Brazil, Russia, India and China will definitely affect South African trade relations and our view is that business must be pre-emptive in taking full advantage of the opportunities this shift may bring about. Another key area of lobbying for BUSA in the trade space revolved around South Africa s position as a recipient of African Growth and Opportunity Act (AGOA) benefits. The situation remains precarious after 2012 with indications that the country is a candidate for graduation out of AGOA. BUSA has been engaging with the Department of Trade and Industry (bilaterally, and within Nedlac) and with members on South Africa s AGOA lobbying strategy. BUSA has also provided input into government s strategy papers, and has contributed to the terms of reference for a study to inform the strategy. In 2013, BUSA will be ramping up efforts with government, industry and other stakeholders to synthesise inputs into the finalised strategy. Recognising the potential inherent in the BRICS partnership, BUSA is also representing business in negotiations for a Preferential Trade Agreement with India. South Africa is negotiating as part of the Southern African Customs Union (SACU). This year, the bulk of BUSA engagements related to the India request (offensive list). BUSA has undertaken a comprehensive consultation process among its members in this regard and the consultation process has elicited concessions to about a quarter of India s requested products. In parallel to the request list, BUSA has consulted on issues such as the legal/negotiating text and proposed Technical Barriers to Trade text. BUSA has continued to represent South African business in the Economic Partnership Agreements (EPAs) negotiations with the European Union (EU). South Africa is negotiating as part of the SADC EPA group and BUSA has been instrumental in ensuring that the interests of South African businesses are adequately represented. From the South African perspective, significant progress was made in 2012 as the EU has begun to exercise some flexibility on a number of the policy prescription issues that were partly responsible for the impasse. Current issues under discussion are the EU s request for additional market access on certain clothing and textile lines and for the granting of additional geographic indicators as well as South Africa s request for greater parity in agriculture, which currently falls under the South African- EU Trade, Development and Cooperation Agreement. While the EU progress was positive, little substantive progress was made during 2012 in the World Trade Organisation s (WTO s) overarching Doha Development Agenda negotiations and no clear indication was forthcoming on the fate of the round due to deadlock in the negotiations. It is more likely that a few deliverables will be achieved by the Bali Ministerial Conference at the end of One area where there is broad consensus is trade facilitation. During the year in review BUSA also made its presence felt in this area, including policy input, legislation and lobbying. Our mark has been particularly felt in the following areas: Customs Duty and Customs Control Bills - BUSA has been the focal point for business in the new customs 10

11 bills. The Nedlac negotiations were completed and the Nedlac report was signed off by the Trade and Industry Chamber. Key issues raised in the report included BUSA s opposition to the de facto abolition of inland ports such as City Deep; the importance of ensuring that the legislation in Nedlac was not undermined by rules formulated outside Nedlac; and co-operation between all constituencies to increase judicial and prosecutorial technical capacity. South African approach to trade in services - BUSA has always articulated the need for a more co-ordinated and well-considered approach to trade in services one that is underpinned by accurate statistics and information on services trade, as well as empirical understanding of South Africa s competitiveness. Such an approach would facilitate better informed stances on South Africa s offensive and defensive interests, and consequent positions in negotiations. For this reason, BUSA has been concerned by the impasse that has subsisted in this area for the past few years particularly in relation to the work of the Nedlac task team on trade in services. An appraisal of the task team, which included a consideration of its possible revival, was taken up by Nedlac convenors. In parallel to this, BUSA and the Department of Trade and Industry (Trade in Services Directorate) initiated discussions on the formation of a Trade in Services Industry Coalition. The envisaged forum is intended to be the contact point for government for engaging with industry on trade in services matters. BUSA invited the Ports Regulator s CEO to a meeting with members on 25 April 2012, to hear the proposed methodology. BUSA continues to argue that the proposed tariff increases cannot be justified in terms of the efficiency of our ports and that it had a detrimental effect on South Africa s competitiveness. BUSA again submitted a written submission end of 2012 in order to counter the proposed tariff increase of 5.4%. Another key area of lobbying for BUSA in the trade space revolved around South Africa s position as a recipient of African Growth and Opportunity Act (AGOA) benefits. In terms of the Africa-centric, Tripartite Free Trade Agreement Non-Tariff Barrier Reporting Mechanism, BUSA continues to feed business concerns directly into the tripartite discussions, through interactions with the governmental focal point. As South African exporters and traders have been become very active users of the system, through BUSA, an expeditious system was created that would ensure that businesses voice is heard in addressing these non-tariff barriers and ensure that greater effect is given to trade facilitation within Africa. Implementation of South Africa s Trade Policy Strategic Framework - In 2011, Nedlac commenced with the implementation components of the Trade Policy Strategic Framework. This began with necessary amendments to the terms of reference of several task teams. It was followed by engagement on a series of government position papers, which continued into To date, BUSA has engaged on government position papers on inter alia: export taxes; trade in services; trade and competition policy; trade and supporting social policies; and South Africa s use of WTO dispute settlement. Related trade reference groups were also established in The reference groups will engage on the papers and input from social partners to consider how to concretely take the outcomes forward. Nedlac Trade and Industry Chamber Strategic Session - The Nedlac Trade and Industry Strategic Session with Minister Rob Davies was held on August 2, The session covered pertinent areas such as the implementation of the Industrial Policy Action Plan, the Local Procurement Accord, the green economy, response measures from MTBS, Special Economic Zones and South Africa s trade relations. Business participation in the event was exceptionally high and a number of key follow-up points were agreed upon. Finally, recognising the importance of South Africa s ports and intra-african trade going into 2013 and beyond, BUSA maintained a strong trade facilitation role in The National Ports Regulator met with BUSA representatives during the period, seeking BUSA s input into the methodology for calculating future tariff increases for the Ports Authority. 11

12 Social Policy MAJOR milestones were reached in BUSA S Social Policy portfolio in The highlight of which was the conclusion of the Nedlac negotiations on the Labour Relations Amendment Bill and the Basic Conditions of Employment Amendment Bill. The Parliamentary hearings regarding the bills were held in July BUSA participated in the negotiations at Nedlac on amendments to the Labour Relations Act, Basic Conditions of Employment Act, Employment Services Act and Employment Equity Act. Six themes were established: atypical employment relationships; dispute resolution; collective bargaining; compliance and enforcement; access to employment; and employment equity. The Nedlac negotiating team was led by Tanya Cohen, with assistance by Kaizer Moyane (dispute resolution), John Botha (atypical employment) and Elize Strydom (collective bargaining). The remainder of the negotiating team consisted of Johnny Goldberg, Elize van der Westhuizen, Aruna Ranchod, Kevin Cowley, Elias Monage and Janette Cummings. Office support was provided by Vikashnee Harbhajan and Vanessa Phala. Chris Todd of Bowman Gilfillan provided legal advice to the drafting team and was supported by Talita Laubscher on employment equity. Prior to the parliamentary hearings, BUSA held a number of bilateral meetings with the Minister of Labour and the director-general from the Department of Labour Labour led by the BUSA CEO and Mthunzi Mdwaba. The purpose of these meetings was to discuss concerns raised in the 2010 Regulatory Impact Assessment (RIA). BUSA indicated to the Minister and the Director-General that the proposals contained in the two bills will: Inevitably result in decreasing employment opportunities; Make the law more complex harder to understand for employers, workers and for the inspectorate to enforce; Create significant burdens for the CCMA and labour courts; Result in fundamental restructuring in employment; and Create excessive administration and punitive outcomes for business, resulting in risks and uncertainty, contrary to the requirements of sustainable enterprises both small and large, particularly in the current economic climate. As a new Regulatory Impact Assessment (RIA) on new amendments was not conducted BUSA commissioned Chris Darroll, Chief Executive of the SBP, and Professor Neil Rankin of the University of the Witwatersrand to conduct an independent mini RIA on selected areas of the two bills. The assessment confirmed that the amendments will place a burden on the business community and will have a negative impact on small businesses and, most importantly, will neither sustain existing jobs nor create new jobs as envisioned in the New Growth Path and the National Development Plan. These were highlighted in the BUSA submission to parliament and in the oral presentation delivered on 25 July The mini RIA confirmed that: A minimum of jobs will be lost due to equal treatment provisions; Between and jobs will be lost should amendments prescribing wage increases on actual earnings be introduced; Between to jobs will be lost should amendments to extend collective bargaining agreements be introduced; and Most importantly these amendments will place significant extra administrative burden on business. Despite the conclusion of these bills, 2012 will be remembered as a year when miners in Marikana were killed during an unprotected strike over wage increases. It will also be remembered for the farmworkers strikes in the Western Cape that led to the Minister of Labour issuing a sectorial determination setting wages higher than current going rates. These events provided vital insights into the weaknesses with our labour relations and collective bargaining systems. BUSA continued continued with the implementation of the Decent Work Country Programme. A review of 2011 s activities was conducted and, in October 2012, a Women Entrepreneurship Development and Gender Equality (WEDGE) Workshop was held to take stock of the programme s achievements in South Africa, Lesotho, Malawi and Mozambique and to discuss the way forward. In addition, BUSA participated in a regional Women in Business and Management forum from October Hosted by the International Labour Organisation s (ILO s) office in Pretoria, in conjunction with the ILO-Bureau for Employers Activities (ACT/EMP) and the Regional Office for Africa, various priority outputs were agreed upon. They 12

13 included the strengthening of labour inspection systems in the public and private sectors; beefing up the capacity of government and social partners to promote employment equity (and gender equality) in the workplace, and a macro-economic policy supportive of employment creation and decent work outcomes. It also encompassed the identification of policy options to improve working conditions for the most vulnerable workers (with particular focus on the informal economy); the development of a coherent policy framework for the adoption of employment-intensive investments in green production, and increased support for a new and more inclusive mandatory social security system. As a result of this output, BUSA believes that the capacity of social partners to engage more effectively in social dialogue has been strengthened and the ability of both workers and employers organisations and bargaining councils to engage more effectively in collective bargaining processes was reinforced. Furthermore, in August 2012, BUSA met with the ILO to discuss areas of collaboration to assist with the implementation of business-related priorities. Work is in progress regarding the analysis of decent work indicators and identification of locally relevant indicators for South Africa. Another involvement of specific relevance to South African trade was BUSA S participation in the Nedlac negotiations regarding amendments to the Merchant Shipping Act No. 57 of The amendments were aimed at giving effect to the Consolidated Maritime Labour Convention adopted by the ILO in 2006 and the Work in the Fishing Convention of The amendments sought to ensure that the act met current demands of merchant shipping and dealt with conditions of employment for seafarers within the current labour relations legislation. The negotiations were concluded in September Turning closer to home, and following a Nedlac presentation by the Department of Health regarding the Green Paper on National Health Insurance (NHI) in January 2012, the BUSA NHI Task Team began drafting a national engagement strategy for health. The strategy is aimed at facilitating the development of a coherent voice and framework for business in the area of public health transformation. On the related issue of HIV/ Aids the Code of Good Practice for HIV/Aids in the workplace and its technical assistance guidelines were finalised in 2012 following negotiations at Nedlac which commenced in 2011.Looking more broadly at the impact of skills, education and training on the social policy environment, BUSA s 2012 highlights in this sphere were mainly centred on its response to the Green Paper on Post School Education and Training and the Seta Grant Regulations, which were gazetted by the Minister of Higher Education and Training for public comment. The green paper sets out the challenges facing the post school system and sets out broad policy for: Expanding post-school provision to improve access; Strengthening the institutions to improve quality; and Setting out a vision for achieving a coherent, collaborative and co-ordinated post school system, as well as alignment between the various institutional types and between education and training institutions and the labour market. The Seta Grant Regulations, on the other hand, seek to standardise the proportion of funds available for skills development that are spent on administration, among others. The grant regulations, in BUSA s view, will lead to reduced workplace training which is not good for promoting youth employment. BUSA s main concerns with the green paper centred on the fact that more focus would be placed on chasing numbers at the expense of quality training. There is also a possibility for a decline in the submission of Workplace Skills Plans as a result of the reduction in mandatory grants provided to employers. BUSA, represented by Mthunzi Mdwaba, Nomaxabiso Majokweni, Vanessa Phala, Tanya Cohen, Kaizer Moyane and John Botha had a good, strategic presence at the 101st session of the ILO in Geneva from 30 May to 15 June Hosted annually by the ILO, all 184 member states were in attendance. The conference addressed three important political and social topics: youth employment, social protection and fundamental principles and rights at work. The discussions on youth employment were timely and useful for South Africa in light of the country s efforts to drive youth employment. The 2012 ILO conference was also the last for outgoing Director-General Juan Somavia. Guy Ryder was elected as the new director-general and assumed office on 1 October The conference also benefited from the participation of a number of high-level visitors, notably Aung San Suu Kyi. This followed on from the ILO s resolution to normalise its relations with the government of Myanmar. 13

14 Transformation Policy THE year 2012 marked the conclusion of negotiations regarding the Broad-Based Black Economic Empowerment (B-BBEE) amendments which cabinet approved for public comments in November One of the constitutional mandates of the transformation policy committee is to design strategies and programmes aimed at the implementation of B-BBEE. In discharging this mandate, the committee commissioned a legal expert to assist in drafting the BUSA position on the B-BBEE Amendment Bill. BUSA welcomed and supported the amendment bill, in particular the changes dealing with fronting, which should speed up implementation of transformation in the country. While cautioning against the introduction of penalties that could have unintended consequences, BUSA supported the regulation of the verification industry as this will bring about consistency and credibility in the verification regime. BUSA also called for an effective, efficient and independent BEE commission with sufficient enforcement powers. Another significant issue for business resulting from the Amendment Bill was the provision on the trumping clause contained in clause 3. In terms of the trumping provision in the B-BBEE Amendment Bill, the act and its codes would trump any transformation provisions in the Mineral and Petroleum Resources Development Act and the Mining Charter where those differ from provisions in the act and its codes. BUSA actively engaged with the Department of Trade and Industry (DTI) on the Bill in general but also specifics such as the trumping provision. Regarding the trumping provision, BUSA indicated that the mining industry had had its own long standing legislation dealing with transformation, that is the Mineral and Petroleum Resources Development Act. In terms of this act, a Mining Charter, a scorecard and Social and Labour Plans have been developed collectively by all relevant role players, namely the Department of Mineral Resources, mining companies and trade unions. Through this engagement, BUSA requested that the mining industry be exempted from the application of the trumping provision. Negotiations on the bill were concluded at the National Economic Development and Labour Council (Nedlac) during The Nedlac report, which was submitted to the Parliamentary Portfolio Committee and Trade and Industry, contained areas of agreement and disagreement on proposals tabled by government. The BUSA position on this was guided by the mandated submission. On 5 October 2012, the DTI gazetted the revised BBBEE Codes for public comments. Prior to the publication, Busa invited the DTI to the transformation committee meeting on 12 September 2012 to share the anticipated main amend- ments with members. On 24 October, the department invited BUSA to its workshop on the revised codes to clarify proposed amendments and afford business an opportunity to engage on the matter. On 5 December 2012, BUSA submitted its comments regarding the revised B-BBEE codes to the department and the issues raised included a caution against raising the bar too high, which could have unintended consequences of weakening compliance especially when research by the department has confirmed progress in compliance. BUSA also expressed concerns on the possible impact on foreign direct investment as a result of proposals on ownership element and the fact that the proposed Seta Grant Regulations were not in place when the codes were gazetted. Alignment between these is important. BUSA welcomed and supported the amendment bill, in particular the changes dealing with fronting, which should speed up implementation of transformation in the country. The increase from 75% of black beneficiaries to 100% in order to claim a maximum of five points was noted with concern and was not supported by BUSA but the department later withdrew Code Series 500, a move BUSA supported. Finally, a number of Transformation Committee projects are dealt with at the Nedlac Development Chamber, the main one being the Women Empowerment and Gender Equity Bill. The bill was tabled at the chamber during 2012 and has been gazetted for public comments. The Nedlac deliberations on the bill commenced in 2012 and a joint task team between the Development and the Labour Market Chambers was established to deal with the bill. On 22 November 2012, the chamber convened its strategic session, which was chaired by the Business Convenor for the Development Chamber, Fani Xaba. The purpose of the session was to take stock of the chamber s achievements and agree on the 2013 plan of action. Major milestones achieved by the chamber for 2012 included the finalisation of the Integrated Youth Development Strategy and the National Disability Policy. 14

15 Ethics and Corruption BUSA continues to strive to address corruption and unethical conduct in the South African business sector. In 2012 the Business Anti-Corruption Awareness Campaign, implemented in partnership with the Department of Public Service and Administration (DPSA) and the Danish Embassy, came to an end. However, during the year, the following initiatives were implemented: Implementation of the e-training programme on corruption that covered modules such as imperatives for fighting corruption, how to identify corruption, and what to do about corruption. Implementation of the mentorship programme: a total of 50 mentees and eight mentors were involved in the programme, with the aim of facilitating a cross-pollination of learning between mentors and mentees to ensure sustainable business growth, increased accountability, transparency and business integrity. The programme, which targeted participants from retail, financial services and construction sectors as well as SMEs, also included networking events that encouraged interaction and engagement between mentors and mentees. As part of BUSA s anti-corruption drive, communication and awareness materials such as billboards, brochures and posters were developed between January 2012 to June The campaign included general anti-corruption messages regarding the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the United Nations Convention against Corruption. Billboards were displayed at various airports, including Durban and Cape Town, and on street poles on main routes around South Africa. While these endeavours aim to broaden the impact of anti-corruption drives to the general public, BUSA continues to believe that corruption must be addressed at the highest levels. To this end, the 3rd CEO Roundtable discussion was held on 26 September 2012 at the Sandton Convention Centre, bringing together various stakeholders from around the country. The focus was on integrity pacts and an international expert from Transparency International was invited to share global best practices. BUSA believes that corruption must be addressed at the highest levels. The focus was on the inclusion of integrity pacts in the Treasury Regulations to enhance integrity and prevent corruption and bribery in procurement deals with government. This topic was particularly important for business and happened during the time when Busa, in collaboration with the National Business Initiative, were in discussions with National Treasury regarding the inclusion of integrity pacts in the Treasury Regulations in order to enhance integrity and prevent corruption and bribery in procurement deals with government. Finally, and as part of the National Anti-Corruption Forum, the leadership of the forum was handed over from business to civil society on 9 December 2012 during the celebration of International Anti-Corruption Day. 15

16 Media & Communications DURING the year under review, BUSA not only streamlined the way the organisation communicated with members but also offered members strategic media opportunities. BUSA s communication for 2012 was more tactical than reactive and was anchored on the organisation s strategy. In 2013, we will continue to use this approach. The year 2012 was successful from a media relations perspective. We made strategic pronouncements on key domestic and international issues. These included the unfortunate events at Marikana, the labour relations challenges in South Africa and how they cripple competitiveness, etolls, and labour law amendments. In all instances, BUSA communicated tactically and as such we gained visibility and improvement of our brand presence in the eyes of our target audiences. Our print presence improved from 1040 Advertising Value Equivalency (AVEs) in 2011 to 1229 in In broadcast we escalated our visibility from 319 AVEs in 2011 to 553 AVEs in On behalf of members, BUSA embarked on a strategic and intensive media campaign on the proposed labour law amendments, an issue of critical importance that needed a louder business voice. In this space we have highlighted a variety of key issues for business. This column also allows us to write on more long term thought leadership issues rather than merely reacting to current issues. General feedback on the column has been outstanding. Having recognised the importance of this space, going forward we aim to involve our members more and invite them to contribute columns for this space. BUSA embarked on a strategic and intensive media campaign on the proposed labour law amendments. Internally, we reformatted our communication, adopting a friendly template sensitive to the fact that members are inundated with communication on a daily basis and, as a result, our s need to stand out, be professional and clear on the purpose of communication at first glance. This template-based way of communicating was well received by the majority of our members and, as always, we are committed to continuously improve our communication systems with members. The focus of our messaging was raising awareness on the impact of these bills should they be enacted. Among the issues we raised was the fact that these bills would raise the cost and complexity of conducting business in South Africa and this would have had considerable negative impact on small businesses. Our media and communications department remains critical to the substantive work produced by BUSA. In 2012 we continued to focus and publicise work done by our standing committee to both our internal and external stakeholders. From a strategic media relations perspective, BUSA continued with the tactical placement of the Voice of Business column in Sunday Times, one of the biggest newspapers in South Africa with an audited circulation of and a weekly readership of 3.2-million. 16

17 Trade Investment Promotion THE year 2012 saw a dynamic active trade and investment promotion portfolio. Some of the major undertakings of this portfolio included facilitating our successful participation at the BRICS Summit in New Delhi, India; launching the US s Doing Business in Africa Campaign; and hosting a business to business seminar to strengthen ties with French business. BUSA, under the leadership of its President Futhi Mtoba and its CEO Nomaxabiso Majokweni, took a business delegation of more than 50 companies to South Africa s second BRICS Business Forum in New Delhi. This was held on the margins of the BRICS Summit. The theme was Partnership for Stability, Security and Growth. Some of the key commitments that came out of the forum were to encourage governments to take steps to deepen trade engagements among the BRICS countries; to look at enhancing intra-brics trade from US$230-billion to at least $500-billion by 2015; and to capitalise on opportunities in sectors such as agriculture, energy, infrastructure, healthcare and pharmaceuticals, as well as ICT. BUSA also hosted a very successful and focussed business conference with France, the South Africa-France Economic Forum, where more than 100 South African and French companies under their French apex business association (Medef International) convened to further advance South African and French economic ties. The two-day conference, which took place in October 2012, saw some of our members highlighting the need for both business communities to deepen and further enhance business engagements. French Ambassador to South Africa, H.E. Jacques Lapouge, informed participants that the 35-strong visiting French business delegation sought to diversify their investments in South Africa. The two-day forum was overseen by the co-chairs, Martin Kingston of Rothschild SA and Gerard Wolf of Medef International. The programme included six plenaries, business-to-business meetings, a reception and site visits for the French delegation. Economic co-operation discussions mainly focused on investment opportunities in infrastructure, ICT, renewable energy and a legislative environment conducive to business. Speakers included representatives from companies and organisations such as Standard Bank, Rothschild SA, Group Five, Transnet, Altech Management, 13 Africa, Thales SA, Eskom, Department of Energy, Absa, KPMG, the DTI, and the University of the Witwatersrand. Together with the Corporate Council on Africa (CCA), BUSA hosted Secretary Blank, America s Acting Secretary for Commerce, when she visited South Africa to promote the Doing Business in Africa Campaign. She described this campaign as a key component of US President Barack Obama s strategy towards sub-saharan Africa, a plan aimed at strengthening democratic institutions, spurring economic growth and trade and investment. The campaign is also aimed at encouraging US companies and African Diaspora-owned businesses to strengthen trade and investment in the continent. A key element of the campaign is enhancing the co-ordination of US government agencies that provide support to American companies trading with and investing in the continent of Africa. The BUSA-CCA luncheon attracted more than 120 participants and was opened by BUSA Vice-President Clive Manci. Manci noted that a number of US policies, such as AGOA, had given impetus to continued economic growth on the continent. 17

18 Busa Parliamentary Office THE BUSA Parliamentary Office (BPO) has two primary mandates: to provide liaison between business and Parliament, and to provide BUSA members with latest information on legislative and policy developments at Parliament. Public hearings were the most common platform used BUSA used to engage with Parliament in They provide a crucial, formal forum through which business opinion may not only be stated, but to which government departments must respond in writing so that Members of Parliament are able to make the most informed decisions when deliberating on legislation affecting the economy. In 2012, BUSA engaged Parliament on a number of key issues, including: Current WTO Negotiations The 2012 National Budget The National Health Amendment Bill The Independent Systems and Market Operator Bill National Waste Management Strategy The Labour Relations Amendment Bill The Basic Conditions of Employment Amendment Bill Electricity Distribution The Spatial Planning and Land Use Management Bill The National Water Resources Strategy The Transport Laws Amendment Bill (etolling) South Africa s Economic Outlook The 2012 Medium Term Budget Policy Statement The BPO was also pleased to assist individual BUSA members in making submissions on new legislation directed at their particular sectors. With the help of the BPO, the Security Industry Alliance (SIA), a BUSA member, made a comprehensive submission to Parliament on a bill targeting private security industry. SIA s submission contributed to the removal of a proposed provision that had the potential to significantly constrain South Africa s private security industry. We continue to urge BUSA members interested in influencing legislation pertaining to their industries to make use of the services of the BPO. The BPO continued to keep BUSA members informed of parliamentary news via its electronic newsletter Parliamentary News Watch, which provides updates on the latest legislation tabled at Parliament, as well as reports on deliberations and other parliamentary news. The BPO s twitter feed (@LeeAtBUSA) continued to provide real-time updates of parliamentary news in The BPO also continued to engage directly with BUSA members wanting more individualised information relating to legislation. We welcome enquiries by all BUSA members and affiliates. BUSA s leadership was, as usual, invited to represent South African business at all key events on the 2012 parliamentary calendar, including the Opening of Parliament/President s State of the Nation Address, the Finance Minister s Budget Speech and Medium-Term Budget Policy Statement. 18

19 Membership, Chambers and SME s General Membership The servicing of membership is a key component of what makes BUSA the organisation that it is. In 2012 BUSA s membership reached a plateau and there was some renewed signs of life into These latest developments are encouraging. Board of Trustees The Board of Trustees (BoT) membership experienced some challenges with some of the restructuring discussions resulting in some loss in membership during 2012 into The organisational review revealed a need to further define the role of direct corporate members versus that of business organisation within an apex body and this resulted in some initial uncertainty on the part of BoT s. The service offering to members of BUSA are as follows: Access to a broad range of information affecting business; Input into macro policy formulation; Interaction with all business sectors, legislators, government agencies, international and regional bodies and government representatives, Participation in high level bilaterals between business and the President and his Cabinet Access to the BUSA Parliamentary Office through which presentations to parliament can be facilitated. Direct access to government ministers and senior officials, trade union and community leaders. Receiving information and participation in activities linked to organisations that BUSA has membership of or with whom BUSA has formal links such as: World Economic Forum (WEF) World Bank International Labour Organisation (ILO) B20 (Business grouping of the G20 countries) BRICS South African Business Coalition on HIV-Aids (SABCOHA) Business Against Crime (BAC) National Business Initiative (NBI) Nepad Business Foundation (NBF) Business and Industry Advisory Committee to the Organisation for Economic Co-operation and Development (OECD) Nomination of representatives to serve on BUSAs various committees and structures; Nomination of representatives to serve on external national and international bodies/committees; Having access to lobbying structures at the highest business levels in the country; Receiving expert advice on/participation in: Economic policy Social policy Trade policy Transformation policy Chambers of Commerce and Industry Small and Medium Enterprise (SME) Development Policy Benefitting from research conducted on matters of national and sectoral interest; Participation and feedback on business-related activities including Nedlac. Networking with business leaders and experts across various industries and professions. Nomination of representatives from time to time to attend sponsored international training events, including development in the macro business environment. 19

20 Board of Trustees Aspen Pharmacare Mr. Steven Saad/ Mr. Stavros Nicolaou CEO/ Senior Executive Shell South Africa Marketing Mr. Bonang Mohale CEO Sumo Coal Mr. Selim Kaymak CEO Transman Mrs. Angela Dick CEO Deloitte Mr. Lwazi Bam CEO Group Five Limited Mr. Mike Upton CEO Price WaterHouse Coopers Mr Thabani Jali /Mr Stanley Subramoney CEO/Deputy CEO Edward Nathan Sonnenbergs (Inc) Mr.Piet Faber CEO Vodacom Group Limited Mr. Shameel Joosub CEO ABSA Bank Ms. Maria Ramos CEO Clicks Group Limited Mr. David Kneale CEO Arup (Pty) Ltd Mr. Joe Strydom CEO Accenture Mr. William Mzimba CEO Pamodzi Investment Holdings (Pty) Ltd Mr. Ndaba Ntsele CEO Alstom South & East Africa (Pty) Ltd Mr. Jerome Boyet President for Africa Siemens Limited Mr Siegmar Proebstl MTN (Pty) Ltd Mr. Karel Willem Pienaar CEO JSE Ltd Mr. Geoff Rothschild - Senior Director Pretoria Portland Cement Company Ltd Mr. Ketso Gordhan CEO Royal Bafokeng Holdings (Pty) Ltd Ms Albertinah Kekana CEO Microsoft South Africa Mr. Mteto Nyati CEO African Rainbow Minerals Mr. Patrice Motsephe Sanofi-Aventis Mr. John Fagan CEO Altech Management Services Mr. Craig Venter CEO Citibank NA Ms. Donna Oosthuyse Managing Director BHP Billiton SA Limited Ms. Nomfundo Mqadi CEO Arcus Gibb Pty Ltd Mr. Richard Vries CEO Eskom Mr. Brian Dames CEO Telkom SA Limited Mr.Sipho Masego CEO Oceana Group Limited Mr. Francois Kuttel CEO Adcorp Mr. Richard Pike CEO Investec Ltd. Mr. Stephen Koseff CEO Rothschild Financial Services Mr. Martin Kingston CEO Anglo Gold Ashanti Mr. Srinivasan Venkatakrishnan CEO Ernst and Young Mr. Ajen Sita- CEO Unilever Mr. Marijn van Tiggelen Chairman Sasol Mr. Maurice Radebe Chairman TATA Mr. Raman Dhawan Managing Director Sanlam Mr. Johan Van Zyl CEO Massmart Mr. Grant Pattison CEO SA Breweries Ltd Mr. Norman Adami Chairman and Managing Director Vedanta Zinc Africa and Ireland Kishore Kumar CEO/Braen Migogo Vice President (HR) Nissan South Africa (Pty) Ltd Mr. Mike Whitfield Managing Director Sappi Ltd Mr. Ralf Boëttger CEO Liberty Mr. Bruce Hemphill CEO Capitec Bank Messrs.Riaan Stassen CEO / Sbusiso Kumalo Head Chanel Marketing & CSI Xsrata South Africa (Pty) Ltd Mr. Andile Sangqu Executive Director BMW South Africa (Pty) Ltd Mr. Bodo Donauer Maning Director Pfizer Laboratories (Pty) Ltd - CEO Mr. Brian Daniel Thoughtworks- MD Africa - Ms. Betty Enyonam Kumahor 20

21 List of Members Aerospace Maritime Defence Industries Association (AMD) Agricultural Business Chamber (ABC) Agri SA AHI AMEO (Automobile Manufacturers Employers Organisation) Apparel Manufacturers Association of South Africa (AMSA) Association of Accredited Chambers of Commerce and Industry (AACCI) Association for Savings and Investment Southern Africa (ASISA) Banking Association Black Information Technology Forum (BITF) Black Women Organisation South Africa (BWOSA) Business Leadership South Africa Business Women s Association (BWA) Casino Association of South Africa (CASA) CESA (Consulting Engineers South Africa) Chamber of Mines of South Africa (COM) Chemical and Allied Industries Association (CAIA) Confederation of Associations in the Private Employment Sector (CAPES) Consumer Goods Council of South Africa (CGCSA) Financial Intermediaries Association of Southern Africa (FIA) Financial Planning Institute of Southern Africa (FPI) Information Technology Association (ITA) Master Builders South Africa (MBSA) Metal Recycles Association of South Africa (MRA) National Association of Automotive Component and Allied Manufacturers (NAACAM) National Association of Automobile Manufacturers of South Africa (NAAMSA) National Federation of Building Industries (NAFBI) Retailers Association (RA) Retail Motor Industry (RMI) South African Agricultural Processors Association (SAAPA) Road Freight Employers Association (RFEA) Security Industry Alliance (SIA) South African Business Coalition on HIV/AIDS (SABCOHA) South African Bus Operators Association (SABOA) South African Chamber of Commerce and Industry (SACCI) South African Federation of Civil Engineering Contractors (SAFCEC) South African Insurance Association (SAIA) South African Leisure, Tourism and Hospitality Association (SALTHA) South African National Co-Operatives Council (SANCOC) South African Petroleum Industry Association (SAPIA) South African Property Owners Association (SAPOA) Steel and Engineering Industries Federation of South Africa (SEIFSA) Tourism Business Council of South Africa (TBCSA) United Businesswomen of South Africa (UBSA) Real Estate Business Owners of South Africa (REBOSA) CHAMBER OF COMMERCE CHAMBER OF COMMERCE LEFT AND RE-INSTATED PROFESSIONALS CORPORATE ASSOCIATIONS PROFESSIONAL SECTOR PROFESSIONALS PROFESSIONALS PROFESSIONALS CHAMBER OF COMMERCE UNIECTORAL PROFESSIONALS PROFESSIONALS 21

22 Busa Staff Members 2013 Back row, from left: Wisani Maswanganyi, Sue Klomp, Mary Tshawe, Fergus Marupen, Andile Mnyaka and Katlego Rapoo Middle row, from left: Mbulelo Lolwane, Mpumelelo Mabaso, Lumka Luzipho, Trudi McLoughlin, Masego Lehihi, Thembi Bentswana, Fredinnah Kgasago and Sbusiso Dlamini Front row, from left: Costa Pierides, CEO Nomaxabiso Majokweni, Raymond Parsons and Ruth Maleka Absent: Vanessa Phala, Kgatlaki Ngoasheng and Nomaza Spelman 22

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24 National Office 3 Gwen Lane, Sandton, 2196 PO Box , Benmore, 2010 Tel: /1/2/3 Fax: busa@busa.org.za Parliamentary Office 9 Church Square, Cape Town, 8001 PO Box 3867, Cape Town, 8000 Tel: /1/2/3 Fax: busa@busa.org.za 24 Designed/edited by Afrimage Communications