Larger businesses in South Africa are postponing spending money on BEE verifications until it is absolutely necessary. BEE verification company Apala VZR Verifications’ financial director, Mike Lovell, said this conclusion was reached based on research conducted by the firm among a range of small, medium and large businesses.

“During the past few months, the South African National Accreditation System (SANAS) has increased the number of BEE verification agencies that have been accredited by it to issue BEE verification certificates to 22. This is a positive development seeing that a substantial number of BEE verification agencies will be needed to give credibility to the requirement of an independent and trustworthy BEE verification certificate.

“The Minister of Trade and Industry, Rob Davies announced a delay of the deadline for BEE verification certificates issued by SANAS accredited verification agencies (or verification agencies in possession of a valid pre-assessment letter from SANAS) to be valid from 1 August 2009 to 1 February 2010. In businesses with a turnover of less than R5m per annum, there appears to have been little effect, as more than 68% of participants in the survey indicated that during the past 12 months they had undertaken BEE verification exercises. However, the research suggested that as the turnover of businesses increases, they participate to a lesser extent in BEE verification exercises.

“During the past 12 months, only 30% of participants with a turnover of between R5m and R35m had undertaken BEE verifications conducted by verification agencies, whereas this percentage dropped to 23% in respect of businesses with a turnover of R35m and more.

“An interesting result of the survey is that it also appears that businesses with larger turnovers more readily make use of non-accredited rating agencies.  Only 25% of participants with a turnover of less than R5m per annum used non-accredited rating agencies, whereas businesses with a turnover of R35m and more per annum were more likely to use such non-accredited agencies - nearly 68% of all business of this size still use non-accredited rating agencies.”

Apala VZR Verifications’ operations director Christo Barnardo said that although all participants in the survey were aware of the SANAS accreditation status of the verification agencies used by them during the past 12 months, nearly a quarter (24%) did not know whether verification agencies used by them were members of the Association of BEE Verification Agencies (ABVA), the national umbrella body representing verification agencies, both accredited and non-accredited.

The survey also established that smaller companies tended to be happier with the service they received from rating agencies than larger companies. In businesses with a turnover of R35m and more, nearly 65% of participants indicated that they were not satisfied with the service delivery of the accredited rating agency used. A number of other service delivery trends were noted, including:

• unacceptable delays by the verification agencies in executing mandates

• inefficiencies in the administration functions of the verification agencies

• incompetence of verification analysts

• a perceived lack of assistance during preparation for the verification exercise

• poor communication from the verification agencies regarding the requirements to be met during the verification process.