SOUTH African businesses with a turnover of less than R10 million will now receive Black Economic Empowerment (BEE) certificates and affidavits from Nedbank along with business registrations – a move that has drawn the ire of verification agencies which claim that they are being put out of business by some of the major banks in SA that have gone similar routes.
The new offering by Nedbank is endorsed by the Department of Trade and Industry in partnership with the CIPC. This has made Nedbank the first of the large major banks in SA to offer BEE affidavits and certificates to its clients when they incorporate a company using the Nedbank portal. On top of that the bank says it plans to extend its service in the near future where clients will be able to renew their annual returns through Nedbank’s online platform.
However, owners of verification agencies tell a different story of how this might affect their businesses.
An owner of verification agency who spoke to the African Times on condition of anonymity for fear of losing business said the business of doing BEE verification and issuing certificates is slowly dying out largely due to various major institutions providing the service at a fraction of the cost.
Also, issues with compliance from majority white owned companies and uncertainty is pushing many clients towards bigger institutions as opposed to smaller players in the field. “What many companies do not realise is that the compliance factor can make or break a business which is why it was important to ensure that small businesses made use of verification agencies to outline their BEE credentials. Nowadays the major players have wrestled market share from verification agencies which has dealt a blow to small business owners in this field,” he said.
However, Dennis Munyuni, the CEO and Founder of My World Business, a business consultancy firm based in Johannesburg, held a different view. “I actually think it’s a great thing because that limits corruption. The banking system is a more regulated system and it only makes sense that that they take over those processes. It is true that the smaller players will be affected to their dismay but the move is a benefit for the majority,” he said.
During the course of 2017, the DTI and CIPC made a decision to allow banks to offer BEE affidavits or certificates.
In a comment, Nedbank’s head of Relationship Banking Sales, Alan Shannon said: “Nedbank is always looking at innovating and providing practical solutions for small businesses particularly start ups, aimed at alleviating red tape and other obstacles in their quest to start a new business. Through our ongoing client engagements, we are cognisant that it has become increasingly difficult for start ups to take off.
“Through initiatives such as these, which form part of our banking and beyond offering, we hope to make it easier for entrepreneurs and start ups,” said Shannon