AT THE BENCH MARK OF EMPOWERMENT

B-BBEE AMENDED CODES EXPLAINED

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BEE (Black Economic Empowerment) or Broad-Based Black Economic

Empowerment (BBBEE) as it is technically known is an initiative by the South

African government to address historical imbalances of the country by

facilitating the participation of black people in the mainstream economy.

Black people refer to African, Coloured and Indian who are South African

citizens by birth or by descent, or who were naturalised prior to the

commencement of the interim constitution in 1993, or who those would have

been able to acquire citizenship by naturalization prior to 27 April 1994 had it

not been for the presence of the Apartheid policy.

BBBEE is governed by the Broad Based Black Economic Empowerment (BBBEE)

Act No. 53 of 2003 and the BBBEE Codes of Good Practice gazetted in February

2007 and the Amended Codes of 2013.

Who needs to comply / participate

Public Sector Procurement

• Anyone who supplies government or the State-owned Enterprises (Eskom,

Transnet etc.) or is in a direct line to any of their suppliers

Money from government

• Anyone trying to become involved in Public-Private Partnerships

• Anyone attempting to purchase state-owned assets

• Further broadening of BEE net to include govt. grants etc.

Regulated Industries & Concessions

• Anyone seeking a license or concession from government (Banks, mines, petrochemical

companies, telecommunications companies, gambling institutions, import / export companies, etc.)

Public Perception (Social License)

• National BEE Database – BEE score is public domain info.

• National BEE Label for consumer products & services and retailers

• Shareholder Activism

What does a BEE Scorecard Mean

Your score counts towards your

customer’s score

Your supplier’s score counts towards yourscore

BEE is not a compliance issue……

……..it is a competitiveness issue.

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What does the “OLD’ Scorecard focus on

• Gender empowerment

• Disabilities

• Support for the youth, rural and elderly

• Increasing local production and value-adding

• Supporting small businesses

• Sectorial issues

• Pro-active investment in business development

• Community projects

• Massive Skills Development

What else does the “Amended ” Scorecard focus on

• Ownership – Mandatory rating for all business’

• Disabilities

• Support for the youth, rural and elderly

• Increasing local production

• Supporting small businesses

• Pro-active investment Enterprise and Supplier Development

• Massive increase in Skills Development emphasis – Targets have Doubled

The seven elements of the BEE scorecard have been reduced to five elements:

Ownership – Mandatory

Management Control – Now includes Employment Equity

Skills Development

Enterprise Supplier Development – Merged Preferential Procurement and Enterprise

Development

Socio Economic Development

NEW CODES : KEY

CHANGES

Enterprise Turnover

Exempted Micro Enterprise Less than R10m

Qualifying Small Enterprise

More than R10m but less than R50m

Large Enterprise More than R50m

REVISED CODES : Thresholds

Element Codes of Good Practice 2007 Amended Codes of Good Practice 2013

Weighting points

Target Weighting points

Target

Ownership 20 25% + 1 Vote 25 25% + 1 Vote

Management & Control 10 50% 19 50%

Employment Equity 15 80% - -

Skills Development 15 3% of Payroll 20 6% of Payroll

Preferential Procurement 20 70% - -

Enterprise Development 15 3% - -

Enterprise & Supplier Development

- - 40 80%

Socio-Economic Development

5 1% 5 1%

Total 100 109

2007 AND 2013 SCORECARD COMPARED

B-BBEE Status Current Qualification

Revised Qualification

B-BBEE

Recognition

Level

Level 1 ≥100 points ≥100 points 135%

Level 2 ≥85 but <100 points

≥95 but <100 points

125%

Level 3 ≥75 but <85 points ≥90 but <95 points 110%

Level 4 ≥65 but <75 points ≥80 but <90 points 100%

Level 5 ≥55 but <65 points ≥75 but <80 points 80%

Level 6 ≥45 but <55points ≥70 but <75 points 60%

Level 7 ≥40 but <45 points ≥55 but <70points 50%

Level 8 ≥30 but <40 points ≥40but <55points 10%

Non-Compliant <30 points <40 points 0%

REVISED CODES : Recognition Levels

A New Requirement :

Priority Elements

(Based on % of target)

40% on ownership’s net value

40% of the skills development score

40% of each of the targets in the 3 categories within the Enterprise and Supplier

Development element, namely:

Preferential Procurement (25 point weighting)

Supplier Development (10 point weighting)

Enterprise Development (5 point weighting)

Failure to meet any of these subminimum targets , results in the discounting of 1 level !!