Taking the Guesswork out of B-BBEE Compliance

Do you need a B-BBEE certificate? Does your company need help in reaching its B-BBEE goals? Are you confused by the concept of Broad-Based Black Economic Empowerment? Let’s get you started on the road to peace of mind for B-BBEE. Here’s what you need to know.

The South African government put in place the Broad-Based Black Economic Empowerment Act in 2003. It is a measure to rectify years of economic imbalance in South Africa. It was acknowledged that the monetary wealth still resides in the hands of a few, while many faced severe poverty. B-BBEE was, and still is, to be a means of creating and maintaining equity among the people. This would go a long way to undoing the racial injustices of the past. A set of Codes of Good Practice was introduced in 2007 to shape business practices according to the Act.

Reasons to get B-BBEE right

Companies should make every effort to comply with B-BBEE as it embodies the most basic rights of the poor. It is the right response to the injustices of the past. Corporates who comply can be useful in uplifting the lives of historically-disadvantaged individuals. This benefits the country as a whole.

Also, companies which follow the B-BBEE codes can transact with the government sector and public entities. Larger companies are more prone to trade with B-BBEE compliant suppliers.

The B-BBEE Act and its Codes of Practice have a noble and just motivation. But, employers and business owners can find it stressful to find an understanding of how to comply with the codes. And with good reason. Misrepresentation of the data you submit for your B-BBEE certificate is a criminal offence. Deliberately trying to skirt around the Act or the Codes is called B-BBEE fronting. This unlawful practice is coming under scrutiny from the B-BBEE Commission. Offenders are referred for prosecution. One should equally be aware of unintentional infringements.

B-BBEE Levels in a nutshell

The more compliant a company is with the Codes, the higher their B-BBEE level. For example, a company with over 100 points on their B-BBEE scorecard would enjoy a level 1 B-BBEE status. This is the highest and most pursued level. The lowest level of compliance is level 8.

There is another reason large companies want to transact with BEE-compliant clients. For every rand they spend, they can claim a certain amount toward their own B-BBEE procurement. For example, if the customer is BEE level 6, the company can claim 60%, or 60 cents of every rand, toward their own B-BBEE procurement. If the customer is BEE level 1, they can claim 135%, or R1,35 for every rand they spend!

How do I up my B-BBEE level?

There are variations in the different industry sectors. But, as part of this introduction, here are five elements most businesses could improve on, to increase their B-BBEE level:

1) Ownership

This has to do with black people involved in rights of ownership of the business. It is measured in terms of voting rights and economic interest. This contributes 25 points to your B-BBEE scorecard.

2) Management Control

This refers to black people with managerial influence over the business. It is measured in percentages of executive management staff and board membership. This contributes 15 points to your B-BBEE scorecard.

3) Skills Development

This means involvement in programmes which upskill and empower black employees and potential employees. It is measured in the amount of expenditure on these programmes. Spending on, or offering learnerships, apprenticeships and internships also improves your points total. The Skills Development element contributes 20 points to your B-BBEE scorecard.

Umsizi has industry experts who can help you with key skills development projects. We are ready to advise you on how to maximise your skills development investment.

4) Enterprise and Supplier Development

This involves making use of B-BBEE compliant suppliers; contributing to the development of compliant suppliers; and, contributing to developing black-owned businesses and specific programmes to benefit and grow these enterprises. This contributes a whopping 40 points to your B-BBEE scorecard.

Again, Umsizi has run multiple successful ED programmes. We have established and developed fully-fledged enterprises on a broad scale. Contact us to see how we can help you with enterprise development programmes for the highest points value on your scorecard.

5) Socio-economic development

This refers to contributions made to socio-economic development programmes. It also covers the benefit your company brings to beneficiary communities. This contributes 5 points to your B-BBEE scorecard.

Umsizi has a vast track record here of successful SED programmes. We pride ourselves on this niche of economically advancing communities and individuals, in partnership with corporates and government.

The above is just an introduction to the Codes, and there is plenty more information that has been gazetted. A lot to take in? Don’t worry, we have you covered. Our industry experts are on call to help tailor a measurable B-BBEE solution that will suit your company’s requirements and budget.