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Old vs New BEE Recognition Levels – EconoBEE Newsletter – 21 October 2013

EconoBEE - BEE Points = Business

Dear [Name]

Since the Amended Codes were released on 11th October 2013 we have been inundated with queries, questions, interpretations, strategies and more. It has been a truly interesting week, not only because we have now finished our first seminar which has given us much more practical knowledge of how these codes need to be implemented but also because of the interest we have had with the press, sector councils and strangely enough some of our competitors (now our customers).

Last week’s Amended Codes full Day Seminar was a tremendous success. With only three and a half working days from when the codes were published we were able to offer our delegates an absolutely fantastic amount of quality information. Our manual – as has now become the norm – was over 140 pages (with 60 being the actual gazetted Amended B-BBEE Codes of Good Practice). Our manual within a few short days could virtually suffice as an implementation file – amongst others included affidavits for EME’s, procurement import policies and plan, to ensure exclusions and pivotal training documentation. During the session we went in to the most intricate details of the new codes, often paging through the gazetted legislation and conducting detailed group discussions about interpretations which lead to a clear and practical implementation path. Happily our delegates arrived nervous and unsure about compliance and left feeling confident that they could in the most part comply with many of the new requirements.

Our delegates now know, what they need to do to implement the amended codes. If you would like to attend please book early as we have filled up our venues very quickly. Our next event is in Cape Town on 25th October.

Event details;

  • 29th October – JHB – Birchwood Conference Centre (Full – please enquire for cancellations)
  • 6th November – JHB – Gallagher Estate
  • 12th November – JHB – Sunnyside Park Hotel
  • 19th November – JHB – Birchwood Conference Centre
  • 25th October – CPT – Moore Stephens Training Centre
  • 8th November – CPT –  Moore Stephens Training Centre
  • 1st November – DBN – Makaranga Garden Lodge

We will be hosting additional events based on demand. In-house presentations available on request to a minimum of 10 delegates.
Time: 8:30 for 9:00 – 17:00
Price: R2500 excl VAT (R2850 incl VAT)
Contact: 011 483 1190
More Information: http://www.econobee.co.za/index.php?option=com_content&view=article&id=547&Itemid=116
Booking Details: http://www.econobee.co.za/index.php?option=com_fabrik&view=form&formid=3&Itemid=211

We are confident that all our clients will be able to achieve the same points on the new scorecard as the current, but your approach will have to be different. We’ll show you how.

Start preparing now, we are on your side Managed Service.


Old vs New BEE Recognition Levels

The Amended BEE Codes have changed the points to levels table. Previously if you earned 30-40 points you were level 8, with a recognition level of 10%. If you earned 65 points you were level 4 with a recognition level of 100%. The crucial aspect to your customer is the recognition level – the higher the level the more procurement points the customer can earn.

The Amended Codes have a new points to level table as follows:

LevelAmended CodesCurrent CodesB-BBEE Recognition Levels
1?100?100135%
2?95 but <100?85 but <100125%
3?90 but <95?75 but <85110%
4?80 but <90?65 but <75100%
5?75 but <80?55 but <6580%
6?70 but <75?45 but <5560%
7?55 but <70?40 but <4550%
8?40 but <55?30 but <4010%
Non-Compliant<40<300%


Note how an “old” level 4 (65 points) with 100% recognition is now a “new” level 7 with 50% recognition. An old level 2 (125% recognition)is now is level ¾ (100-110%) recognition.

This simply means that due to the “revaluation” of the points to levels table, the average recognition level will drop by 20-50%. It means, all things being equal, the procurement score obtained will drop by a similar amount: Companies currently earning 20 points on procurement will get about 14 points.

In reality, not “all things are equal”. The new codes have made some substantial changes to the way we need to look at them.

The new scorecard has 118 points available, compared to 100 with 7 bonus = 107. Since more points are available it should be easier to get the same or more points on the new scorecard. The old level 8 of 30 points was earned from 107 points. The new level 8 of 40 points will be earned from 118 points. On the face of it, it sounds like an easy task.
A minor problem is the priority elements – if you do not reach at least 40% of targets on ownership, skills development and enterprise and supplier development you drop a level. In order to reach level 8, you need level 7, ie 55 points if you do not reach targets.

Another issue is procurement itself. The targets have increased dramatically on some indicators. Previously companies had to spend 12% of their procurement with majority black owned businesses to earn 3 points. The Amended Codes ask for 40% in order to earn 9 points.

Your strategy:
Get to understand the new scorecard far better than you ever knew the old one. Start adopting strategies now to ensure you are able to make the changes in your business. Officially you have a year, but probably 18 months before the new codes come into effect.
Aim to get higher points by focusing firstly on the easy to score aspects:

  • Socio-economic development
  • Enterprise development
  • Procurement
  • Skills, especially learnerships/apprenticeships
  • Management control
  • Ownership

We have calculated potential points that some of our clients could earn based on their current score, and most will be able to achieve exactly the same score, but obviously lower recognition level, than they are currently getting – albeit with more work and effort.


New BEE codes ‘will hurt small white businesses’

by Carol Paton, 17 October 2013, 08:49 – BusinessDay

SMALL white-owned businesses will be disadvantaged by the new codes of good practice for black economic empowerment (BEE) which, according to analysts, will make it difficult for most of them to reach compliant status.

The codes, promulgated last week but which will come into effect after a year, set out the elements of the empowerment scorecard, by which the empowerment rating of a company is determined.

Companies wishing to do business with the government, whose clients do business with the government, or are under government regulation, aspire to at least a level 4 on the eight-rung scorecard. While micro-enterprises — companies with a turnover of R10m or less — will be exempt and immediately qualify for level 4, small companies with a turnover of between R10m and R50m will have a harder time of it, unless they are 100% black-owned.

Small enterprises will immediately qualify for level 1 status if 100% black-owned and level 2 if 51% black-owned.

EconoBEE CEO Keith Levenstein said on Wednesday that due to changes in the scorecard “it will be 100% more difficult for white-owned small businesses to maintain their current rating. These small family businesses will have a dramatic drop in their score. A company that was on level 3 could drop to level 8 or even into non-compliant status.”

Read more…


BEE fronting getting increasingly sophisticated in face of new law

By Stephen Timm on 12 October 2013 in News by Small Business Connect

GONE are the days when fronting simply meant white business owners passing off their gardeners as company directors. These days, business people and rating agencies are using far more subtle techniques to get around black economic empowerment (BEE) legislation, often involving complex accounting and company restructuring.

When the Broad-based Black Economic Empowerment (B-BBEE) Amendment Bill, which is currently before Parliament, is passed, it will make fronting an offence, with fines of at least 10% of a company’s turnover or jail terms of at least 10 years.

The bill also allows for the setting up of a BEE Commission to investigate instances of fronting.

BEE consultant and EconoBEE chief executive Keith Levenstein says the bill will make a “huge difference” in curbing fronting.

“All we need is the first court case and first person to go to jail, and people will be scared of fronting,” he said.

Levenstein says his consultants reject between two and three certificates a day, but that of the 40 000 BEE certificates on his database, only one in 50 need to be further investigated for possible fronting.

Many company heads and rating agencies explain these as “mistakes” made in the rating process.

Read more…


Classic Business – Classic FM 16th October 2013 – Keith Levenstein

Segment 5:
White Owned Business with a Turnover Between R10 million and R50 million will be Disadvantaged by new BEE Codes

Guest:
Keith Levenstein
CEO
EconoBEE

DOWNLOAD AND LISTEN TO PODCAST HERE


Small companies to find BEE codes more difficult – CNBC Africa 16th October 2013 – Keith Levenstein

The new amendments made to the BBBEE Codes of good practice are likely to result in increased compliance requirements and costs for companies operating in South Africa, more for smaller companies. Keith Levenstein, CEO of EconoBEE joins ABN’s Alec Hogg for more.

View Interview…


A new era for BEE – CNBC Africa 4th October 2013 – Keith Levenstein

Today was the final day of the Broad-Based Black Economic Empowerment Summit at Gallagher Estate. ABN discusses how the BEE landscape is likely to change with the announcement of the new codes of good practice with Keith Levenstein, the CEO of EconoBEE.

View Interview…


Understanding the Amended B-BBEE Codes of Good Practice

The new codes will have an impact on your strategies that you need to implement.

Many people think that the new codes will be more difficult to understand and implement. We will show you that this is not necessarily the case.
Join us for a full day and

  • Learn how to benefit from the new codes.
  • Understand the intricacies of the codes
  • See the differences between current codes and new codes
  • Identify strategies to follow
  • Recognise how easy it will be to follow the new codes

Date:29th October – JHB – Birchwood Conference Centre (Full – please enquire for cancellations)
6th November – JHB – Gallagher Estate
12th November – JHB – Sunnyside Park Hotel
19th November – JHB – Birchwood Conference Centre

25th October – CPT – Moore Stephens Training Centre
8th November – CPT –  Moore Stephens Training Centre

1st November – DBN – Makaranga Garden Lodge

We will be hosting additional events based on demand. In-house presentations available on request to a minimum of 10 delegates.

Time:8:30 for 9:00 – 17:00
Price:R2500 excl VAT (R2850 incl VAT)
Booking Details:Email info@econobee.co.za
Contact 011 483 1190
Book online or download our brochure.


Let our consultants save you time on B-BBEE.

Preferential Procurement – Save Time by using the BEE Procured database containing over 40 000 BEE Certificates. Procurement Managed Service: Our consultants can phone your suppliers for a BEE certificate – Managed Service.

 


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While there is demand for a B-BBEE Scorecard someone will be taking advantage, shouldn’t that someone be you…


Want us to manage your BEE Process – Managed Service.

Turnover below R5 million – find out how to get your BEE Exemption.

Is BEE procurement a pain? Sort it out quick and easy – BEE Procured.

Need a scorecard – produce one yourself – EconoBEE V3

 
EconoBEE Newsletter
 21 October 2013

In this issue

  • Old vs New BEE Recognition Levels
  • New BEE codes ‘will hurt small white businesses’
  • BEE fronting getting increasingly sophisticated in face of new law
  • Classic Business – Classic FM 16th October 2013 – Keith Levenstein
  • Small companies to find BEE codes more difficult – CNBC Africa 16th October 2013 – Keith Levenstein
  • A new era for BEE – CNBC Africa 4th October 2013 – Keith Levenstein
  • Understanding the Amended B-BBEE Codes of Good Practice

In other news

About EconoBEE

EconoBEE is an expert BEE consultancy. EconoBEE helps businesses Become BEE Compliant, prepare for verification, earn maximum BEE Points and ensure that they achieve the BEE Level they need to get more business.

Our services include BEE Management Systems, Training, EME Pack, Complete Managed Services; consulting and advisory and Procurement Solutions.

As leaders in the industry we are driven to help maintain and develop knowledge in the BEE industry.


Already have a BEE Certificate

Please send it to us and we will include it in our BEE Procured database.


Contact Us

Tel: 011 483 1190
Fax: 011 483 1195
Email: info@econobee.co.za
Web: www.econobee.co.za


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Remember
BEE Points = Happy Customers = Sustainable Business
 


Regards
Gavin and the EconoBEE Team
 

  
Executive summary of B-BBEE

Turnover below R5 million per annum – automatic BEE status

 

Turnover above R5 million per annum – you need a BEE Scorecard. Our workshops, scorecard tools, procurement manager or a complete managed services will be best for you.

 

Your time on your business, our time on your BEE status

Tip:

Through our managed service avoid the BEE distraction and let our consultants implement Broad-Based Black Economic Empowerment for you.

 

10 Strategic Steps to B-BBEE!
 We have prepared an easy to follow guide “B-BBEE in 5 Minutes” and “Crash Course to BEE Verification” which explains BEE in a simple step by step approach.

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