Nine industry sectors, representing more than half the economy, are at risk of becoming non BEE compliant when evaluated against the amended BEE codes that will be introduced on 1 May 2015.
The sectors affected are construction, tourism, transport, forestry, accounting profession, ICT, agriculture, financial and property.
Keith Levenstein, CEO of BEE advisory firm EconoBEE, says these industries are waiting for the dti to release amended codes for each sector, but it is unlikely that the deadline will be met.
“If the sector codes are not released in time, businesses will need to follow the amended codes released last October,” he says.
“Even if the sector codes are issued in time, they will be very similar to the current amended codes, meaning that businesses should start adapting the existing amended codes so as to make the necessary adjustments timeously for their updated (annual) BEE certificate.”
It makes business sense to start implementing the new codes well in advance of the expiry date of your current BEE certificate, at least 12 to 18 months before,” says Mr Levenstein.
A company’s BEE scorecard is usually aligned to their financial year end and the certificate is valid for 12 months. Businesses with a BEE scorecard expiring after 1 May 2015 will have their BEE certificate assessed on the amended codes, based on the data and activities carried out in the year prior to verification.
“For example, if your new financial year end started in 1 June 2014 to 31 May 2015, the amended codes will need to be followed,” because your financial year ends after 1 May 2015.”
“Based on the new codes, a business currently at level 4 will almost certainly fall to level 6, and possibly even further. Management will need to do additional work and activities to retain their current BEE status. Training spend, for example, needs to be increased from 3% to 6%,” says Mr Levenstein.
“For a company providing training to earn BEE points, it is a long process. A training budget needs to be allocated, staff selected and only then can the training be done. This is usually spread over a period of six to 18 months. The BEE points allocation only accrues after the money is spent. The same goes for procurement, socio-economic development (SED) and enterprise development (ED),” says Mr Levenstein.
“In earning BEE procurement points, your suppliers will become non-compliant if they do not adhere to the amended codes. This will result in your BEE rating, as their customer, being negatively affected.”
“Businesses could be caught with a number of suppliers having lost their BEE rating, resulting in a domino effect of downgraded BEE ratings across all the industry sectors.”
BEE is a complex business task which consumes a considerable amount of time and resources. It needs a strategy planned with commercial logic, which is then properly implemented and monitored in a way that makes complete business sense.
Choosing the appropriate competitive B-BBEE strategy is a sophisticated endeavour requiring knowledge and familiarity with the minute intricacies of the B-BBEE Act and Codes of Good practice. The lack of expertise in many companies countrywide hampers the successful implementation of the B-BBEE Codes in their operations.
EconoBEE’s managed services offer a high quality streamlined step-by-step approach to becoming BEE compliant.
Issued by: Sha-Izwe/CharlesSmithAssoc
ON BEHALF OF: EconoBEE
AT: EconoBEE: Keith Levenstein TEL: (011) 483-1190
FAX: (011) 483-1195