Revised B-BBEE Codes of Good Practice – Briefing – EconoBEE Newsletter – 03 October 2012

Impact on your current scorecard

The revised B-BBEE Codes of Good Practice will have a major impact on your current B-BBEE certificate.

Even though they have only been issued as a draft for comment, preparation needs to start immediately.

We will be hosting a highly informative session in October which will discuss the changes in great detail.

If you would like to book please email info@econobee.co.za or download our brochure.

Alternatively contact our consulting department who will be able to calculate a revised codes scorecard, prepare you for the implementation of the revised codes and take the stress out of implementing B-BBEE.


The long awaited revised B-BBEE Codes were officially launched by the dti Minister Rob Davies on 2nd October 2012.

The B-BBEE act requires that any changes to the BEE Codes be gazetted as a draft, giving the public a 60 day commentary period. Thereafter the dti minister can gazette the codes in terms of  Section 9(1) which becomes the final codes. In practice it takes far longer than 60 days – usually about a year before draft codes, particularly as far reaching as these drafts, can be finalised and put into practice.

It is important to understand the draft codes, to be able to comment if necessary, and also to begin preparing to change your B-BBEE strategy for when the final codes are gazetted.

DISCLAIMER: This article is written based on the minister’s presentation and therefore our preliminary comments. The formal draft codes giving the detail are not yet available.

Draft Codes – Generic Scorecard

ElementPoints
Ownership 25
Management Control15
Skills Development    
20
Enterprise and Supplier Development    
40
Socio-economic Development    
5
Total    
105


Salient Features:
There is some good news for small businesses:

EMEs (Exempt micro enterprises – businesses that are exempt from calculating a B-BBEE scorecard): The threshold has increased from up to R5 million annual turnover to a maximum of R10 million. EMEs are automatically given a level 4, but 100% black owned EMEs are level 1 and 50% black owned EMEs are level 2.

QSEs (Qualifying small enterprises – businesses that followed a more lenient scorecard): The threshold has increased from between R5 million annual turnover and R35 million to R10million up to R50 million.

Priority Elements:
The codes have defined three priority elements:

  • Ownership
  • Skills development
  • Enterprise and Supplier Development

If a generic does not achieve minimum targets on all three of the priority elements, the calculated BEE level will decrease 2 levels. For example if your company has no black ownership but reaches level 4,  it will be dropped down to level 6.

A QSE has to comply with Ownership and any one other priority elements. Otherwise it will drop one level.

Summary of each element:

Ownership – points available: 25
Little significant changes other than for points on indicators.
New entrant threshold increased from R20 million to R50 million.
An enterprise must achieve at least 40% of the net value targets (points?) in order to comply with the priority requirements. If they do not, then they drop 2 levels.

Management Control – points available: 15
The indicators for management and employment equity have been combined into one element.
Still awards points for board members and directors.
Points for top management (senior top and other top have been removed).
Points for Senior management.
Points for Middle management.
All points for junior management have been removed.
The calculation for adjustment for gender has been removed and points awarded specially for black women and black people (same effect).

Skills Development – points available: 20
Target spend has gone up from 3% to 6%.
5 extra points awarded for “absorption of learners”. Refers to providing permanent employment of learners after they complete their learnership program.
Is a priority element: 40% threshold is a requirement – alternatively the company drops 2 levels.

Enterprise and Supplier Development – points available: 40
Is a simple combination of both preferential procurement and enterprise development, with additional indicators.
Is a priority element: 40% threshold is a requirement – alternatively the company drops 2 levels.
Recognition levels thresholds have changed. Recognition is only awarded for value-adding suppliers.

EconoBEE note: Details are not fully available. Most companies are not value adding suppliers and have no way of becoming a value adding supplier. Therefore their certificate cannot be used by their supplier and they have no incentive to produce a BEE certificate. If they have no need or ability to produce a BEE certificate, then they will have no incentive to ask their suppliers to produce a BEE certificate. BEE has been driven by large companies asking their own suppliers for scorecards.

Recognition from all suppliers: Target increases to 80% (previously 70%) – only 8 points awarded (previously 12).
Recognition from  50% black owned suppliers: Target increased to 40% (previously 12%) – 9 points awarded (previously 3).
Points awarded for enterprise development – sector specific programs.
Bonus points for new venture creation.
Clarification that early repayments may only be used to earn points for assisting black owned EMEs and QSEs, and limiting points to 15% of the available 15 points.

Socio-Economic Development – points available: 5
No change, other than an emphasis on sustainable access to the economy, job creation.

As more information becomes available and we analyse the codes, we will give more commentary.

EconoBEE will be holding a series of briefings on the new codes and provide a submission to the dti. Watch this space for details.


Revised B-BBEE Codes Briefing Session

DetailsRevised B-BBEE Codes Briefing Session
CostR1140 incl VAT
VenueOctober 2012 – JHB – Montecasino Conference Centre
Time7:30 for 8:00 to 11:00
Booking Download our brochure and fax booking form to 011 483 1195
Email info@econobee.co.za
Contact 011 483 1190
More infoOnline details on www.econobee.co.za, email info@econobee.co.za or contact 011 483 1190



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


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That’s it for the time being.
Regards
Gavin and the EconoBEE Team

About EconoBEE

EconoBEE assists companies prepare their BEE Scorecard for Verification by offering consulting & advisory services, management tools and training courses. This ensures a cost effective and efficient approach to becoming BEE compliant.

Contact Us

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

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