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Welcome to the New Codes – Amended BEE Codes – EconoBEE Newsletter – 14 October 2013

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Dear [Name]

We support the Amended BEE codes and we realised a long time ago that the Amended BEE Codes would have significant differences to the existing codes. There are similarities but your strategies around the codes will be different. That is why we decided to offer a full day seminar. A half-day will do no more than identify the new codes and some changes, all of which you can obtain from our articles and presentations on our web site.

If you need to take BEE seriously our full day seminars starting from this Thursday 17th October at Gallagher Conference Centre and continuing throughout the year is your best option.

We will be taking you through the basics of the new codes, but also the seemingly insignificant aspects that will have a huge impact on your business. For example, did you know:

  • that if your business is not in compliance with every law in the country you cannot get a certificate?
  • that the adjustment for gender has been removed from the calculations, but replaced with two indicators and an adjustment for diversity?
  • that enterprise development and supplier development have two conflicting definitions.
  • that unless the minister in his discretion extends the transitional period for one year, you will be rated against the new codes starting from October 2014. Your current activities need to start reflecting your strategies around the new codes. You have less than a year to go.

TIP: It may be preferable to follow the current codes for verification. Plan your verification as close to end September 2014 as possible to use the current codes!

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.

 


Welcome to the New Codes – Amended BEE Codes

A Cautious welcome to the new codes

EconoBEE is giving a cautious welcome to the new BEE codes which were gazetted by the dti minister, Dr Rob Davies on 11th October 2013. The codes will replace the existing BEE codes of Good Practice and must be followed within a year.

The codes contain a mixture of good aspects and some complexities:

They are fairly similar to the existing codes, although some weightings and names of some elements have been changed.

Instead of 7 elements, we now use 5. However they still contain mostly the same indicators as before.

The 5 elements are:

Ownership:
This has not changed significantly. The targets are still 25%, and weighting is 25 points. We are encouraged that there are some clarifications around how to score points.

Management Control:
The codes previously included 2 elements: management control and employment equity. Both elements have been consolidated into a single element, but with substantially the same indicators. Previously management control and employment equity were worth 29 points combined. The new combined element is only worth 19 points. In recent years employment equity has improved dramatically. Points are the incentive to businesses to become compliant. By dropping the points available and making the weightings more onerous could rebound in that companies may make less effort in this important activity.

Skills Development:
Skills has increased from 15 points to 25 showing the importance of skills development in the economy. Some targets have increased: Target spend is now 6% of payroll, instead of 3%, but more points can be earned than ever before. We see this as a positive move. Although a possible consequence of decreased points for Management is less effort the reverse is almost certainly going to be true. With 10 additional points Skills Development is not only a priority element in terms of the codes but a priority in terms of business.

Enterprise and Supplier Development:
The current codes speak of two elements: Preferential Procurement and also Enterprise Development. The new element Enterprise and Supplier Development (E and SD) is a simple combination of both elements. The two previously were worth 35 points. This has now increased to 44 points. A slight concern is it is now more difficult to reach targets on procurement in that the minister has defined “empowering suppliers” which is a more complex definition than having a simple recognition level. It implies that even if a company does reach a compliant level, it may not be sufficient to help its customers earn BEE points. The whole driver behind BEE compliance is that a company asks its suppliers for BEE certificates in order to earn points and therefore companies obtain certificates to satisfy their customers. If a company cannot meet the requirement of being an “empowering supplier”, even if it can reach a BEE level, it may discourage that company from continuing its transformation journey.

One of the indicators on the new element E and SD is for a company to spend 40% of its procurement from empowering suppliers that are at least 51% black owned. We know that there is a distinct lack of black industrialists and this target is going to be very difficult to achieve. Clever businesses will start the process now of identifying black businesses who can supply substantial values of goods and services. Since the new codes give a one year transitional period, there is not too much time. From a black industrialist’s viewpoint, this is an excellent opportunity to grow his business. If procurement works, BEE will pretty much have succeeded.

Socio-economic Development:
The last of the five elements is unchanged at 5 points.

Summary:
The points on all elements add up to 118 (previously 107 for all seven elements).

Element
Points (incl Bonus)
Ownership25
Management Control 19
Skills Development25
Enterprise and supplier development44
Socio Economic Development 5
Total118

New Points to Levels Table:
As a result of the increased points available the minister has changed the points to levels table as follows.

LevelAmended CodesCurrent Codes
1?100?100
2?95 but <100?85 but <100
3?90 but <95?75 but <85
4?80 but <90?65 but <75
5?75 but <80?55 but <65
6?70 but <75?45 but <55
7?55 but <70?40 but <45
8?40 but <55?30 but <40
Non-Compliant<40<30

We see this as an unnecessary complication to the codes. Everything could have been calculated out of 100%. Psychologically businesses may feel disappointed when they see their current level 3 become a 4 or a 5.

In addition the minister has exempted all businesses with an annual turnover of less than R10million (previously R5million) from all forms of BEE. Any organisation, no matter its ownership is automatically level 4. Furthermore, any business that is 100% black owned and has an annual turnover of less than R50million is automatically level 1. If that business is more than 51% black owned and less than 100% it is level 2.

A QSE (qualifying small enterprise) which is currently any organization/business with a turnover of between R5million and R35million and follows a far more lenient scorecard has been adjusted to R10million to R50million. However, other than for black owned businesses, it still has to follow the entire scorecard with very few allowances or easier aspects to its scorecard than the generic.

Priority Elements:
The minister has also defined three of the five elements as priority elements with additional targets.

  • 40% on ownership’s net value
  • 40% of the skills development score
  • 40% of the Enterprise and supplier development score

If a generic business does not achieve all three targets (two targets for QSEs), it drops one level.

Conclusion:
There is a general improvement in the targets which should result in better transformation. Some of the weightings and targets may be a disincentive.

At first glance the new points to levels table may be more onerous, but we see that most companies will be able to quite easily reach the same number of points as previously. There will be more work and planning required. It will be important to understand how the new code work, and a change in strategy will be required.

This will result in more and better transformation of the economy and we are therefore encouraged.

12th October 2013
Keith Levenstein
CEO – EconoBEE
© EconoServ SA cc


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:17th October – JHB – Gallagher Estate
29th October – JHB – Birchwood Conference
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
 14 October 2013

In this issue

  • Welcome to the New Codes – Amended BEE Codes
  • 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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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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