Why Amend the B-BBEE Codes? – EconoBEE Newsletter – 03 November 2014
Looking back at the past year, it is evident that much has changed. The Generic and QSE Amended Codes and the B-BBEE Amendment Act are undoubtedly on the top of the list. Almost every consultant and verification agency has virtually not stopped talking about this, which makes me think – as a consultant I understand the impact of the amended codes but does the general public?
History A few years back the treasury used an act called the PPPFA – Preferential Procurement Policy Framework Act which governed all tenders of a certain value. More recently that act was changed to fully incorporate B-BBEE levels. This meant that without a good B-BBEE level (ownership was no longer a requirement) you were unable to win tenders. On the other hand though, a good B-BBEE Level ensured that you more regularly won tenders.
Black businesses started losing significant amounts of tenders because their B-BBEE score was not as good and Ownership was no longer a requirement. In-part as a result of this the DTI needed to change the B-BBEE scorecard to place greater emphasis on Ownership but without leaving out other important elements like Skills Development or Enterprise Development.
Impact The result was the Amended Codes. The Amended Codes have such significant changes that a company who previously achieved a level 4 on the generic scorecard could drop to a level 8 or even be non-compliant. Worse though, an unprepared QSE who had previously achieved a level 1 score could become non-compliant when using the Amended Codes.
The mechanism for encouraging businesses to produce a scorecard is business – without a good score it will be much harder to find new customers and virtually impossible to win government tenders.
Timing and Problems The anticipated start date for the Amended Codes is 1st May 2015. Although the start date is some way in the future the verification data is potentially in the past. A company who has a year end of June 2015 would start their year in July 2014. June 2015 is past 1st May 2015. This implies that they have already begun the year that will be measured using the Amended Codes.
Practical Without starting early andunderstanding the legislation, companies face tremendous risk that their business‘s BEE score drops which will cost them significant amounts of money. Small businesses should be creating an internal scorecard currently to identify where they are weak, then begin implementing activities to improve their overall score. Where they don‘t understand the legislation attend coursesand contact consultants to assist.
Conclusion B-BBEE is not going away anytime soon – if it does it may become even harder. 1st May 2015 represents a turning point for businesses and their current scorecard, resisting change will simply result in a lower score and lost business.
Practical Implementation of the QSE Amended BBBEE Codes
Knowledge of B-BBEE and in-particular the QSE Amended Codes is vital to a long term BEE strategy, however knowledge will only take you to a point. Continue managing our own BEE scorecard with regular reports. Gain a thorough understanding of where your business is in the process and what it can do in the future to maintain a high BEE score and win more business.
17th November – Durban – Protea Hotel Umhlanga Ridge 19th November – Johannesburg – Gallagher Estate 28th November – Cape Town – Belmont Conference Centre
Additional Johannesburg, Durban and Cape Town event details to follow.
We will be hosting additional events based on demand. In-house presentations available on request to a minimum of 10 delegates.
While there is demand for a BBBEE Scorecard someone will be taking advantage, shouldn’t that someone be you…
Remember BEE Points = Happy Customers
That’s it for the time being. Regards Gavin and the EconoBEE Team
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.