This article will be enlightening you on the basics of B-BBEE. Basic descriptions of the current 7 elements will be highlighted.
Most of us have heard of the term Broad-Based Black Economic Empowerment (B-BBEE), but what is it and how does it affect us as an organisation, how does it influence transformation and what role do we, as an organisation, play in this? This will be outlined below.
Simply put, the B-BBEE ACT is a legislation that strives to strengthen the county’s democracy by addressing the imbalances of the past in achieving sustainable and inclusive economic development, social stability and labour-absorbing economic growth. The 2007 Codes of Good Practice outline the sub-indicators per element as well as the targets and points that cant earned per element.
Transformation is sought by creating opportunities for Black people to actively participate in the economy, thereby uplifting themselves and their communities in the process.
How is this achieved you ask. The Act is supported by 2007 Codes of Good Practice. Each code addresses a specific area where transformation is sought.
Code 100 – Ownership – deals with the black ownership of the company. Also takes into consideration Black females. The 2007 Codes of Good Practice states that a measured entity must comply with 25% black shareholding and with 10% Black female ownership.
Code 200 – Management Control – is aimed at providing Black people with real participation in the management and control of the business. This element deals with the Board members as well as the Top Management. The measured entity is verified in terms of the black individuals within their entity that have daily running and control of the entity.
Code 300 – Employment Equity – aims to create a balance in the employment arena in terms of race and gender. Your organisations managers and black staff give you B-BBEE recognition under this category. Disabled employees also play a part in the points earned.
Code 400- Skills Development – strives to create an internal environment which promotes personal growth and employee development for Black people. Training pertaining to your black staff is evaluated. Points are earned by means of Skills Development expenditure for Black employees and Black people participating in a registered Learnerships. Skills Development Expenditure is based on a % of the entities Leviable Amount. Learnerships are based on the total number of headcount within the entity.
Code 500 – Preferential Procurement – seeks to encourage the organisation to procure goods and services from broad-based black empowerment organisations, which include micro enterprises and qualifying small enterprises. Most say this element is the driver of B-BBEE as many customers require your current B-BBEE certificate in order to procure goods or services from your entity. Tenders also push us to be verified for B-BBEE, as we can see this element plays an important role in terms of the revenue of our entity.
Code 600 – Enterprise Development – aims to encourage the organisation to implement initiatives intended to assist and accelerate the economic development of micro or small BEE enterprises. 2-3% (depending on the size of your entity) of your Net Profit after Tax needs to be contributed to an Enterprise Development Beneficiary in order to qualify.
Code 700 – Socio Economic Development – aims at encouraging the organisation to implement sector specific initiatives as well as other initiatives that contribute towards social development and those that directly facilitate access to the economy for black people. Examples of Socio Economic Development contributions are donations to Charities, Churches or Schools.
Who are some the various role-players?
- The Measured Entity: this is the organisation that is being verified in terms of B-BBEE
- The Verification Agency: This is the company that is outsourced to perform the B-BBEE verification audit on the measured entity.
- The B-BBEE Consultant: this is the entity that is outsourced to assist the measured entity with the B-BBEE and Transformation strategy.
- The Department of Trade and Industry: The DTI has gazetted the Codes of Good Practice and are the custodians of B-BBEE in the Republic.