Enterprise Development

BEE Codes

When the Government gazetted the B-BBEE Codes of Good Practice at the beginning of 2007, it made the implementation of black economic empowerment a legal requirement. Broad Based Black Economic Empowerment (B-BBEE) is the cornerstone of the South African Government’s efforts to empower the large component of the population that was disadvantaged under the previous regime. It aims to accelerate the participation of black people in the economy by encouraging change in the following key areas of business: ownership, management and control, employment equity, skills development, preferential procurement, supplier, enterprise development and socio-economic development.

With the gazetting of the amended Broad-Based BEE Codes of Good Practice in October 2013, companies are obligated to support Black-owned enterprises with a view to ensuring operational and financial sustainability. The key emphasis is ensuring that these Black-Owned enterprises are given the opportunity to enter (and grow into) corporate South Africa’s supply chain for at least a 3 year period in order to attain sustainability and avert business failure.

The amended Codes of Good Practice now stipulate four elements (reduced from seven) on how companies are measured on their B-BBEE compliance, including:
a) Ownership
b) Management Control & Skills Development
c) Enterprise & Supplier Development (ESD)
d) Socio-Economic Development (SED)

As a result, many companies are experiencing a reduction of their empowerment rating, as the revision places an emphasis on three priority elements: ownership, skills development, ED and SD. Companies must achieve compliance of at least 40% of these priority elements.

How is B-BBEE Compliance expressed and how is it measured?

1100 or Above135%
375 – 84.99
4 65 – 74.99
555 – 64.99
645 – 54.99
740 – 44.99
830 – 39.99
Non Compliant<300%

*Level 4 is regarded fully compliant

The new codes group Enterprise Development, Supplier Development and Procurement into one section referred to as ESD (Enterprise and Supplier Development), amounting to 40 points out of a
total 104.
As this is a priority element, a minimum of 40% must be achieved on each line of the ESD scorecard. Failure to achieve the 40%, according to the gazetted amendments, will resultin the reduction of overall compliance by one level...Read More