BEE in the Know – Edition 1 2016

BBBEE prepared in 2016

Last year was one of massive and sometimes controversial change, for broad based black economic empowerment (BBBEE).

The amended BBBEE scorecard, gazetted in October 2013, came into effect in 2015. This will affect all companies who are being measured and verified based on a financial period ending after 30 April 2015.

For some companies, this means you may still have one more financial period under which you can be measured for the old codes, however, many will need to ensure they have addressed the requirements of the amended codes, to avoid being non-compliant.

Do you qualify at the same level?

For some entities the new thresholds will make compliance easier. Under the amended codes, the annual total revenue threshold for Exempt Micro Enterprises (EMEs) has increased from R5 million to R10 million, and a Qualifying Small Enterprise (QSE) qualifies within the R10-R50 million bracket.  Generic companies are those with a turnover exceeding R50 million. EMEs (including start-ups) and QSEs could qualify for higher B-BBEE Status Levels, depending on their black ownership:

  • An EME or QSE with 100% black ownership qualifies at a Level One.
  • An EME or QSE with more than 51% black ownership qualifies at a Level Two.
  • If black ownership of an EME is below 51%, it qualifies at a Level Four.
  • If black ownership of a QSE is below 51%, it is required to be measured in terms of the QSE scorecard to confirm its B-BBEE Status Level.

What’s changed?

For many businesses, February sees their financial year end. This means there are only a few weeks left to ensure you effect any changes or spend required, in order to ensure you meet your targets.

It is important to remember that ownership, skills development and enterprise and supplier development are now all priority elements, with a subminimum achievement of 40% required on each. Failure to meet all 3 of these means a level drop for Generics. For QSEs, ownership plus either skills development OR enterprise & supplier development points must reach the subminimum in order to avoid the scorecard dropping one level.

Ownership and management control/employment equity are measured based on the date of verification, with the balance of the elements, skills development, enterprise & supplier development and socio economic development all being measured based on your activities during the financial period being verified.

The points you need to achieve have increased and the difficulty and technicality of the elements have increased.

What do I need to do?

Ownership and management control/employment equity cannot be changed overnight, however, EE reporting must have been completed if you are a designated employer or no points will be awarded.

The areas where you can effect fairly immediate change are the following:

Skills Development – 20-25 points

The spend target has doubled to 6% of salary/wages bill, and can include people other than employees. For generics, there are specific targets per sub-race and gender group. For QSEs, the spend target is 3% of salary/wages bill. Ask your verification agency or consultant to confirm your targets if you are unsure.

In order to score any points under skills development, training in priority skills for black people must be evident, the following must be submitted to your SETA for approval for both QSE and Generic entities:

  • workplace skills plan
  • annual training report
  • pivotal report

Enterprise development – 5 points

1% net profit after tax (NPAT) to be spent on > 51% black owned companies with a turnover under R50 million, in order to increase their financial or operational capacity.

Supplier development – 10 points

For QSEs 1% NPAT and for Generics 2% NPAT to be spent on > 51% black owned companies (who are suppliers) with a turnover under R50 million, in order to increase their financial or operational capacity.

Socio economic development – 5 points

1% NPAT to be spent on qualifying beneficiaries and activities.

Who can help me?

We have worked with a number of service providers in the BBEEE field and can recommend companies who may be able to assist, on request.

Sounds of celebration - socio economic development

A partnership between Education for Africa and Sydenham-Highlands North Hebrew Congregation, bringing disadvantaged learners together through music, culminating in an annual show held at Emperors Palace. The Marimba Project incorporates teacher training, provides often neglected cultural activities to learners who would ordinarily be unable to access this type of experience and provides international travel opportunities for those learners who are selected to perform overseas.

James Urdang - james@educationafrica.org

011 685 7300 Website: www.educationafrica.org

Engeli - enterprise and supplier development and ownership solutions

A multi-faceted service provider, Engeli specialises in business incubation as well as ownership solutions, among other offerings.

Trevor Hayter - thayter@engeli.co.za

0861 364 354 www.engeli.co.za

MEDO – enterprise and supplier development - refer BITK Edition 2

A unique combination of entrepreneurship support and supplier development combines to provide solutions scalable and tailored to your company’s specific needs.

Their Women in Stem (science technology engineering math) project involves learners from school age, which will culminate in the launch of a satellite, MEDOsat1, which will happen in the second quarter of 2016 from the Mojave Desert in the USA.

Judi Sandrock - js@medo.co.za

021 3000 500 Website www.medo.co.za 

ORT - skills development and socio economic development – refer BITK Edition 6

ORT SA offers Teacher Empowerment and School Management Team programmes, Work Readiness courses, Computer Technology Training, Business Skills training and the New Venture Creation (NVC) modules. Under E & SD (Enterprise and Supplier Development), ORT SA offers its unique model of Business Training coupled with Volunteer Mentorship from business experts and captains of industry.

Ariellah Rosenberg - ariellah@ortsa.org

011 728 7154 Website www.ortsa.org.za

Contact us if you would like a gap analysis or scenario planning in order to prepare for your next verification.