BEE in the Know

BEE in the Know – Edition 5 2015

Should you be using a BEE Consultant?

By Tanya Dippenaar

The impact of the Amended Codes, and the general feeling amongst entities and business owners alike, is that many companies may not be compliant at their next BEE audit. The compliance standards have been increased and compliance with the new amended rules, if you have not prepared for them, may present serious challenges. A company that was compliant under the old BEE Codes with a Level 2 status may find that under the New Codes their status drops to a level 5 or 6. It is thus worth considering whether you need to work with a BEE consultant to help your company stay on track and ensure that you can constantly improve on your score.

Your verification agency can assist you in identifying shortcomings in your compliance (gap analysis) but may not provide consulting services to improve your BEE score in conjunction with verification services. BEE consultants differ from BEE verification agencies in that consultants do not verify information.

BEE is now a different playground with a new set of rules. The best advice to clients is to learn the rules of the game (get educated and trained) and then play the game by implementing strategies and development plans, together with your BEE consultant.

How can consultants assist your business? A good consultant should deliver the following:

  • Assist management to ensure that the business complies with legislation while contributing to measurable transformation
  • Give you a clear understanding of how the scorecard works and how to achieve the level you require
  • Plan for the level you want to achieve – constant monitoring and the recommendation of corrective actions can assist with achieving a specific level that is required
  • Assist you in implementing a B-BBEE strategy for each individual element of the scorecard
  • Compile your verification file to the requirements of your verification agency
  • Ensure you achieve maximum return on investment (points) for any changes you implement or contributions you make.

Tips when selecting a consultant:

Consulting is rarely cheap and can often cost more than the verification itself. As with any type of consultant, there are good and bad examples. Using a poor consultant will result in a waste of money, time and opportunity and, worst case scenario, a non-compliant scorecard resulting in a loss of customers. When you source a consultant, bear in mind the following:

  • Ask for suggestions or references from your verification agency. You need a reputable consultant to assist with developing a plan and strategy for your upcoming verification
  • Make sure that the consultant has experience within your industry and understands your business and the industry you are operating in, especially when you fall intone of the specific sector scorecards
  • Ensure your consultant understands the verification procedures and requirements the BEE scorecard. E.g. if you have made a contribution to an enterprise development beneficiary based on their advice, have they obtained the required documentary evidence to support this?

A smooth B-BBEE verification process is the result of perfect planning and successful implementation of the B-BBEE strategy. If you do not have the expertise and capacity, a consultant may well be the answer for you.

The dti in the UK – boosting investment in SA

I was fortunate to be given the opportunity to meet with the dti representatives at SA House in London recently.

Thobile Mazibuko, trade councillor and marketing officers Jacob Mothopeng and Lyndsey Duff are often the first point of contact for UK parties interested in investing in South Africa.

At the presentation, highlighting the recent changes to the BEE legislation, it became clear that this team is very busy with queries from potential investors. As well as assisting with BEE questions, they also advise interested parties on the many dti incentives offered to businesses. These incentives are focused on boosting local manufacturing, cost sharing grants for feasibility studies and infrastructure developments and competitiveness improvement programmes for certain industries, such as textiles and clothing, amongst others.

All of these initiatives are aimed at realising the aims of the industrial Policy Action Plan (IPAP), to strengthen industry and boost employment and local revenue.

It is refreshing to learn that parties are actively researching investment in our country, and actually following through.

The various incentive programs offered by the dti are available to existing local businesses and sometimes have a minimum BEE requirement for participation.

We will be running some roadshows covering the BEE amendments, how the dti incentives can be accessed and also introducing our clients to some partners who can assist with strategies around your BEE needs. Dates will be announced soon.

For more info on some of the current incentive programmes, see the dti’s information by clicking here.

Tourism scorecard amended

In the dti’s announcement on 15th May 2015, an extension was granted to all of the sectors for the aligning of their scorecards to the amended codes. If you have not yet been verified on a financial period covering 1 Nov 2014- 30 Oct 2015, you can still be verified under the current sector scorecard.

The transitional period for the alignment of Sector Codes was extended to 30 October 2015. From 1 November 2015, Sector Codes that are aligned will be effective and consideration shall be given to repealing any Sector Codes that are not aligned and ready for gazetting by 30 October 2015.

While we have seen glimpses of the construction, tourism, property and chartered accountancy scorecards, the tourism sector charter has been the first to be gazetted for comment. Issued on 30th June 2015, the public have 60 days to provide commentary and feedback on the contents.

Along with aligning the tourism scorecard to the new amended codes, the following has been noted:

  1. Turnover threshold for EMEs increased from R2,5million per annum to R5million, a QSE between R5million – R45million and a generic entity R45million+
  2. Ownership target remains the same as the existing tourism scorecard, at 30% plus 1 vote
  3. Skills targets are based on spend within tourism related sectors including accommodation, hospitality, travel and related services
  4. Empowering supplier requirements have not been varied from those in the amended codes
  5. The socio economic development element still requires the entity to be a TOMSA levy collector in good standing and no longer measures the involvement of black recruits new to the tourism industry

The draft can be accessed here.

We expect a rush of new scorecards in the run up to the 30th October deadline – watch this space!