The Complete Guide to B-BBEE Amended Codes: How to keep your company's competitive edge
Now that the B-BBEE amended codes are in effect, is your company still BEE compliant? Do you know how to calculate the new codes? Can you still do business with BEE compliant companies?
These are questions racing in the minds of many business owners and managers like you. And rightfully so. Because let's face it, if you depend on your BEE status to do business, and you find that you no longer score at the required BEE level, you won't be able to keep your business running for much longer.
You could lose out on existing business contracts, you won't be able to renew some contracts and worse, you won't be able to propose for business tenders with the government.
But don't fret! We have exactly what you need to ensure you keep your company's competitive edge even after the changes.
Enterprise and Supplier development… Responsible for 38% of your B-BBEE scorecard
Before we get into how you can earn the most points, let's look at the changes to enterprise and supplier development:
1. Preferential procurement and enterprise development from the old scorecard, merged to form enterprise and supplier development (ESD).
2. Out of all the elements, you'll earn the most points with ESD. You can earn up to 40 points (plus 4 bonus points) in this element.
3. If you're a supplier, you must be an empowering supplier (this used to be value-added suppliers) to earn points on the scorecard. Basically, this means you must be a BEE compliant entity that complies with all regulatory requirements of the country.
Now, let's look at how you can earn the most points in this area…
Firstly, what is preferential procurement? In its simplest form, it measures the extent to which you buy qualifying goods and supplies from B-BBEE compliant suppliers. You can get the B-BBEE scorecard rating from the supplier.
You'll earn 5 points if 80% of your procurement spend is from empowering suppliers. In other words, if you spend 80% or more with suppliers and companies who are BEE compliant, then you'll get the points.You'll earn 3 points if 15% of your procurement spend is from Qualifying Small Enterprises. This is on the basis of the procurement recognition levels as a percentage of total measured procurement spend. Basically, you'll get the points if you spend 15% with Qualifying Small Enterprises. These are companies with a turnover of between R10 million and R50 million per year.
You'll earn 4 points if 15% of your procurement spend is from Exempted micro enterprises (EME). This is on the basis of the procurement recognition levels as a percentage of total measured procurement spend. An EME's turnover is less than R10 million per year.
You'll earn 9 points if 40% of your procurement spend is from empowering suppliers who're 51% black owned.
You'll earn 4 points if 12% of your procurement spend is from empowering suppliers who're 30% black women owned.
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Enterprise and supplier development:
Basically, you'll get the points by helping other companies develop and grow …
You'll earn 10 points if the annual value of your supplier development contributions is 2% of net profit after tax.
You'll earn 5 points if the annual value of your enterprise development contributions and sector specific programmes are 1% of net profit after tax.
So… To sum it up - the more suppliers you can get a BEE certificate from the better your score. I'm not saying you must ignore the other 4 elements, I just want you to get started with the easiest area you can get the most points, and use it to your advantage!
And with this area making up 40 of the 105 points on the scorecard, it really is one of the quicker-win areas.
We recently update the Practical Guide to Human Resources Management
with everything you need to maximise your B-BBEE scorecard!