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Department of Trade and Industry set to announce new B-BBEE codes...

by , 02 October 2013
The Department of Trade and Industry, together with the Black Economic Empowerment advisory council, will announce new Broad-Based Black Economic Empowerment (B-BBEE) codes of good practice at a summit on 3 and 4 October, Fin24 reports. Read on to find out how this announcement could affect your business.

The Department of Trade and Industry (DTI) wants to shake up its B-BBEE policies.

According to Fin24, Trade and Industry Minister Rob Davies announced that his department, together with the B-BBEE advisory council, would host the first ever B-BBEE summit. The new B-BBEE Codes of Good Practice will be revealed at this summit.

The B-BBEE Codes were set out in 2007. They set targets for those companies who wish to be measured against the scorecard for employment equity and other elements, says the Practical Guide to Human Resources Management.

As they stand, the B-BBEE policies are seen as not achieving their true objectives.

The move to change the codes 'comes after almost a year of silence on the topic since the issuing of the amended B-BBEE codes of good practice for public comment, which raised many questions by economists and business owners,' Fin24 reports.

Here's a summary of some of the proposed amendments to the B-BBEE Codes of Good Practice:

  • Five elements in generic scorecard;
  • Ownership points broadened to include designated groups in the main points;
  • Exempted micro-enterprises and qualifying small enterprises thresholds adjusted;
  • All companies in the R10 million annual revenue category to comply with five elements;
  • Revised qualification points for B-BBEE recognition;
  • New priority elements- ownership, skills development and supplier development;
  • 100% black owned Exempted Micro Enterprise (EME) - level 1 status;
  • 50% and above black owned EME - level 2 status and B-BBEE employment equity elements aligned with the Employment Equity Act.

So what are the current B-BBEE Codes of Good Practice?

According to Tshuletsa, the B-BBEE generic score card is made up seven elements. Each element has a certain weighting (points) attached to it. Once your points are calculated your business will land up with a score out of 100 and that'll determine your level.

The elements are: Ownership, Management Control, Employment Equity, Skills Development, Preferential Procurement, Enterprise Development and Social-Economic Development.

Tshuletsa adds that in terms of the Codes of Good Practice on B-BBEE, the compliance requirements for B-BBEE varies according to the size of your business as measured by your annual turnover.

If you're classified as an EME (have a turnover of R 5 million per annum and below), you're classified as a Level 4 Contributor to B-BBEE.

This means 'your clients can claim at least 100% of their procurement spend with your company which then counts towards their own B-BBEE scorecard. You could also be classified as a level 3 Contributor if more than 50% owned by black people. You can be measured in terms of the Qualifying Small Enterprise (QSE) score card if you want to move to the next procurement recognition level,' says Tshuletsa.

If your business has a turnover of R 5 million per annum to R 35 million, you're classified as a Qualifying Small Enterprise (QSE). This means you'll only be measured on the best four sections of the scorecard that you choose to be measured on.

If you have turnover of R 35 million per annum and above, you need to comply with the Generic scorecard, which consists of all seven elements.

With the summit set to get underway tomorrow, these current B-BBEE Codes of Good Practice will change. If you're affected, don't fret, FSPBusiness will keep you up to date so you can comply with the new B-BBEE Codes.

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