Broad-based Black Economic Empowerment (B-BBEE) is an initiative launched by the South African Government to address the restrictions that exist within the country for Black individuals to participate fairly in the economy.
The BEE Act allows for the existence of the BEE ‘Codes of Good Practice’ which provide the structures for the Scorecards and certain rules associated with claiming BEE points.
BEE is essentially a buyers' club. If you have a BEE Certificate then your customers can claim BEE points on their BEE Scorecard for buying from your business.
You can get different level BEE certificates (from level 8 to level 1) depending on what contributions you have made to black people from your business. The better level of BEE Certificate you have the more BEE points they can claim.
When your customers are choosing which supplier to use they are likely to look at price, quality and service and your BEE Score. Depending on how important BEE points are to your customer, the more they will consider your BEE Score over the other three elements.
Use the index below to navigate yourself through the BEE information Page
The BEE Codes of Good Practice allow for three levels of measurement. The intention is to take into account the challenges faced by small businesses.
It is unrealistic to expect a start up business to contribute to BEE as there are likely to be few employees. Most businesses try to limit their staff costs in the first few years and including additional senior staff of any colour can put the business in danger.
For this reason any business that turns over less than R5 million is exempted from being measured against any BEE Scorecard. They get allocated a Level 4 BEE status (100% procurement recognition) or a Level 3 BEE status (110% procurement recognition) if they have more than 50% black ownership.
EMEs are still required to produce a BEE Certificate to give to customers to confirm that they are Exempted. These certificates can be sourced from;
- Accounting Offices
- Financial Auditor
- Verification Agency
Any business that turns over more than R5 million but less than R35 million qualify as a QSE.
QSEs tend to be family run businesses that would struggle to include additional people at ownership and Senior Top Management level. However, a white owned QSE can start to employ black staff, train black staff, buy from BEE Certified Suppliers and support black businesses and communities.
QSEs get scored against a QSE Scorecard and can choose to be scored against any 4 of the 7 sections on the Scorecard. The QSE Scorecard is easier to score points against than the Generic Scorecard.
Any business that turns over more than R35 million per annum is measured against a Generic BEE Scorecard.
The same 7 sections are included on the Generic and the QSE Scorecards. The targets and the point allocations are different and Generic companies are measured against all 7 sections of the BEE Scorecard.
As described above there are two types of BEE Scorecard; a QSE Scorecard and a Generic Scorecard.
The Scorecards provide the 7 elements against a company will be scored and give the targets and the associated points available.
Companies can then consider the elements and attempt to score points in each of the 7 elements.
The points in each element can be secured by achieving the required targets. Should you achieve a percentage of the target then the same percentage of points can be claimed.
The Scorecard is simply a framework against which your business can score points in order to secure a BEE Certificate.
Your BEE Certificate can then be used by your customers to claim BEE spend when they procure goods and services from your business.
BEE Certificates can be issued by any Verification Agency so long as they are approved to do so by SANAS.
The Certificate can only be issued once a full verification has been performed and the documentation presented by your company has been verified.
On your certificate you should find the following information;
- Company name and number
- Type of Certificate (Group/Entity/Division)
- BEE Category (QSE/Generic)
- BEE Level (1-8)
- Procurement Recognition %
- Black Ownership %
- Black Women Ownership %
- Value Adding Supplier (Yes/No)
- Certificate Issue Date
- Certificate Expiry Date
You do not need to provide any additional information to your customers. Your BEE Certificate is regarded as sufficient as supporting evidence of your B-BBEE credentials.
During February 2009 the first batch of accredited verification agents was released by SANAS , this list has increased in number and currently includes the following verification agents:
|Accreditation Code ||Verification Agent |
|BVA068 ||Apala VZR Verification Agency |
|BVA021 ||Aqrate (Pty) Ltd |
|BVA019 ||Aqrate KZN (Pty) Ltd |
|BVA050 ||BEE - Matrix Cc |
|BVA040 ||BEE BIZ Compliance (Pty) Ltd |
|BVA057 ||BEE Empowered and Labour Consultancy Cc |
|BVA049 ||BEE Rating Solutions (Pty) Ltd |
|BVA014 ||BEE Verification Agency Cc |
|BVA031 ||BEESA Rating Services (Pty) Ltd |
|BVA023 ||Client King CC |
|BVA056 ||DRGSiyaya (Pty) Ltd |
|BVA037 ||Emex Trust |
|BVA030 ||Empowerdex |
|BVA018 ||EmpowerLogic (Pty) Ltd |
|BVA041 ||Grant Thorton |
|BVA046 ||Honeycomb BEE Ratings (Pty) Ltd |
|BVA052 ||Integra Scores (Pty) Ltd |
|BVA017 ||lquad Verification Services (Pty) Ltd |
|BVA020 ||National Empowerment Rating Agency - Gauteng |
|BVA013 ||Prostart Traders 24 (Pty) Ltd t/a CENFED BEE Verification Agency |
|BVA032 ||Small Enterprises Rating Agency (Pty) Ltd |
For more information about accredited BEE verification agents click here
When you are either starting down the BEE road or if you are in the process of improving your score you need to have a strategy. Your BEE score will not manage itself and it is very dangerous to simply call a verification agency in to find out what score you achieved this year without managing it and being sure you have achieve your desired score before getting verified!
Someone in your business should have a sound understanding of BEE and be able to calculate your BEE score. There are software tools available to help in this process (see www.boxsmart.co.za for QSEs).
You need to choose which elements you are going to be scored against and then develop a strategy to ensure you score those points.
Your strategy may span a 12 month period, 5 year period or simply be a once off project;
- Ownership – Once off project
- Management Control – Once off project (with succession planning)
- Employment Equity – 12 month period
- Skills Development – 12 month period
- Preferential Procurement – 12 month period
- Enterprise Development – 5 year period
- Socio-economic Development – 5 year period
You should note that each section is also scored against different periods. These tend to tie in with your strategy timelines.
If you want to do this properly it is advisable to call on consultants who can assist and share best practice tips and experience. As they have been developing strategies for other businesses that can share in their exeperience of what does and does not work.
Consulting costs are not usually expensive with consultants charging between R800 – R1,500 per hour.
When choosing a consulting firm you should ask the specific consultant what experience they have and ask for references. There are examples of consultants providing in accurate information as BEE is a new issue and there is scope for interpretation which can lead to difficulties.
BEE is all about being strategic and having good administration systems in place.
This is good for South African business as typically we are weak on administration and having a good administration system will improve our businesses.
Without the documentation to prove your BEE activities you cannot claim the associated BEE points. All activities relating to BEE have to be documented and then provided as proof to a verification agency.
Should you choose to self assess (not use a verification agency) then you still have to produce evidence that support your claims.
Listed below are the administration systems you should have in place;
- Ownership = none
- Management Control – none
- Employment Equity – Payroll system, Employment Documentation File
- Skills Development – Skills spend tracker, Skills Documentation File
- Preferential Procurement – Procurement system
- Enterprise Development – Documentation File
- Socio-economic Development – Documentation File
You have three options when considering who should manage your BEE Score;
The Chief Executive Officer (CEO) in any business should take direct responsibility for the company’s BEE Score. We have not seen any business succeed in driving BEE successfully without the CEOs direct involvement.
The CEO is likely to delegate certain operational responsibility to other staff members but the drive should come from them.
The best structure is as follows;
- Chief Executive Officer – Ownership and Management Control
- Chief Financial Officer – Preferential Procurement and Enterprise Development
- Employment Equity Committee – Socio-economic Development, Skills Development and Employment Equity.
The Employment Equity Committee would need some training as they are likely to have limited experience in making strategic recommendations to the CEO on these issues. The CEO should sit in the Employment Equity Committee along with someone with HR experience (preferably the HR Manager).
If the company to too small for this type of structure then the responsibility would fall back on the senior executive team.
In very large businesses it is advisable to appoint a Head of Transformation. See BEE and Transformation
It is important to note that BEE is not transformation. BEE is a reporting exercise and encourages specific activity in a business. However it is a quantative measure and does not take into account any qualitative elements.
If Transformation is not achieved then the business will struggle to maintain their BEE Score. This becomes more evident the larger the business.
Transformation, in essence, is the establishment of a fair working environment along with the removal of preconceptions and assumptions.
Once a staff team is operating together side by side with a common goal in mind and within a clearly understood corporate culture then you have achieved transformation.
Employment Equity numbers do come into the equation but reporting on Employment Equity is obviously not transformation.
For more assistance on a Transformation Programme contact Andrew Bizzell at BEESA Empowerment Services on 011 726 3052 or Click Here and we will get back to you.