A MIRROR IMAGE ‘BLACK’ DESIGNATED GROUPS & ‘BLACK’ DESIGNATED GROUP SUPPLIER

‘Black’ Designated Groups and Designated Group Suppliers are defined in Schedule 1 of the Codes of Good Practice (Codes). The 2019

amendments to the Codes introduced ‘Black’ Designated Group Suppliers. As a mirror image of each other, ‘Black’ Designated Groups and

Designated Group Suppliers play a vital role in optimising an organisation’s B-BBEE Scorecard.

‘Black’ Designated Groups, which filter directly through to ‘Black’ Designated Group Suppliers, must have a ‘Black’ Ownership structure that

represents at least 51% of people that qualify under this category. However, there are considerations when claiming for ‘Black’ Designated

Groups and Designated Group Suppliers

Who qualifies in the category Designated Groups?

Criteria for Designated Groups Source of evidence for a B-BBEE Verification

‘Black’ Military Veterans who qualify to be called a military veteran

according to the Military Veterans Act 18 of 2011, which means for the

purposes of this sector code, any Black South African Citizen who: > rendered military service to any of the Non-Statutory Military

Organisations, which were involved in South Africa’s Liberation

War from 1960 to 1994;

> served in the Union Defence Force before 1961; > became a member of the new South African National Defence

Force after 1994; and

> has completed his or her military training and no longer performs

military service, and has not been dishonourably discharged

from that military organisation or force, provided that this

definition does not exclude any person referred to in paragraph

4.5.1 or 4.5.2 of the Act who could not complete his or her

military training due to an injury sustained during military training

or a disease contracted or associated with military training.

Any substantiating evidence.

‘Black’ Persons with disabilities according to both the Codes and

Employment Equity Act.

Confirmation of disability by a medical doctor and completed

EEA1 form.

Unemployed ‘Black’ People not attending, or not required by law to

attend, an educational institution and not awaiting admission to an

educational institution.

An Affidavit or CIPC B-BBEE Certificate.

‘Black’ People living in rural or underdeveloped areas. Proof of residence. See page 26 on how a B-BBEE Rating

Agency verifies rural or underdeveloped areas.

‘Black’ People who are Youth are aged between 14 and 35 as

defined in the National Youth Commission Act of 1996.

A South African Identity document confirming the age of such a

person. This status can be verified and claimed annually.

At what stage is the status of a

Designated Group substantiated?

The factor that determines whether a ‘Black’ Person meets

the criteria of a Designated Group is the date on which an

organisation is measured. On this measurement date, a B-BBEE

Rating Agency will substantiate whether it meets the criteria set

out in Schedule 1. Therefore, the status of a Designated Group is

irrelevant at the time of a transaction. For example, at the time of

the transaction:

> Upon confirmation of the status of a ‘Black’ Military Veteran,

it will remain unchanged. Therefore, the status can be carried

yearly unless the definition thereof is amended. However, if

an organisation changes its B-BBEE Rating Agency, it will

need to re-verify the person.

> An Unemployed ‘Black’ Person was just that, however,

before the B-BBEE Verification they became gainfully

employed, hence would not qualify in the Designated

Group category.

> A ‘Black’ person with a disability must provide evidence

confirming their disability status annually to qualify under a

Designated Group. Although, in most cases, a disability status

does not change, there are cases where it no longer applies.

> Whether a ‘Black’ Person is living in a rural or

underdeveloped area is evidenced by their proof of

residence. Therefore, if such a person moves out of the rural

or underdeveloped area before a B-BBEE Verification takes

place, they would not qualify under Designated Groups.

> The day that a ‘Black’ Person who is Youth turns 36, they no

longer qualify under this category. Therefore, at the time of

an organisation’s B-BBEE Verification, the person’s age must

still be under 35 years old or they do not qualify under the

Designate Group category..

Do any sets of codes refer to Designated Groups?

Two Sector Codes confirm their criteria of Designated Group:

> Agri Sector Code

Farmworkers.

> Defence Sector Code

Military Veterans.

How can an organisation identify the

status of a person claiming to be part

of a Designated Group?

B-BBEE Credentials confirm a ‘Black’ Designated Group status.

However, an organisation must refer to the Code on which they

are measured as the criteria may vary from Code to Code.

1 Large Enterprises and QSEs with less than

51% ‘Black’ Ownership:

A SANAS accredited B-BBEE Certificate, as it features all

the necessary information, specifically confirming the ‘Black’

Designated Group Status and the ownership thereof of

people or organisations claiming this status.

2 EMEs or QSEs with more than 51% ‘Black’ Ownership:

Organisations falling into these thresholds only need to

present an Affidavit or CIPC EME B-BBEE Certificate to

confirm their annual income and ownership structure.

However, an Affidavit or CIPC EME B-BBEE Certificate

presents a certain element of risk as there is no ‘regulator’ to

verify its authenticity. Therefore, a deponent must understand

the concept of perjury. The primary duty of a B-BBEE Rating

Agency is to mitigate risk, which means it may request

additional evidence to substantiate a claim. However, many

organisations do accept an Affidavit at face value.

Notably, the transport sector has yet to align with the 2019

version of the Codes. Therefore, Designated Group Suppliers

do not apply to those measured on this sector Code. ‘Black’

Designated Groups in line with the Transport Sector Code are

confirmed by:

> EMEs

A letter from an accounting officer must include the practice

number and confirm the financial period and turnover, as well

as the ‘Black’ Ownership of the business. Otherwise, a SANAS

accredited B-BBEE Certificate is acceptable in this instance.

> QSEs and Large Enterprises A SANAS accredited

B-BBEE Certificate.

Are Bonus Points allocated for

Designated Group Suppliers?

The Enterprise & Supplier Development Scorecards across

most sets of Codes allocate Bonus Points for organisations

procuring from ‘Black’ Designated Group Suppliers, which

appear as:

Scorecard Description Target Bonus

Points

Generic Scorecard 2% 2

QSE Scorecard 1% 1

Specialised Scorecard 2% 2

Construction

> BEP

> Contractor

20% 2

20% 3

Agri Sector Code 2% 2

Defence Sector Code

> Generic

> QSE

2% 2

1% 1

Financial Sector Code 2% 2

Forestry Sector Code

> Generic

> QSE

2% 2

1% 1

MAC Sector Code 2% 2

ICT

> Generic

> QSE

2% 2

1% 1

Property Sector Code 2% 2

Tourism Sector Code 0% 0

The Tourism Sector Code and the Transport Sector Code are

the only Codes that do not allocate Bonus Points for ‘Black’

Designated Group Suppliers.

Although there will always be an element of risk when verifying

‘Black’ Designated Group status, the advantage for any

organisation is considerable, bearing in mind that the Bonus

Points could make a difference to an organisation’s Status Level

and the accompanying Preferential Procurement Recognition.