Paragraph 3.2.1 of  Statement 500  of the Amended General B-BBEE Codes of Good Practice  warrants that a Socio-Economic Development contribution must provide income-generating opportunities. Paragraph 3.2.3 mandates that 75% of the total contribution must benefit Black People; otherwise, the claim will be pro-rated accordingly. For example:   ABC Traders donates R100,000 towards an SED initiative, of which 60% are Black Beneficiaries.  The Benefit Matrix allows 100% of a Grant Contribution. However, 100% of the Value of ABC Traders contribution only reaches 60% Black Beneficiaries. The result is that ABC Traders can only claim R60,000.   Socio-Economic Development Services  are available to assist Members with insight Socio-Economic Development Contributions.

Section 3.7, under Statement 400  of the Amended General B-BBEE Codes of Good Practice , allows an active Enterprise or Supplier Development Beneficiary that is an EME or QSE, which is at least 51% Black Owned, to continue as a Beneficiary when their annual turnover increases to elevate them to the Large Enterprise threshold. However, it is critical to note that an organisation may not support a Large Enterprise as an Enterprise or Supplier Development Beneficiary unless there was previous support for the Beneficiary when they were a QSE or EME.   Notwithstanding, such recognition for those measured under the Amended General B-BBEE Codes of Good Practice  is for five years only from the first instance assistance was provided.   Enterprise & Supplier Development Services  are available to guide members on the implementation of sustainable ESD Strategies.

It is fair to surmise that the points earned on Supplier Development, especially since Enterprise & Supplier Development is a Priority Element, will impact an organisation’s overall scorecard. Statement 400  of the Amended General B-BBEE Codes of Good Practice allocates 10 Weighting Points with a compliance target of 2% Net Profit After Tax, based on the following criteria:   2.2 Supplier Development 2.2.1    Annual value of all Supplier Development Contributions made by the Measured Entity as a target percentage.   There are another 2 Bonus Points available for job creation and elevation from an Enterprise Development Beneficiary to a Supplier Development one.   It is therefore vital that the Supplier Development Strategy of an organisation reflects the importance of this element. A Beneficiary must be identified as per the criteria in the correct timeline. The contract should highlight all interventions and contributions with evidence to support those contractual obligations were met.   Enterprise & Supplier Development Services are available to guide Members on the implementation of Sustainable Supplier Development initiatives.

In certain areas of the B-BBEE Scorecard, once a B-BBEE claim has been made under one element, the same spend must not form part of another claim in another element. For example, if an organisation claims the headcount of a Y.E.S Employee, under no circumstances can that spend for a Salary be recycled and then claimed under Skills Development.   Although an organisation can claim training for a Y.E.S Employee, this needs to then align to the Skills Development Learning Programme Matrix as per a B-BBEE Code of Good Practice.   Technical Support Services  are available to advise Members on B-BBEE Claims.

Clause 2.4.2 of Statement 400 of the Amended General B-BBEE Codes of Good Practice allocates Bonus Points for creating one or more jobs as a direct result of a Supplier Development or Enterprise Development intervention.   The necessary evidence varies between B-BBEE Rating Agencies. Generally, however, a letter confirming job creation from the Beneficiary will serve as such evidence or a Signed Employee contract. The letter of confirmation must affirm that the intervention created at least one new job. Some confirmations may include being administered by a Commissioner of Oaths.  This must be undertaken by the Beneficiary and must include (not limited to):   An organisation’s full name, physical address, postal address, and registration number; A Beneficiary’s full company name, physical address, postal address, and registration number; The Enterprise Development or Supplier Development commenced; The date of the contribution; The number of new positions due to the intervention; and The names of the new employees;   Enterprise & Supplier Development Services are available to assist Members meeting requirements for Job Creation.

The most significant risk to an organisation meeting its Preferential Procurement targets is fraudulent B-BBEE Certificates and Affidavits. They not only go against the spirit of B-BBEE, but they put an organisation at risk, as fraudulent B-BBEE Credentials generally only reveal themselves at the time of an organisation’s B-BBEE Verification.   The B-BBEE Commission's website contains a List  of known Fraudulent / Invalid B-BBEE Credentials currently in circulation.   If any Members have suspicions about B-BBEE Credentials currently on file, Certificate Collection Services  is on hand to assist with validation of their authenticity.

At the time of a B-BBEE Verification, many organisations fail to produce updated B-BBEE Statuses from their suppliers especially those who are EMEs and QSEs with Enhanced Recognition. During a B-BBEE Verification, a B-BBEE Rating Agency will generally consider:   Any B-BBEE status that is valid within the Measurement Period or thereafter; Most recent valid B-BBEE Status; and A B-BBEE status that is valid for at least one day in the Measurement Period due to differing Financial Year Ends as well a customer and supplier not being measured at the same time.   B-BBEE Statuses that have expired before the start of an organisation’s Financial Year End will not be accepted.   Certificate Collection Services are available to clarify the validity of any B-BBEE Status on file.

A B-BBEE Verification is based on a sampling of evidence and an element of risk. In other words, the process of analysing less than 100% of the evidence supplied. The procedure provides a Verification Analyst with a reasonable basis on which to conclude that all evidence provided is true and accurate.   However, posing a challenge is a Learnership claim where the Learner is no longer employed. If that particular Learner is chosen as part of the sample, the B-BBEE Rating Agency will need to interview them for an organisation to claim its points.   As per Clause 18.3.1.3 (e), the SANAS R47-03 document states the following:   " (e) As part of the Verification process, the Verification personnel shall interview a sufficient number of black persons at all levels of the Measured Entity to provide assurance that the information gathered is sound. For the avoidance of doubt, interviews shall be conducted for the Skills Development element. This does not exclude the sampling of white persons or others who do not meet the definition of 'Black'."   Therefore, an organisation must ensure that it has up-to-date contact details of Learners no longer employed or other pieces of corroborating evidence.   B-BBEE Verification Support Services  are available to assist Members to prepare for B-BBEE a Verification.

Those driving Preferential Procurement Strategies must bear the following in mind when an EME, QSE with more than 51% ‘Black’ Ownership or a Start-up Entity opts to tender outside their financial threshold.   EMEs tendering for contracts of R10m and above must be verified using the QSE Scorecard; QSEs tendering for contracts of R50m and above must be verified using the Large Enterprise Scorecard; and Start-ups that qualify as EMEs that want to tender for contracts of R10m and above must be verified using the QSE Scorecard.   Certificate Collection Services are available to clarify the validity of any B-BBEE Credentials.

The most critical element of an Enterprise Development loan is that it is a loan and not a grant disguised as one. An organisation must record a loan in their Financial Statements to confirm its origin. The following is a non-exhaustive list of evidence necessary for a B-BBEE Rating Agency at the time of a B-BBEE Verification:   Signed Loan Agreement including the type of loan and the terms of repayment; Proof of the valid B-BBEE status of the Beneficiary; Evidence that an organisation paid the loan in full as per the agreement; Presentation of the loan account, ledger or a journal that determines the outstanding amount. Acknowledgement from the Beneficiary that the loan was received as per the agreement;   As the necessary evidence slightly differs between B-BBEE Rating Agencies, an organisation should confirm before their B-BBEE Verification what their evidence requirements are.   Enterprise & Supplier Development Services  are available to assist Members with the creation & implementation of Enterprise & Supplier Development initiatives.

At the time of B-BBEE Verification, a Measured Entity needs to produce all relevant evidence or documentation to substantiate their B-BBEE claims. From a Measured Entity perspective, it is often misunderstood that confidential documentation cannot form a part of the B-BBEE Verification whereas a B-BBEE Rating Agency would require this based on the procedures that they need to follow. Reference is made to clause 2.6 under Statement 000 of the Amended General B-BBEE Codes of Good Practice which states:   2.6 Any representation made by an Entity about its B-BBEE compliance must be supported by suitable evidence or documentation. A Measured Entity that does not provide evidence or documentation supporting any initiative must not receive any recognition for that initiative.   B-BBEE Verification Services  are available to assist Members with their B-BBEE Verification Requirements.

Statistics South Africa is the source used to determine the Net Profit After Tax (NPAT) for calculating the targets for Enterprise Development, Supplier Development and Socio-Economic Development. The latest statistics  were published during March 2024. The statistics in this version will be for the 4th quarter of 2023.   Any B-BBEE Verification from hereon would most commonly apply the latest Industry Norm published by Statistics South Africa. For example, if a B-BBEE Verification takes place in April 2024, the latest published stats to be used would be those posted during March 2024.    Technical Compliance Services  are available to guide members in calculating their Targets.