BBBEE regulatory shake up on the card

The  Broad Based Black Economic Empowerment (BBBEE) regulatory space may be set for a major shakeup if the changes to the BBBEE codes of good practice prepared by the DTI are approved.

The DTI moved closer to finalising the amendment process yesterday after the cabinet announced that it has seen the proposed revisions and approved that they be published for public comment. The amendment of the codes comes amid rising tension within South Africa’s socioeconomic landscape on the back of concerns that the economy continues to reflect pre 1994 patterns of racial domination. Rising calls for nationalisation of mainstream commercial assets and scenes like the Marikana masacre are seen to be fermentation of economic alienation of the majority of the South African population.  The pressurised  ruling party, the ANC, has promised to up the ante on the transformation. Addressing the ANC policy conference recently ANC president Jacob Zuma said the situation cannot be allowed to continue 18 years after democracy. Its time to act, said Zuma.

In a statement issued yesterday the cabinet said the revised codes will enhance the implementation of the BBBEE in a meaningful and sustainable manner. The revised codes also contain principles and guidelines that will facilitate and accelerate the implementation of BBBEE.

Key areas of refinement include:

  • The generic scorecard has been reduced to five elements with Employment Equity and Management Control being consolidated
  • Preferential Procurement and Enterprise Development merged to form a Supplier Development Element.
  • The points for ownership have been broadened to include designated groups in the main points;
  • Thresholds for Exempted Micro Enterprises and Qualifying Small Enterprises (QSE) have been adjusted.
  • All companies, except Exempted Micro Enterprises, will be required to comply with the five elements of the B-BBEE scorecard;
  • Revised qualification points for awarding of B-BBEE recognition levels status;
  • The introduction of priority elements: Ownership, Skills Development and Supplier Development, and large enterprises to comply with all three priority elements. The priority scores of entities that do not comply with sub-minimum requirements in each priority will be discounted;
  • Entities that are 100% black-owned will qualify as Level 1;
  • Entities that are more than 50% black-owned will qualify as Level 2;
  • Updated framework for the accreditation of B-BBEE Verification Agencies to include the Independent Regulatory Body of Auditors;
  • Alignment of the B-BBEE Employment Equity elements with the Employment Equity Act;
  • Skills Development Elements has been aligned to the New Skills Development Strategy and to be outward focused; and
  • QSE’s must comply with all 5 elements on the scorecard.

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