Turning Strategy into Action: How B-BBEE Can Help!
As calls for transformation intensify, it is becoming increasingly important for companies to prioritise B-BBEE compliance, and skills development. While the B-BBEE scorecard is loathed by some, Finweek correspondent, Jessica Hubbard believes that it offers a potential way out of the current mismatch between what training provides and the real-world requirements of employers. Read more here.
THE PURPOSE OF B-BBEE
Broad-Based Black Economic Empowerment (B-BBEE) is an integration programme launched by the South African government to reconcile South Africans and redress the inequalities of Apartheid. It encourages businesses to integrate, upskill and mentor Black people (defined as Africans, Indians and Coloureds) in the workspace, support Black businesses and give back to marginalised communities across the country. Businesses are awarded points for these activities, which determines their B-BBEE level and is reflected on their B-BBEE certificate.
A B-BBEE certificate reflecting a good B-BBEE level, means your business stands a better chance of:
- Winning government contracts
- Obtaining business from companies only wanting to work with B-BBEE compliant companies
- Taking over business from non-compliant competitors
- Being eligible for various grants and funding
HOW YOUR B-BBEE LEVEL IS CALCULATED
If your business falls into the Generic Enterpise category, i.e. your turnover is above R50 million per annum, your verification is measured in terms of all 5 elements of the Generic Scorecard.
If your business falls into the Qualifying Small Enterprises (QSE) category, i.e. your turnover is between R10 million and R50 million per annum, then your verification is measured in terms of all 5 elements of the QSE Scorecard. Businesses that have a Black shareholding of more than 51% under this category, will qualify as Level 2 B-BBEE contributors. 100% Black-owned entities will be automatic Level 1 contributors.
If your business turnover falls below R10 million per annum, it automatically qualifies you as a 100% contributor towards B-BBEE.
THE FIVE B-BBEE PILLARS
Ownership measures the effective ownership of enterprises by Black people. The reason ownership has such a high profile in the scorecard is that it is the dimension most often equated with transformation. This is a priority element and ownership (through employee ownership or strategic partners) should therefore exceed the sub-minimum of 40% of the total weighting of points.
Management Control measures the effective control of enterprises by Black people. This equates to representation in board decision-making, executive management, senior management, and the middle employee base. Management control is not a priority element and there is currently no sub-minimum requirement.
Skills Development measures the extent to which employers carry out initiatives designed to develop the competencies of Black individuals (employed or unemployed). This is a priority element and the sub-minimum requirement is 40% of the total weighting of points for skills development (inclusive of learnerships, but exclusive of bonus points for absorption).
ENTERPRISE & SUPPLIER DEVELOPMENT
Enterprise and Supplier Development is comprised of Preferential Procurement, Enterprise Development and Supplier Development. This is a priority element, and therefore the sub-minimum requirement is 40% of the total weighting of points for each of the three categories within the Enterprise and Supplier Development element. Learn more about each sub-element here.
Socio-Economic Development measures the extent to which enterprises carry out initiatives that contribute towards the upliftment of marginalised communities. Monetary or non-monetary contributions that are implemented for these communities, where at least 75% of the beneficiaries are Black people, can be fully recognised. The target spend is 1% of a company’s net profit after tax.
As a Generic Enterprise, there exists three opportunities to receive bonus scores (points), depending on the element in question and its underlying criteria (or indicators). The three elements with bonus weightings are Management Control (with 4 bonus points), Skills Development (with 5 bonus points), and Enterprise and Supplier Development (with 4 bonus points).
Your score will ultimately determine your B-BBEE status or level. Refer to the B-BBEE Recognition Levels for the range of statuses organisations may achieve.
A level 8 is at the base level of compliance, but most customers would expect a Level 4 result to ensure sufficient positive support to their own preferential procurement targets on their B-BBEE scorecard.
HOW WE CAN ASSIST YOU!
Apart from Ownership, Skills Development and Enterprise and Supplier Development are two of the heaviest weighted elements in the B-BBEE scorecard; and where we, as a corporate training provider, can best advise and assist you. These are also priority elements, and therefore a business must achieve a minimum of 40% of the total weighting of points to avoid dropping a level.
The purpose of the Skills Development Scorecard is to expand the knowledge and competencies of the labour force to achieve economic growth and social development that will create decent work and sustainable livelihoods for all South Africans.
To find out how much you need to spend, how many learners you will need to train and how you can achieve bonus points for Skills Development, click here.
ENTERPRISE & SUPPLIER DEVELOPMENT
The purpose of the Enterprise and Supplier Development Scorecard it to encourage businesses to work with a more diverse number of SMEs to increase their operational and/or financial capacity. This can be done through monetary or non-monetary methods.
Learn how a Learnership training solution employed across the ESD and SED levels, can help you achieve up to 47 B-BBEE points on your scorecard.
Continue to watch this space! We will be releasing our Grants and Incentives issue shortly. In this issue, we will explain all you need to know about Grants and Incentives and how this is linked to all the other elements in our Skills Development Game Plan.
At any time during this series, we invite you to connect with us and Book A Free Consultation. Just complete the form attached and we will be in touch promptly.