04 Jan A Re-Cap on Revised BEE Codes
Do you understand why the codes were revised? If not a re-cap on the revised BEE codes which were implemented in May 2015 may help you to understand the reasons for the revision.
The original codes were gazetted in 2007 with the aim of reducing inequality in South Africa’s economy. With the BEE act and codes it was hoped that the previously disadvantaged would no longer be excluded, there would be a positive growth of the black middle class with a spin-off of less unemployment and more people contributing to the local economy.
When the initial codes were introduced they did help to increase black ownership, integrate black management as well as assist with socio-economic development. Unfortunately it was realised later that many companies had obtained high BEE scores without having contributed to any meaningful transformation. This led to the first revision of the codes in October 2011 which featured 5 elements namely Skills Development, Ownership, Management Control, Enterprise and Supplier Development and Socio – Economic Development. Further changes this year have been introduced for the improvement of skilled blacks as well as the growth of small and small black owned enterprises.
Smaller businesses have the opportunity to procure more business with the revised codes. Medium and larger organisations (with a turnover of more than R50 Million per year) will need to do more business with EMEs, QSEs and 51% Black owned companies. In 2015 Employment Equity was merged with Management Control. Preferential Procurement and Enterprise Development were merged with Enterprise and Supplier Development. Most notable are the Priority elements with minimum thresholds. The thresholds are Ownership, Skills Development and Enterprise and Supplier Development. Companies need to achieve at least 40% so that their total BEE score does not drop.
EME’s or Exempted Micro Enterprises are now automatically recognised as “Empowering suppliers”. Businesses that fall into this category are ones with a turnover of less than R10 Million a year and there is no need for these entities to have a BEE certificate. Black owned EMEs are now rated as level 1.
Businesses that are serious about future opportunities, growth and an improved BEE rating will align their business with the revised codes.