22 Aug BEE and Socio-Economic Development
Socio-Economic Development forms part of the government’s policy of Black Economic Empowerment and is one of the five elements in the revised Broad-based Black Economic Empowerment (B-BBEE) codes – encouraging medium and larger organisations to help the previously disadvantaged facilitate their own business or income. For their contribution, QSE and Generic entities will be recognised with valuable points on their BEE scorecard.
Socio-economic development explained
The revised B-BBBE Codes of Good Practice were implemented to reduce inequality, promote the growth of the black middle class and reduce unemployment, and, since the Codes’ promulgation in 2007, many companies have supported various skills development initiatives without recognition or the opportunity to earn valuable points on their BEE scorecard. Unlike corporate social investment, Socio-Economic Development (SED) is a means for companies to help black people gain sustainable access to the economy and become economically active. Qualifying Small Enterprises (with a turnover of more than R10 million but less than R50 million) and Generic entities (with an annual turnover of more than R50 Million) can provide sector specific educational or training programmes for qualifying beneficiaries by monetary or non-monetary contributions. Their BEE score is then weighted on the annual value of their contribution.
QSE’s and Generic companies can contribute to SED initiatives by assisting qualifying beneficiaries in various ways:
- Grant contributions
- Offering discounts
- Covering overhead or direct costs
- Providing professional services at no cost
- Providing professional services at a discount.
How the Scorecard for SED works
SED contributions qualify if they are made to defined beneficiaries aligned to SED principles – resulting in individuals’ sustainable economic participation. The compliance target is set at 1% of net profit after tax for a weighting of five points. If at least 75% of the contribution value benefits black people, the total value of SED contribution will be recognised. However, if less than 75% of the value of contribution benefits black people, the value multiplied by the percentage of black people benefiting will apply. Do note that not all contributions will qualify as total spend. For example, if a full grant is given, 100 % of the contribution will count towards the score calculation. But if a company uses its own employee to train a recognised beneficiary, this non-monetary contribution will only count as 80%. In order to measure their SED contributions, companies will need to tally the value of the contribution, their compliance target, and their allocated weighting points.
No matter the size of your company, SAB&T BEE can assist you with your Socio-Economic Development initiatives – contact us for more…