Broad Based Black Economic Empowerment (BBBEE) legislation has been a fixture in the South African business landscape for a while, as early as 2003, and has, to an extent, changed the economic landscape of business in country. South African businesses have struggled to keep pace with this continuously changing policy, and its potential benefits for their company’s.
It is important to be cognizant that B-BBEE compliance depends largely on the size and turnover of a business. The three levels of compliance, therefore, include:
Exempted Micro Enterprises (EMEs): These businesses have a yearly income of less than R10 million.
Qualifying Small Enterprises (QSEs): These businesses’ yearly income lies between R10 and R50 million.
Medium to Large Enterprises (M&Ls): And these businesses have an income above R50 million each year.
Also, important to first understand the pillars BBBEE is comprised off.
Ownership – Ownership refers to the voting rights and shareholding within the business of previously disadvantage individuals. This can be achieved by bringing in previously-disadvantaged partnership or shareholder agreement, an employee trust scheme or a joint venture agreement.
Management Control – Management control refers to previously disadvantaged company members in top managerial roles, and their voting rights with control on the executive board of an enterprise.
Employment Equity – This pillar deals with the representation of previously people below the executive level. It involves hiring more previously disadvantaged individuals and upskill them towards promotion.
Skills development – This pillar is increasingly becoming an important aspect of B-BBEE in that it provides learning opportunities, for previously disadvantaged individuals, within the company to develop new skills. It also strengthens the skills base and operational effectiveness of your business.
Preferential Procurement – This pillar focuses on creating networks for smaller black-owned enterprises by making them preferred suppliers to bigger enterprises. This ensures they play a part in the supply chain of industries they would usually find it hard to have access to.
Enterprise development – This involves creating support programmes that aid previously disadvantaged individuals start, maintain or grow their businesses.
Socio Economic Development (Social Responsibility) – This pillar refers to a company’s investment in social and economic initiatives of empowerment. These are often community-based initiatives by the company.
BBBEE can often be time-consuming to understand for many business owners as they focus on creating growth for their companies, without understanding that their BBBEE status plays an integral part in remaining competitive in South Africa’s economy. This is why having a partner such as Probity Advisory during BBBEE restructures, and other corporate finance matters, is important in staying on top of any issues that might arise. With a team of highly-capable professionals, understanding where you stand with BBBEE and how to become complaint.
– Ilze Mynhardt, Director Trusts & Outsourced Management