B-BBBEE Consulting & Advisory

What Is Broad-Based Black Economic Empowerment (B-BBEE)?


In response to South Africa’s economic status quo, a system has been set up where any business that wishes to get government contracts (or enter into businesses with other businesses that seek government contracts) may improve its chances of success by becoming B-BBEE compliant.


How Is Compliance Achieved?


Businesses whose revenue is under R10 million can do this by filling out a B-BBEE Affidavit that is then stamped by the Commissioner of Oaths. Businesses that make more than R10 million have to be audited for a B-BBEE compliance certificate that includes a rating so the businesses they trade with know how their own scores are impacted. We can refer you to an auditor near you, if your business is ready to be audited. But before that, it may need assistance preparing for the audit. No firm is allowed to offer your businesses both services, and when COVID-19 lockdown restriction necessitate, consultancy and audit can be conducted through a live video communication system. The purpose of the Act is to accomplish equitable economic representation in various sectors across categories such as race, gender, disability, rural and youth. The diversity of sectors means there is a different way of measuring B-BBEE compliance in agriculture than there is, for example, in the media sector.


What Does Compliance Consist Of?


There are five elements on the generic B-BBEE scorecard, each of which gives businesses a set of options on how to earn the points that lead to B-BBEE compliance. There are different permutations for different sectors, but generally the elements are:


Ownership (priority)

  • Refers to the percentage of ownership interests (e.g. rights, shareholding) held by black people, particularly black women.
  • Weighting: 25 points
  • At least 40% of net value must be reached

    • Skills Development (Priority Element)

  • Quantifies the investment made towards training and developing black employees
  • Weighting: 20 points (plus 5 bonus points
  • A sub-minimum of 40% must be scored overall

    • Management Control

  • Refers to the proportion of black people who influence the direction of the business (e.g. senior management)
  • Its weighting on the scorecard is 15 points (plus 4 bonus points)

    • Socio-Economic Development

  • Weighting: 5 points
  • Agricultural sector: a 1.5% contribution of net profit after tax earns the entity 15 points because rural communities usually have greater need
  • Generally this element is a measure of the extent to which entity carries out corporate social investment efforts to uplift black individuals and communities

    • Management Control

  • Refers to the proportion of black people who influence the direction of the business (e.g. senior management)
  • Its weighting on the scorecard is 15 points (plus 4 bonus points)
    • If a business is found to have falsified its B-BBEE compliance, this is called fronting and it can incur a fine of up to 10% of its annual turnover and a 10-year jail sentence. Businesses that comply, however, become more competitive.

    How Can We Assist You?

    In addition to guiding your business towards its audit, BEE Novation can integrate your compliance on the elements of legislation into your business growth strategy, which is why our background for the BEE in BEE Novation isn’t just Black Economic Empowerment, but Business Evolution and Expansion.

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