The Codes of Good Practice for broad-based black economic empowerment are a blueprint for the transformation of the South African economy. The codes are pragmatic and reflect a balance between the government’s stand on empowerment and the needs of the private sector. Roger Latchman, MD of PKF, a business advisory organisation, provides an overview of what they mean for business.
What is the list of codes?
- Management (control)
- Employment equity
- Skills development
- Enterprise development
- Socio-economic development
What do the new BEE codes entail? They have been relaxed in many ways from the draft codes. Businesses with a turnover of less than R5 million per annum are exempted, and automatically qualify as a level 4 contributor to BEE. Businesses with a turnover between R5 million and R35 million need to comply with only four of the seven elements. The full set of codes applies to businesses with a turnover greater than R35 million.
Who do they affect? Virtually all trading entities in business and government departments, state-owned entities, parastatals and municipalities.
What is the deadline for compliance? There is no deadline, but BEE is to be reviewed in 10 years’ time to ascertain progress. However, market forces will dictate the speed with which BEE will proceed. We have already seen the pressure coming from government and corporates alike.
What is the penalty, if any, for non-compliance? The ultimate penalty is that clients and customers may stop purchasing from a non-compliant or insufficiently compliant entity.
What are the pros and cons of using a BEE verification agency for small and medium business?
- It shows the commitment to BEE and transparency of the small or medium business towards BEE.
- It allows the business owner and directors to gain an understanding of BEE and
- Businesses get a certificate indicating their BEE compliance level
- It allows for easier completion of certain tender documents as the certificate should replace all the information pertaining to BEE.
- Businesses need not furnish confidential information to their customers, who are sometimes also their competitors.
- It allows for further recognition of points gained from being a value-adding supplier.
- BEE certification must be reviewed annually.
- There is a cost to having a verification and certification.
Where can business owners and managers go for advice?