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      Update: Everything You Need To Know About The New B-BBEE Scorecard

      The Department of Trade and Industry has made amendments to the B-BBEE Codes of Good Practice, here’s everything you need to know to remain compliant:

      Nicole Crampton by Nicole Crampton
      Jun 24, 2019
      in BEE
      298
      B-BBEE
      Share on FacebookShare on TwitterShare on LinkedIn

      RelatedTopics

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      Dr. Rob Davies, Minister of DTI published the Amended Codes of Good Practice for implementation within 6 months from the date of the Gazette. This means that B-BBEE verifications taking place from the 1 December 2019 will need to comply with these changes.

      Changes to the B-BBEE scorecard can impact your business and if you aren’t staying up to date your B-BBEE rating could drop significantly.

      Four codes were amended; we’re going to take a closer look at these changes and how they will impact businesses in terms of:

      • Skills development
      • Enterprise and supplier development
      • Procurement

      Amended: The B-BBEE Codes of Good Practice

      Here are the code changes you need to know about:

      Schedule 1 Interpretation and Definitions – Amendments:

      • Designated Group Supplier: Added definition
      • Absorption definition: Amendment

      Related:How Do I Become B-BBEE Compliant?

      General Principles and the Generic Scorecard – Amendments:

      • Sub-minimums: Explanation
      • Unincorporated Joint Venture: Added measurement

      General Principles for Measuring Enterprise and Supplier Development – Amendments:

      • Suppliers within a business’ supply chain cannot be considered an Enterprise development beneficiary
      • Guarantees: ESD matrix has been updated

      General Principles for Measuring Skills Development – Amendments:

      • Double counting on various interventions have been ruled out
      • Capping of Category F and Category G training interventions have changed to 25% (this is an amendment from the 15% that it was previously capped at).

      What do these changes mean for your business?

      Updated Skills Development

      Although skills development remains unchanged, there is a shift in focus on how you’ll need to approach skills development. Skills development, previously, accounted for 8 points on your B-BBEE scorecard.

      Related:Navigating The Tricky Path Towards BEE Compliance

      It also requires you to use 6% of your business’ annual payroll for skills development initiatives.

      Now, skills development only counts for 6 points on the scorecard, and you only need to use 3% of your annual payroll. There is also the addition of some new elements, such as funding for higher education.

      Rajan Naidoo, director of Edupower Skills Academy believes this change came about because of former president Jacob Zuma’s free higher education announcement to appease the protestors of the #FeesMustFall campaign.

      “Zuma’s announcement was made without any budgetary provisions, but the changes to the scorecard offers the means to potentially access the funds from the private sector and to creating new funding mechanisms,” explains Naidoo.

      The increase in higher education funding

      The new amendments now require you to spend 2.5% of annual payroll on funding higher education through bursaries for black students at higher education institutions.

      Related:Louis Pulzone Of LFP Group Shares His Lessons Learnt In The BEE Industry

      This will earn your business up to 4 points on the B-BBEE scorecard. Adult basic education training and school funding programmes are also included in this new amendment.

      Businesses can now fund the children of their employees through bursaries or even school fees, says Naidoo, as the new amendment enables businesses to choose both basic and higher education.

      Revised Code 300: General Principles for Measuring Skills Development

      Find the amendments to The Skills Development Generic Scorecard:

      IndicatorWeightTargetChange
      Skills Development Expenditure on Black People63.5%Points and target reduced
      Expenditure on Bursaries for Black Students at Higher Education Institutions42.5%New indicator relating to bursaries for tertiary education
      Skills Development Expenditure on Black People with Disabilities40.3%Unchanged
      Skills Development Expenditure on Black People participating in Learnerships, Apprenticeships and Internships65%Points reduced and a clear restriction to Categories B, C & D with no distinction between employed and unemployed black people
      Bonus: number of Black People absorbed5100%Clearly limited to Categories B, C & D learners only
      Total25Unchanged

      Related:Unpacking The New Amendments To The B-BBEE Scorecard

      • The points available under skills development and bursary expenditure are now 10 vs 8 previously although the combined target remains at 6%
      • The cap on informal and workplace skills development expenditure under Categories F&G Learning programmes is increased from 15% to 25%.

      Source: Mantis Networks

      What you need to know about the changes to enterprise and supplier development

      The changes also combine the categories for training through learnerships, apprenticeships and internships of the unemployed in relation to the size of your company’s workforce.

      In this previous iteration, the B-BBEE scorecard required 2.5% of your workforce to be unemployed and undergoing training.

      Related:Making BEE Work for You

      You should focus your skills development spending on the unemployed, but you can now also focus on skills development alternatives, such as training. 3.5% is currently mandated for your business’ training budget, of this you can now spend 25% on non-accredited in-house programmes that are not necessarily NQF certified.

      These programmes can focus on soft skills and adult literacy, which can benefit your business as you’re spending your budget on upskilling your employees.

      “The implications of training versus productivity will also come into play as training unemployed people doesn’t have the same impact on productivity as staff training,” says Naidoo.

      How absorption has changed and what this means for you

      This code of good practice used to say that your business needed to provide the unemployed with additional training and a short-term job, this would qualify as absorption and earn your business 5 bonus points.

      Related:BEE and Small Businesses

      In the updated codes, your business only needs to provide one learner with permanent employment to qualify for absorption, which can offer your business a one level increase on your B-BBEE scorecard says Naidoo.

      Changes to your procurement requirements

      “Procurement remains one of the most commanding mediums for transformation and maintains the most powerful weighting on the overall B-BBEE scorecard,” says Naidoo.

      “The two-points increase definitely emphasises the need to bring more Exempt Micro Enterprises (EME) and Qualifying Small Enterprises (QSE) into the supply chain. The points increase is undoubtedly aimed at incentivising generic entities (businesses with an annual turn-over exceeding R50 million) to empower and grow majority black-owned businesses.”

      Take note of these changes as you’ll need to implement them within six months from the announcement date of 31 May.

      This could have financial implications for you as you’ve probably already put a plan in place for the 2019/20 financial year and will now need to revisit it and make the necessary adjustments.

      Related:R16 Million Available For Ground-Breaking Financial Services Disruptor Start-ups

      Nicole Crampton

      Nicole Crampton

      Nicole Crampton is an SEO specialist who contributes to both ExpertHub and Entrepreneur.com/za. She has studied a BA Journalism at Monash South Africa and has continued her studies with a Creative Writing degree from UNISA. Nicole has completed several courses in writing and online marketing, and continues to hone her skills and expertise in digital media, digital marketing and content creation.

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