What Are Codes of Good Practice For Broad-Based Black Economic Empowerment (B-BBEE)?
The Codes of Good Practice refers to options that businesses can use in order to evaluate and track their B-BBEE efforts. Within the new B-BBEE regulations companies must meet specific targets. The codes are there to guide businesses into receiving an accurate rating, which it can include on the company profile.
The Codes of Good Practice are legally binding on all state and state-owned entities. These businesses have 10 years to reach this target, which means government will have to use the Codes to measure its B-BBEE compliance when choosing suppliers, granting licences or making concessions.
The cascade effect of this focus on B-BBEE compliant companies is that non-compliant businesses will find it hard to grow or maintain their level of business success within South Africa.
On the other hand, private companies will also need to apply the codes if they want to do business with any government enterprise – in order to tender for business, apply for licences and concessions, enter into public-private partnerships or buy state-owned assets.
The Act is broken up into nine Subsections.
- Code 000: Framework for Measuring Broad-Based Black Economic Empowerment
- Code 100: Measurement of the Ownership Element
- Code 200: Measurement of the Management Control Element
- Code 300: Measurement of the Employment Element
- Code 400: Measurement of the Skills Development Element
- Code 500: Measurement of the Preferential Procurement Element
- Code 600: Measurement of the Enterprise Development Element
- Code 700: Measurement of the Socio-Economic Development Element
- Code 800: Measurement of Qualifying Small Enterprises.
Sector Codes Are an Extension of Codes of Good Practice
Companies must also be aware of Sector Codes, which are an extension of the Codes, but apply within a specified industry sector only.
For example, there is a Construction Sector Code (a new draft to appear in 2017), a Property Sector Code, Financial Sector Code and Tourism Sector Code.
Sector codes are industry-specific interventions and measures driven by major stakeholders in industries where the codes are developed.
Levels (Of Compliance)
B-BBEE Contribution Level | “Old” Scorecard Points | Amended Scorecard Points | B-BBEE Procurement Recognition Level |
1 | ≥100 points | ≥100 points | 135% |
2 | ≥ 85 but < 100 | ≥ 95 but < 100 | 125% |
3 | ≥ 75 but < 85 | ≥ 90 but < 95 | 110% |
4 | ≥ 65 but < 75 | ≥ 80 but < 90 | 100% |
5 | ≥ 55 but < 65 | ≥ 75 but < 80 | 80% |
6 | ≥ 45 but < 55 | ≥ 70 but < 75 | 60% |
7 | ≥ 40 but <45 | ≥ 55 but <70 | 50% |
8 | ≥ 30 but < 40 | ≥ 40 but < 55 | 10% |
Non-Compliant | < 30 | < 40 | 0% |
Customers (public and private) will prefer to interact and procure from companies with higher B-BBEE status (for its own recognition), level 1 being the ultimate goal.