Confusion over new BEE codes hampers SME compliance


A lack of understanding of how the revised Broad-Based Black Economic
Empowerment Codes of Good Practice will practically be implemented and
measured within smaller companies is holding them back in their compliance

"Government has not provided any further clarity on precisely when a
company will be required to verify their B-BBEE compliance on the revised codes.

Some pundits indicate that the verification process should have commenced
prior to the 11th of October 2014 to obtain any recognition on the current ("old')
codes, whilst others suggest any company with a financial year end prior to the
11th will be required to measure and verify on the revised Codes,' says Bruce
Rowe, head of Mpowered Business Solutions, a B-BBEE IT systems provider.

According to Rowe, most small and medium businesses don?t actively
manage their B-BBEE compliance on a regular basis. "SMMEs will be required to
measure and verify their B-BBEE compliance on the same five scorecard elements
as larger companies.

For the majority of SMME businesses, it is going to be a huge challenge in
obtaining any level of B-BBEE recognition. Larger companies measuring as
"Generic' companies are going to drop three or four compliance levels as it is.

The result is that many local SMME businesses that are unable to achieve
these unreasonable expectations are going to shift away from being active
contributors to B-BBEE compliance under the new codes.'

There are several challenges with some of the calculations of the revised
scorecard that don?t appear to be aligned with the intentions outlined in the BEE
Act or the BEE Amendment Bill. Rowe says SMMEs will find it challenging to
accurately assess the impact of these new codes. "Increasingly companies are
seeking cost effective technology solutions to manage their BEE compliance
processes internally, rather than using expensive third parties.'

Rowe has introduced a free-to-use B-BBEE compliance management tool
named LevelONE, aimed at businesses with a turnover of less than R250m.
"Under the new codes, companies will have to focus on implementing initiatives
that improve their B-BBEE score, as non-compliance will lead to the potential loss
of business in an already challenging economic environment. It?s no longer just
about ticking boxes - companies will need to actively participate in driving BEE
compliance,' warns Rowe.

LevelONE taps into Mpowered?s experience of providing BEE IT solutions to
large corporates and small companies over the past eight years.

It includes most sector charters as well as the revised codes, and integrates
into one of South Africa?s largest scorecard databases. "There are premium
functions that companies can pay for, but the core part of the product, namely
the scorecard calculator, is free.'

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