What you need to know about BEE

As the year draws to a close, and our minds are already on the beach sipping cocktails, I would like to leave you with a few pointers on how best you can maximise your BEE compliance before your financial year is closed (bearing that all initiatives made outside of your financial year are NOT claimable).
1. First you need to ensure that you are complying with the Priority Elements to avoid discounting a level on your scorecard. How do you check this?
a. Ownership - ensure that you are scoring at least 3.2. points on the Net Value indicator of the scorecard (this applies to both Generic- over R 50 million annual total revenue- and Qualifying Small Enterprises - R 10 - R 50 million annual total revenue).
b. Skills Development - ensure that you are scoring at least 8 points (if you are Generic) and 10 points (if you are a Qualifying Small Enterprise). Remember that bonus points need to be excluded from this total.
c. Enterprise and Supplier Development - ensure that you are scoring the following points:
Generic companies:
· Preferential Procurement - 10 points across all indicators (excluding bonus points). Remember that all your suppliers need to be Empowering and BEE compliant in order to achieve any recognition from your spend with them. Once the spend is made it cannot be reversed- so you need to check your supplier's Empowering Supplier status asap!
· Supplier Development - 4 points or ensure that at least 0.8% of NPAT is spent on qualifying initiatives. REMEMBER that there is a cap on shorter payments and if your entire budget is spent on this type of contribution you will only score 1.5 points and will be discounted a level on your scorecard!
· Enterprise Development - 2 points or ensure that at least 0.4% of NPAT is spent on qualifying initiatives.
Qualifying Small Enterprises:
· Preferential Procurement - 8 points across both indicators of the scorecard. Same note applies regarding your suppliers Empowering Supplier status.
· Supplier Development - 2 points or ensure that at least 0.4% of NPAT is spent on qualifying initiatives. Same note regarding Shorter payment terms applies.
· Enterprise Development - 2 points or ensure that at least 0.4% of NPAT is spent on qualifying initiatives.
Qualifying Small Enterprises need only comply with 2 out of the 3 Priority Elements above. Ownership is compulsory and the organisation can choose either Skills or Enterprise and Supplier Development.
Generic companies need to comply with all 3 Priority Elements.
2. Another way to maximise your points before the year ends is to look for the low hanging fruits, that are within your control. You now need 40 points to get on the scorecard at a Level 8. You then need another 15 points to move to a Level 7 and another 15 to move to a 6.
15 points on the Amended Codes are extremely difficult to achieve without proper planning and sustainable implementation.
A good place to start looking for some juicy points is to always look at Social Development. It is not a priority element, so non-compliance will not see you being discounted a level on the scorecard. In order to achieve these 5 points you need to spend 1% of NPAT on charitable initiatives, where at least 75% of the beneficiaries are black people. Please take note, if you fall within the ambit of a Sector Code, this target and the weighting points may be different.
Then another hidden gem that seems to pass by many people is the Black Disabled Training element on the Skills Development scorecard. The Generic Code says that you need to spend some money training black disabled employees and some other Sector Codes say you need to train black disabled people. Either way there are solutions to achieve both. I am just going to illustrate just how easy these points are to achieve.
Let's say your total leviable payroll is R 15 million. You would need to spend R 900 000 in order to score the first 8 points available on the scorecard. If this is spent in the right race and gender mix it equates to about R 112 500 per point. If not, then you will be spending loads more to achieve the same outcome.
The second indicator says you need to spend 0.3% of your leviable payroll on training black disabled employees/ people (no race and gender requirements) . This equates to R 45 000 for 4 points. As long as this is spent on black disabled people/employees you will achieve the points- this equates to R 11 250.00 per point. - BIG difference!
If you’re interested in knowing how to maximise this then send me an email at [email protected] and we can chat more about it.
If you have implemented any learnership, internship or apprenticeship programmes or have trained any black unemployed people and any of these candidates have been employed (by you or somewhere else) as a result, then you should have a tracking tool in place in order to score some bonus points for skills development. There are 5 bonus points available if you have helped in the employment, or continuation of studies, of any of the beneficiaries listed above.
Never before has proper planning around an organisation's BEE compliance been so important. This year to date I have completed 48 assessments on organisations compliance under the Amended Codes. 40 of these were for organisations that do between R10-R50 million t/o per annum and the balance were large organisations. Nothing special or unique about these organisations. I just took a picture of their ytd compliance against these new codes and the results were frightening:
Of the 40 Qualifying Small Enterprises I assessed:
· 37 were non-compliant- all had zero % black shareholding- and very far away from being compliant. All of these companies were between a Level 1 and Level 4 under the old codes;
· 1 was able to achieve a level 8 status. They actually achieved a Level 7 but were discounted due to non-compliance with the Priority Elements (currently a Level 1 on old codes);
· 2 had some degree of black shareholding and achieved a Level 6 with a short term plan to achieving a Level 4 (currently a Level 2 on old Codes).
One special case that really showed me just how challenging these new Codes are was one of the larger organisations that I assessed. They are 100% black owned, 50% black women owned; correct board representation (i.e. 100% black and 50% black women); 95% of their workforce are african people; 2% indian and coloured people; and 3% mix between foreign nationals and white people. Empowered company right? Well, this company went from being a Level 2 on the old Codes to a Level 7 on these Codes!
Still want to know more?
Great! I will be hosting 1 last workshop for the year on the 9th of December 2015 and the 21st of January 2016 in Sunninghill Johannesburg. It will run from 9am until 4pm.
I will take you through all the important aspects of these Codes; I will give you some tips and hints on how best to maximise your score at the 11th hour and on a tight budget (because we know there are bonuses to be paid); and I will take you through the process and documentary requirements you will need to prepare for your next audit under these Codes.
After lunch I will go through some of the important changes that the Sector Codes present. I will cover the following Sectors:
· Tourism;
· ICT;
· Agriculture;
· Marketing, Advertising and Communications;
· Forestry; and
· Property.
The costs of the programme are:
Morning Session only (excl lunch): R 750.00 per person
Whole day (incl lunch and snacks): R 1 500.00 per person.
If you are interested in attending please send me an email ([email protected]) or a LinkedIn message and I will send you all the relevant information.
As always, your feedback is appreciated!”