Your Success is Our Success -  Specialist Accounting, BBBEE, & Advisory Support

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Improve your BBBEE score

A Business’s BBBEE rating has the potential to threaten the sustainability of that business; if deemed unacceptable, a BBBEE rating, could potentially result in that business being turned down by existing and new clients, and the business could consequently lose revenue!

However, successfully managed, a desirable BBBEE rating could also establish new revenue streams for the business.

The new codes, which the DTI have confirmed took effect on 1 May 2015, are quite onerous in terms of the new requirements, and will see most organisations automatically drop a few levels.

The new BBBEE codes of good practice also introduce substantial penalties – fines of up to 10% of annual turnover or a ten year jail term – for fronting. It is therefore essential to ensure that your business has a plan to optimise your BBBEE as well as ensure compliance.


What is BBBEE?  

BEE (Black Economic Empowerment) or Broad-Based Black Economic Empowerment (BBBEE) as it is technically known is an initiative by the South African government to address historical imbalances of the country by facilitating the participation of black people in the mainstream economy. Black people refer to African, Coloured and Indian who are South African citizens by birth or by descent, or who were naturalised prior to the commencement of the interim constitution in 1993, or who those would have been able to acquire citizenship by naturalization prior to 27 April 1994 had it not been for the presence of the Apartheid policy. BBBEE is governed by the Broad Based Black Economic Empowerment (BBBEE) Act No. 53 of 2003 and the BBBEE Codes of Good Practice gazetted in February 2007 and the Amended Codes of 2013.


What is Revised B-BBEE Codes? 

The revised BBBEE Codes of Good Practice were gazetted on 11 October 2013 after much research and public consultation and heralds a new phase of Broad-Based Black Economic Empowerment.  A number of subsequent gazettes and clarification statements have been released since then, and we list the most up-to-date information below:

Implementation date:

Companies can choose to be assessed on this new legislation either from 11 October 2013, or at the latest, on all financial periods ending after 01 May 2015.  The table below gives an example of a company with a February financial year-end.

Financial Year-end                                                Codes Used                                                          Certificate Issue Date

February 2014 Old 2007 Codes April 2015
February 2015 Old 2007 Codes April 2016
February 2016 New 2013 Codes April 2017

In this example, the company would only be assessed on the New Codes in 2017, however more importantly, they would need to implement the new legislation in their 2015/6 financial year to ensure they still receive a good score on their 2017 certification – proactive action is absolutely key!

Sector Codes

All those companies falling within the gazetted Sector Codes of Construction, Tourism, Transport, Property, Financial Services, Forestry, Chartered Accountants, Agriculture and ICT are required to continue on the existing Sector Codes until they are updated to align with the New Codes.  The DTI has indicated that should these updates not be concluded by 31 October 2015, they will most likely be repealed.  Register (link to Home Page) for our newsletter or follow us on Social Media to receive the updates.

Change in Thresholds:

The annual turnover thresholds for the 3 different scorecard categories have been amended as follows:


Scorecard Category

2007 Codes

2013 Codes

Exempted Micro Enterprise (EME)  (QSE)

<R5 million

<R10 million

Qualifying Small Enterprise

>R5 – <35 million

>R10 – <50 million

Large Enterprise

 >R35 million

>R50 million


BEE Recognition Levels:

The BEE recognition levels have changed dramatically, so its important to take note of the number of points needed for the BBBEE level you are targeting eg. previously 68 points was equivalent to Level 4 and now it falls to a Level 7.

Level 1 ≥100 points ≥100 points 135%
Level 2 ≥85 points <100 ≥95 points <100 125%
Level 3 ≥75 points <85 ≥90 points <95 110%
Level 4 ≥65 points <75 ≥80 points <90 100%
Level 5 ≥55 points <65 ≥75 points <80 80%
Level 6 ≥45 points <55 ≥70 points <75 60%
Level 7 ≥40 points <45 ≥55 points <70 50%
Level 8 ≥30 points <40 ≥40 points <55 10%
Non-compliant<30 points<40 points 0%


Scorecard Elements:

The previous 7 elements have now been condensed to 5 elements, with the old Management Control and Employment Equity merged into a new Management Control element, and the old Preferential Procurement and Enterprise Development merged into a new Enterprise and Supplier Development element.

Priority Elements:

A new concept of priority elements has been introduced, where a sub-minimum of 40% of the Ownership net value score, Skills Development and ESD are required.  Should large companies not meet this sub-minimum in all three, their BEE level would drop 1 level whereas QSEs would drop a level only if Ownership and 1 of the other priority elements are not met.

Empowering Supplier:

It is imperative for a company to achieve Empowering Supplier status on their Amended Codes assessment or they will not feature in future client procurement.  The Codes lists the definition and requirements for this status, so ensure your company complies.





Contact Akanya Tharabololo today to see how we can assist your business through our BBBEE optimisation startegies and programmes. You can phone us on +27 11 704 0473, email us at info@akanya.co.za or alternatively you can fill out the form below.

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Customer feedback

Bruce Meyer
26/04/17 18:41:51
Great website. Keep up the good work!
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23/04/17 00:50:49
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Comment:
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