What is difference between BEE and B-BBEE?
Black Economic Empowerment (BEE) and B-BBEE (Broad based black economic empowerment (B-BBEE)
Broad Based Black Economic Empowerment allows all companies to be scored on a broad base not only on black economic interest. Therefore a company can get a good BEE scorecard regardless of the amount of black employees or black owners in a company as long as they meet the requirements in the other (Broad Based) elements.
This article refers to B-BBEE, however for ease of use the acronym BEE may also be used.
What is a B-BBEE Consultant?
Dilemo Accountants aims to assist clients in a cost effective manner, all our clients are unique and each strategy is tailored to be as simple and effective as possible. We educate our clients to understand BEE and then make informed decisions.
What is B-BBEE Verifier?
A verification company is the company that gives you the BEE certificate, they are the auditors and are not allowed to assist you to improve your score.
Why is it important to have a good BEE score?
Your clients will be asking for your BEE certificate as your score (certificate) has an impact on their BEE score rating. Companies have to have at least 80% of their supplier’s BEE certificates in order to get a score for procurement. If you care about your customer you will see that you have a good BEE rating to improve their rating.
If I only employ black people will I automatically be BEE?
No you need to get points in each element, Management Control, Skills Development, Supplier and Enterprise Development and Socio Economic Development of the B-BBEE scorecard to get a good rating for BEE.
If I am a white owner can I have a good BEE score?
Yes, definitely you need to get a good score in each of the other elements, Management Control, Skills Development, Supplier and Enterprise Development and Socio Economic Development, to get a good score.
Why is B-BBEE expensive to implement?
BEE is only expensive if you don’t know how to implement it or you have left everything until the last minute, a good consultant will be able to assist you to implement BEE cost effectively, with tax concessions and SETA funding to assist you.
What happens if I don’t get a BEE score card?
BEE is not a law however you will find over time that your clients start using other suppliers who have got BEE score cards as the pressure to comply will increase.
THE BEE Scorecard
The basic premise behind BEE is transformation. The scorecard is used to determine how much a company is transforming after apartheid. Depending on the score that the company attains, the BEE rating will be given a status of a Level 1 contributor (the highest/best) to a Non-Compliant contributor. Companies would apply for BEE status at a BBBEE verification agency. This can be done on your own but having the guidance of a BEE consulting firm will yield much better results for your application. This is because a few strategic changes can produce a much better score.
Five codes to calculate a business’s B-BBEE score
• Ownership– for points on this code, there needs to be a percentage of black ownership in a company and they need to be directly involved in the strategy and leadership of the company along with their financial compensation. The ownership code accounts for 25 points of a BEE score.
• Management Control – the points earned here are determined by the amount of black people across junior, middle and senior management levels of a company. It accounts for 19 percent of the total score. Management control also measures the amount of disabled people a company employs.
• Skills development – if a business has a vested interest in its staff and is dedicated to improving their skills, then it can be used to gain BEE points. A highly skilled workforce is only going to benefit the company so it is a win Skills development consists of mentoring and learnership programmes. It must be noted that these must qualify within the guidelines of the BEE outlines. BEE consulting firms are a good measure in assisting with this aspect. Implementing learnerships will also benefit companies with tax concessions and a lot of funding can be claimed from the various SETAs. Much as 20 BEE points can be earned on skills development.
• Supplier and Enterprise Development– to earn points here is one of the easiest. A company would simply have to buy products from a company that has a high BEE rating. It has great value for the economy as it creates a chain reaction for businesses to support BEE compliant companies. With 40 points up for grabs, it is the code (other than ownership) with the highest number of points. Supplier and Enterprise Development also represent the number of black owned enterprises supported by your business.
• Socio-economic development- businesses social responsibility also comes into play in BEE scoring. BEE points are earned on the percentage of black recipients that will benefit from the company’s donations. 5 percent of the BEE score comes from this code.
The above codes form the basis on which the BEE level score will be calculated. The company must show how they plan to achieve points from the codes they wish to apply with. BEE consulting firms help companies in determining which codes will yield points for the individualized interests of their company.
By bringing in a BEE consulting firm, the company will also be privy to experienced help of what will actually be of use for the application. There is no need for a company to go blindly into a BEE audit and hope for the best.