B-BBEE ENTERPRISE AND SUPPLIER DEVELOPMENTacceleratecapetown.co.za/.../11/...Webber-Wentzel-.pdf ·...
Transcript of B-BBEE ENTERPRISE AND SUPPLIER DEVELOPMENTacceleratecapetown.co.za/.../11/...Webber-Wentzel-.pdf ·...
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© Webber Wentzel 2015
B-BBEE ENTERPRISE AND SUPPLIER DEVELOPMENT
10 November 2017
Adam Ismail
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INTRODUCTION
“BEE IS FUNDAMENTAL TO ECONOMIC ACTIVITY IN SOUTH
AFRICA AND ENCOURAGES THE OPENING UP OF THE ECONOMY
TO THOSE PREVIOUSLY EXCLUDED BY THE SYSTEM OF
APARTHEID THROUGH A MIX OF ECONOMIC PERSUASION AND
INCENTIVE.”
• Origins of BEE – Freedom Charter
• Constitutional Mandate
• Assessments of models elsewhere in the world
• Carrot and stick approach, not a stick approach
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BBBEE LEGISLATIVE HISTORY (1)
2004• BBBEE Act
2007
• BBBEE Generic Codes
2008-2012
• Various sector charters under section 12
• Various sector codes under section 9
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BBBEE LEGISLATIVE HISTORY (2)
2011
• Revised Preferential Procurement Policy Framework Regulations to accord with BBBEE Codes
2013 -2014
• Revised BBBEE Generic Codes
• Draft Phase 2 Revised Generic Codes
• BEE Amendment Act - effective 24 October 2014
May 2015
• Clarification note published and withdrawn
• Further amendments to the Revised Generic Codes
• Phase 2 Revised Generic Codes finalised
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BBBEE LEGISLATIVE HISTORY (3)
2015
• Trumping provisions in BEE Amendment Act becomes law
• Tourism Sector Code aligned with the Revised Generic Codes
2016
• Existing Sector Codes repealed due to slow progress on alignment –Chartered Accountancy / Construction. (Legal???)
• Further draft Sector Codes Published for comment
• BEE Regulations
2016 -2017
• BEE Commission established (within DTI)
• Acting Commissioner appointed – Zodwa Ntuli
• First investigations start
• Revised Sector Codes published
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EXEMPTED MICRO-ENTERPRISES
EME = Annual Total Revenue of less than R10m
EME = deemed Level 4 Contributor Status
51%+ black owned EME = deemed Level 2 Contributor Status
100% black owned EME = deemed Level 1 Contributor Status
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QUALIFYING SMALL ENTERPRISES
• Verification of annual turnover and black ownership by sworn affidavit
• QSE scorecard now finalised. Threshold higher but still requires compliance with all elements – no longer choose 4 elements.
• Keep Key principles in mind at all time
• Also keep sector in mind
QSE
Annual Total Revenue of between R10m and R50m
100% black owned QSE = deemed Level 1
Contributor Status
51% + black owned QSE= deemed Level 2
Contributor Status
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PRIORITY ELEMENTS: COGP
• Large enterprise must comply with all priority elements
• QSEs must comply with 2 (1 of which must be ownership)
• Non-compliance= BBBEE status level discounted by 1 level. Discounted level must be reflected on BEE verification certificate.
Ownership
40% of net value points
Skills Development
40% of total weighting points
Enterprise and Supplier
Development
40% for each of preferential procurement, supplier development and enterprise development
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B-BBEE STATUS TABLE:
B-BBEE Status Qualification B-BBEE
recognition
level
Level One Contributor ≥ 100 points on the Scorecard 135%
Level Two Contributor ≥ [85] 95 but < 100 points on the Scorecard 125%
Level Three Contributor ≥ [75] 90 but < [85] 95 on the Scorecard 110%
Level Four Contributor ≥ [65] 80 but < [75] 90 on the Scorecard 100%
Level Five Contributor ≥ [55] 75 but < [65] 80 on the Scorecard 80%
Level Six Contributor ≥ [45] 70 but < [55] 75 on the Scorecard 60%
Level Seven Contributor ≥ [40] 55 but < [45] 70 on the Scorecard 50%
Level Eight Contributor ≥ [30] 40 but < [40] 55 on the Scorecard 10%
Non-Compliant Contributor < [30] 40 on the Generic Scorecard 0%
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ENTERPRISE AND SUPPLIER DEVELOPMENT
• Largest element on the BEE scorecard for points – 44 points out of 100 points
• Clear focus from government where priorities must be focussed, SMMEs as the engine room for growth, black industrialists and radical economic transformation
• three components – all three priority elements:
o preferential procurement
• empowering suppliers
• QSEs
• EMEs
• 51% black-owned
• 30% black women owned
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ENTERPRISE AND SUPPLIER DEVELOPMENT: SOME KEY NOTES
• All B-BBEE procurement spend (except if EME) must be from Empowering Suppliers
• Empowering supplier = good SA citizen; comply with all laws and must meet at least 3 (and if QSE 1) of following:
o at least 25% of COS (ex labour and depreciation) must be from local suppliers – in service industry labour may be included up to 15%
o Jobs created – at least 50% of jobs created must be for black people provided that the number of black employees in previous measurement period maintained
o At least 25% of raw materials beneficiated by local manufacturing, production, assembly or packaging
o Skills transfer - At least 12 days per annum of productivity deployed in assisting Black EME and QSE to increase their sustainability
o at least 85% of labor costs should be paid to South African employees by the service industry
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ENTERPRISE AND SUPPLIER DEVELOPMENT
o supplier development
• monetary and non-monetary contributions
• to value adding suppliers to the measured entity
• contributing to development, sustainability and financial and operational independence
• to EMEs and QSEs which are at least 51% black owned or 51% black women owned (what does this mean?)
o 2% of net profit of tax
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ENTERPRISE AND SUPPLIER DEVELOPMENT
• enterprise development
o monetary and non-monetary contributions
o to beneficiaries
o contributing to development, sustainability and financial and operational independence
o to EMEs and QSEs which are at least 51% black owned or 51% black women owned
o 1% of net profit of tax
General observations
• timing
• various ways of achieving it
• use of agents
• sincerity and helping one another
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