BEE Introduction and how NPOs can access BEE benefits
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Transcript of BEE Introduction and how NPOs can access BEE benefits
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PETER ROSS ActivPro Business Solutions
B3 Bloubergsands,22 Arum Road,
Bloubergrant. 7441.
Tel: 021 556 2271Cell: 083 302 3791
Email: [email protected]
INTRODUCTION TO THE NEW BBBEE CODES
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New BBBEE Codes
EFFECTIVE DATES
New codes came into effect on 1st May 2015
This implementation date relates to the financial year end of the
entity and not the date of verification
Old codes apply to all financial years on or before 30 April 2015
and the new codes apply to financial years after 1st May 2015
Sector charters will continue to apply until they are brought into
alignment with the new codes and finally gazetted.
New BBBEE Codes
DEFINITION OF A BLACK PERSON Black people – Generic term which includes Africans, Coloureds, Indians:
Who are citizens of RSA by birth or descent Who became RSA citizens by naturalisation:
a) Before 27 April, 1994b) On or after 27 1994 and who would have been entitled to
acquire citizenship by naturalisation prior to that date were it not for apartheid
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New BBBEE Codes
Principle ChangesEmpowering Supplier StatusAmended ScorecardsAdjusted Recognition TablePriority Elements & DiscountingEconomically Active Population (EAP) targetsSkills Development Increased targetIncentive for disability
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New BBBEE Codes
Principle Changes - ContinuedTraining of non employees is recognisedLearnership Absorption incentivesGrowth in EME/QSE ExpenditureGrowth in 51%+ BO Supplier ExpenditureSupplier DevelopmentSED – Income generating activities
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New BBBEE Codes
Changes in Turnover ThresholdsExempt Micro Enterprise (EME) Increase from R5
million pa to R10 million paQualifying Small Enterprise (QSE)
Old codes: R5m - R35 pa New codes: R10m – R50m pa
Large Enterprise:Old codes: > R35 million paNew codes: >R50 million pa
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New BBBEE Codes
Deemed Recognition LevelsExempt Micro Enterprises (EMEs):
< 51% Black-owned: Level 4>= 51% Black-owned: Level 2100% Black-owned: Level 1
Qualifying Small Enterprise (QSEs): < 51% Black-owned: Per verification>= 51% Black-owned: Level 2100% Black-owned: Level 1
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New BBBEE Codes
Deemed Recognition LevelsSpecialised Enterprises (EMEs and QSEs):
>=75% Black beneficiaries: Level 1>=51% Black beneficiaries: Level 2
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New BBBEE Codes
Proof of Deemed StatusFor EME or QSE with at least 51% Black
Ownership: Affidavit confirming turnover and percentage Black Ownership
EME with less than 51% Black Ownership: Affidavit confirming turnover
QSE with less than 51% Black Ownership: has to be verified.
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New BBBEE Codes
Proof of Deemed StatusFor Specialised Enterprises EMEs or QSEs
with 51% or more Black beneficiaries: Affidavit confirming:
Annual revenue of R10m / R50m or less Percentage of Black beneficiaries
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New BBBEE Codes
Empowering Supplier•Entity must be a good SA citizen •Complies with all regulatory requirementsFive Criteria:1. At least 25% of costs of sales must be procured from local SA suppliers2. 50% of jobs created are for Black people 3. At least 25% transformation of raw material including manufacturing, production, assembly or packaging4. Spend 12 days pa minimum assisting Black EMEs and QSEs beneficiaries5. At least 85% of labour costs should be paid to South African employees by service industry entities
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New BBBEE Codes
Empowering Supplier:Large Enterprises have to comply with 3
out of 5 criteria QSEs have to comply with 1 out of 5
criteria EMEs and Start-ups automatically qualify
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The BBBEE Generic Scorecard
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Old Codes New Codes
Element Weighting (excluding bonus points) Element
Actual points as per each code (excluding bonus points)
Ownership 20 +3 Ownership (priority element) 25
Management 10 +1 Management control 19
Employment Equity 15+3 Skills development (priority element) 20+5
Skills development 15 Enterprise and Supplier Development (priority element)
40+4
Preferential procurement 20 Socio-economic
development 5
Enterprise Development 15
Socio-economic development 5
TOTAL 100 +7 109+9
The BBBEE Generic Scorecard
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REVISED BBBEE CODES GENERIC SCORECARDHIGH LEVEL TARGETS
Indicatorweighting
Indicatortarget
Ownership (Priority Element) 25,0 25% of EquityManagement Control 19,0 50% - 88%
Skills development (Priority Element) 20,0 6% of PayrollEnterprise and Supplier Development (Priority element) 40,0
Preferential procurement: 25,0 80% of TMPSSupplier development: 10,0 2% of NPATEnterprise development: 5,0 1% of NPAT
Socio-economic development 5,0 1% of NPATTOTAL 109,00
GENERIC SCORECARD
New BBBEE Codes
Priority ElementsPriority elements with sub-minimum targets:
OwnershipSkills DevelopmentEnterprise and Supplier Development
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New BBBEE Codes Priority Elements - Continued
Large Enterprises:All three priority elements are
compulsoryQSEs:
Ownership compulsoryChoose between Skills Development and
Enterprise & Supplier Development
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New BBBEE Codes
Priority Elements - ContinuedOwnership:
At least 40% of the Net Value points (3.2 out of 8)Skills Development:
At least 40% of the total points (8 out of 20)Enterprise and Supplier Development:
At least 40% of the points in each of Preferential Procurement, Supplier Development and Enterprise Development
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Procurement Recognition Levels
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Contribution Level Old Codes New Codes Recognition level
Level One ≥ 100 points ≥ 100 points 135%
Level Two ≥ 85 points but < 100 points ≥ 95 points but < 100 points 125%
Level Three ≥ 75 points but < 85 points ≥ 90 points but < 95 points 110%
Level Four ≥ 65 points but < 75 points ≥ 80 points but < 90 points 100%
Level Five ≥ 55 points but < 65 points ≥ 75 points but < 80 points 80%
Level Six ≥ 45 points but < 55 points ≥ 70 points but < 75 points 60%
Level Seven ≥ 40 points but < 45 points ≥ 55 points but < 70 points 50%
Level Eight ≥ 30 points but < 40 points ≥ 40 points but < 55 points 10%
Non-Compliant Contributor < 30 points < 40 points 0%
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PETER ROSS ActivPro Business Solutions
B3 Bloubergsands,22 Arum Road,
Bloubergrant. 7441.
Cell: 083 302 3791Email: [email protected]
FROM CHARITY TO BBBEE BENEFICIARY
Scorecard elements which could benefit NPOs
SOCIO ECONOMIC DEVELOPMENT
SKILLS DEVELOPMENT
ENTERPRISE AND SUPPLIER DEVELOPMENT
PREFERENTIAL PROCUREMENT
Socio-Economic Development Scorecard
Criteria Weighting Points
Compliance Target
Annual value of all Socio-Economic Development Contributions by the Measured Entity as a percentage of the target
5 1% of NPAT
Socio Economic Development Monetary or Non-monetary Contributions
Specific objective of facilitating income generating activities for
targeted beneficiaries
SED contributions are measured annually
Full value of SED contributions is recognisable if at least 75% of
the value benefits black people
If beneficiaries are less than 75% black the actual percentage is
recognisable ie Pro rata achievement is recognised
Socio Economic DevelopmentSED Contributions include:
Development programmes for women, youth, people with
disabilities, people living in rural areas
Healthcare and HIV/ Aids programmes
Support for education programmes, resources and materials at
primary and secondary education level
Arts, culture and sporting development programmes
SED Benefit Factor MatrixGrant and Related Contributions:
Grant Contributions (100%)
Direct cost incurred in supporting SED initiatives (100%)
Discounts in addition to normal business practices supporting SED
initiatives (100%)
Overhead Costs incurred in supporting SED initiatives - Monetary or Non-
monetary (80%)
Contributions made in the form of human resource capacity:
Professional services rendered at no cost supporting SED initiatives (80%)
Professional services rendered at a discount (80%)
What NPOs Need to do to Align themselves with BBBEE
As a Recipient of Grants and Related Contributions:
Thank You letter in the prescribed format on your letterhead stating:
Date and amount of donation
The name of the donor
The nature of the NPOs activities
Description of the beneficiaries
The percentage of thebeneficiaries who are black persons
Beneficiary Recognition Certificate issued by a verification agency or by an
independent competent person
What NPOs Need to do to Align themselves with BBBEE - CTD
As a Recipient of Grants and Related Contributions - CTD:
Apply for registration as a Public Benefit Organisation (PBO) with
SARS
This will enable the donor to treat the donation as tax deductible
Other Scorecard elements which could benefit NPOs
SKILLS DEVELOPMENT
ENTERPRISE AND SUPPLIER DEVELOPMENT
PREFERTIAL PROCUREMENT
New BBBEE Codes
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Skills development (Priority Element) 20,0
Skills development spend for black people 8,0 6,00%
Skills development spend for black employees with disabilities 4,0 0,30%
Black employees participating in Learnerships, Apprenticeships and Internships as a % of all employees 4,0 2,50%
Black unemployed people participating in training specified in learning programme matrix as a % of all employees 4,0 2,50%
Bonus points: Black people absorbed by the measured and industry entity at the end of the learnerships programme 5,0 100,00%
SKILLS DEVELOPMENT The new Skills Development scorecard refers to training of black people as
opposed to black employees
The Skills Development target for large corporates has been increased from 3%
of annual payroll to 6% of annual payroll. For medium sized corporates the
increase is from 2% to 3% of annual payroll
New element for larger corporates – Black unemployed people participating in
training specified in learning programme matrix. Target is 2.5% of number of
employees (4 points).
Must be an alignment to demographic representation of black people and
different race and gender sub-groups
Skills development a priority element (40% of target needs to be achieved)
SKILLS DEVELOPMENT - CTDAn NPO can examine their activities and the skills of their Management and
Staff with a view to providing training programmes to Corporates as another
revenue stream
Programmes can be aimed at the corporates employees and / or unemployed
black people (latter applicable to large corporates only)
Reference must me be made to the Skills Development matrix – defines
Categories A to G training programmes.
Informal training (Category F and G) is capped at 15% of total expenditure
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BBBEE - SKILLS DEVELOPMENT MATRIX
Cat. Narrative description Delivery mode Learning site Learning achievement A Instruction-based theoretical
instruction alone – formally assessed by the institution
Institutional instruction Institutions such as universities and colleges, schools, ABET providers
Recognized theoretical knowledge resulting in the achievement of a degree, diploma or certificate issued by an accredited or registered formal institution of learning
B Instruction-based theoretical instruction as well as some practical learning with an employer or in a simulated work environment – formally assessed through the institution
Mixed mode delivery with institutional instruction as well as supervised learning in an appropriate workplace or simulated work environment
Institutions such as universities and colleges, schools, ABET providers and workplace
Theoretical knowledge and workplace experience resulting in the achievement of a degree, diploma or certificate issued by an accredited or registered formal institution of learning
C Recognized or registered structured experiential learning in the workplace that is required after the achievement of a qualification – formally assessed by a statutory occupational or professional body
Structured learning in the workplace with mentoring or coaching
Workplace Occupational or professional knowledge and experience formally recognized through registration or licensing
D Occupationally directed instructional and work-based Learning Programme that requires a formal contract – formally assessed by an accredited body
Institutional instruction together with structured, supervised experiential learning in the workplace
Institutions and workplace
Theoretical knowledge and workplace learning, resulting in the achievement of a South African Qualifications Authority registered qualification, a certificate or other similar occupational or professional qualification issued by an accredited or registered formal institution of learning
E Occupationally directed instructional and work-based Learning Programme that does not require a formal contract – formally assessed by an accredited body
Structured, supervised experiential learning in the workplace which may include some institutional instruction
Workplace and some institutional as well as ABET providers
Credits awarded for registered unit standards
F Occupationally directed informal instructional programmes
Structured information sharing or direct instruction involving workshops, seminars and conferences and short courses
Institutions, conferences and meetings
Continuing professional development, attendance certificates and credits against registered unit standards (in some instances)
G Work-based informal programmes Informal training Workplace Increased understanding of job or work context or improved performance or skills
New BBBEE Codes
Enterprise & Supplier Development – ED & SD Component
Annual value of all Supplier Development Contributions made by the measured entity as a percentage of the target Annual Value of Enterprise Development Contributions and Sector Specific Programmes made by the Measured Entity as a percentage of the target
10 5
2% of NPAT
1% of NPAT
Total - Enterprise & Supplier Development
15
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ENTERPRISE AND SUPPLIER DEVELOPMENT What was previously just enterprise development (ED) has been split into
enterprise development (5 points) and supplier development (SD) (10 points)
Targets and points allocated for each are:
ED – 5 points if target of 1% of NPAT achieved
Supplier Development – 10 points if target of 2% of NPAT achieved
The aim is to encourage the development and sustainability of black-owned
small businesses and their access to market.
NPOs can’t benefit directly since they are not businesses, but they can act as a
conduit by facilitating ED and SD initiatives for a company for a fee.
NPOs can also possibly set up small black-owned business units within their
operations for companies to fund.
ENTERPRISE AND SUPPLIER DEVELOPMENT - CTDThere are various types of ED and SD initiatives (Refer ED and SD Benefit Factor
Matrix)
For example:
Grant contributions (100% recognisable)
Direct cost incurred (100%)
Discounts in addition to normal business practices (100%)
Overhead Costs incurred in supporting SED initiatives - Monetary or
Non-monetary (70%)
Soft loans (70%) or standard loans (50%)
Professional services rendered at no cost (60%)
Professional services rendered at a discount (60%)
New BBBEE Codes
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FROM BENEFICIARY TO SUPPLIERPreferential Procurement Component BEE Procurement Spend from all Suppliers 5
80%
BEE Procurement Spend from Qualifying Small Enterprises 3 15%
BEE Procurement Spend from Exempted Micro-Enterprises 4 15%
BEE Procurement Spend from any of the following Suppliers : 1. Suppliers that are at least 51% black owned; or
2. Suppliers that are at least 30% black women owned.
9 4
40%
12%
Total - Preferential Procurement
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PREFERENTIAL PROCUREMENT One of the most sustainable ways an NPO can benefit from BBBEE is by
becoming a regular supplier of goods or services to corporates
There are some social enterprises who have succeeded to enter this more
lucrative space
Typically the transactions are commercially based in terms of which the NPO
supplies goods or services at a market related price
NPOs should regularly assess what role they can meaningfully play in the
supply chain of businesses
The deemed status provisions for specialised enterprises supports their
favourable recognition in the preferential procurement scorecard
What NPOs Need to do to Align themselves with BBBEE
As a Service Provider or Supplier:
An affidavit in the standard format confirming:
Statutory details of the NPO – Registered name, Registration number and
Address
Turnover in the last financial year
The percentage of beneficiaries who are black persons
Their BEE status (NPOs with more than 75% black beneficiaries are deemed to
have a Level 1 status. If between 51% and 75% the deemed status will be a
Level 2.
The affidavit can be accompanied by a confirmation letter confirming the contents
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ActivPro Business SolutionsContact Details
PETER ROSS
ActivPro Business Solutions
B3 Bloubergsands,22 Arum Road,
Bloubergrant. 7441.
Cell: 083 302 3791