B-BBEE ENTERPRISE AND SUPPLIER DEVELOPMENT Adam Ismail 10 Nvember 2017 Webber Wentzel 2015
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 f BEE Freedm Charter Cnstitutinal Mandate Assessments f mdels elsewhere in the wrld Carrt and stick apprach, nt a stick apprach
BBBEE LEGISLATIVE HISTORY (1) 2004 BBBEE Act 2007 BBBEE Generic Cdes 2008-2012 Varius sectr charters under sectin 12 Varius sectr cdes under sectin 9
BBBEE LEGISLATIVE HISTORY (2) 2011 Revised Preferential Prcurement Plicy Framewrk Regulatins t accrd with BBBEE Cdes 2013-2014 Revised BBBEE Generic Cdes Draft Phase 2 Revised Generic Cdes BEE Amendment Act - effective 24 Octber 2014 May 2015 Clarificatin nte published and withdrawn Further amendments t the Revised Generic Cdes Phase 2 Revised Generic Cdes finalised
BBBEE LEGISLATIVE HISTORY (3) 2015 Trumping prvisins in BEE Amendment Act becmes law Turism Sectr Cde aligned with the Revised Generic Cdes 2016 2016-2017 Existing Sectr Cdes repealed due t slw prgress n alignment Chartered Accuntancy / Cnstructin. (Legal???) Further draft Sectr Cdes Published fr cmment BEE Regulatins BEE Cmmissin established (within DTI) Acting Cmmissiner appinted Zdwa Ntuli First investigatins start Revised Sectr Cdes published
EXEMPTED MICRO-ENTERPRISES EME = Annual Ttal Revenue f less than R10m EME = deemed Level 4 Cntributr Status 51%+ black wned EME = deemed Level 2 Cntributr Status 100% black wned EME = deemed Level 1 Cntributr Status
QUALIFYING SMALL ENTERPRISES Annual Ttal Revenue f between R10m and R50m QSE 51% + black wned QSE= deemed Level 2 Cntributr Status 100% black wned QSE = deemed Level 1 Cntributr Status Verificatin f annual turnver and black wnership by swrn affidavit QSE screcard nw finalised. Threshld higher but still requires cmpliance with all elements n lnger chse 4 elements. Keep Key principles in mind at all time Als keep sectr in mind
PRIORITY ELEMENTS: COGP Ownership Skills Develpment Enterprise and Supplier Develpment 40% f net value pints 40% f ttal weighting pints 40% fr each f preferential prcurement, supplier develpment and enterprise develpment Large enterprise must cmply with all pririty elements QSEs must cmply with 2 (1 f which must be wnership) Nn-cmpliance= BBBEE status level discunted by 1 level. Discunted level must be reflected n BEE verificatin certificate.
B-BBEE STATUS TABLE: B-BBEE Status Qualificatin B-BBEE recgnitin level Level One Cntributr 100 pints n the Screcard 135% Level Tw Cntributr [85] 95 but < 100 pints n the Screcard 125% Level Three Cntributr [75] 90 but < [85] 95 n the Screcard 110% Level Fur Cntributr [65] 80 but < [75] 90 n the Screcard 100% Level Five Cntributr [55] 75 but < [65] 80 n the Screcard 80% Level Six Cntributr [45] 70 but < [55] 75 n the Screcard 60% Level Seven Cntributr [40] 55 but < [45] 70 n the Screcard 50% Level Eight Cntributr [30] 40 but < [40] 55 n the Screcard 10% Nn-Cmpliant Cntributr < [30] 40 n the Generic Screcard 0%
ENTERPRISE AND SUPPLIER DEVELOPMENT Largest element n the BEE screcard fr pints 44 pints ut f 100 pints Clear fcus frm gvernment where pririties must be fcussed, SMMEs as the engine rm fr grwth, black industrialists and radical ecnmic transfrmatin three cmpnents all three pririty elements: preferential prcurement empwering suppliers QSEs EMEs 51% black-wned 30% black wmen wned
ENTERPRISE AND SUPPLIER DEVELOPMENT: SOME KEY NOTES All B-BBEE prcurement spend (except if EME) must be frm Empwering Suppliers Empwering supplier = gd SA citizen; cmply with all laws and must meet at least 3 (and if QSE 1) f fllwing: at least 25% f COS (ex labur and depreciatin) must be frm lcal suppliers in service industry labur may be included up t 15% Jbs created at least 50% f jbs created must be fr black peple prvided that the number f black emplyees in previus measurement perid maintained At least 25% f raw materials beneficiated by lcal manufacturing, prductin, assembly r packaging Skills transfer - At least 12 days per annum f prductivity deplyed in assisting Black EME and QSE t increase their sustainability at least 85% f labr csts shuld be paid t Suth African emplyees by the service industry
ENTERPRISE AND SUPPLIER DEVELOPMENT supplier develpment mnetary and nn-mnetary cntributins t value adding suppliers t the measured entity cntributing t develpment, sustainability and financial and peratinal independence t EMEs and QSEs which are at least 51% black wned r 51% black wmen wned (what des this mean?) 2% f net prfit f tax
ENTERPRISE AND SUPPLIER DEVELOPMENT enterprise develpment mnetary and nn-mnetary cntributins t beneficiaries cntributing t develpment, sustainability and financial and peratinal independence t EMEs and QSEs which are at least 51% black wned r 51% black wmen wned 1% f net prfit f tax General bservatins timing varius ways f achieving it use f agents sincerity and helping ne anther
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