The new black empowerment Codes explained

Posted 14 October 2013 Written by Jako Liebenberg CA(SA)

Jako Liebenberg explains what the new black empowerment Codes mean for business. The recently held black empowerment summit highlighted a shift in emphasis from entrepreneurship to Broad-Based Black Economic Empowerment (B-BBEE) development in the industrial sector.

The long awaited Revised Codes of Good Practice for Broad-Based Black Economic Empowerment were gazetted 11 October 2013 and become effective after one year giving businesses an opportunity to align and implement their B-BBEE strategies.

The recently held summit on B-BBEE also indicated a marked change in direction with regards to a focus shifting from mainly entrepreneurship to B-BBEE development in the industrial sector. Government is also reviewing competition legislation to assist small businesses to get into the market and prevent collusion from large established companies. There are also various incentives managed by the Department of Trade and Industry (DTI) to promote economic development.
The highlights of the revised codes can be summarised as follows:
  • There are new thresholds for Emerging Micro Enterprises (EME), Qualifying Small Enterprises (QSE’s) and Generic Companies.
  • The reduction of the number of B-BBEE pillars from 7 to 5 with the combining of management control and employment equity as well as procurement and Enterprise development.
  • QSE’s no longer have a choice in selection of pillars and must be scored on all five pillars.
  • Priority pillars are stipulated and an entities B-BBEE level is discounted if targets are not met. Large enterprises have to comply with all elements. QSE's have to comply with Ownership as a compulsory element and either Skills Development or Enterprise and Supplier development.
For B-BBEE to succeed the Government and Private Sector need to work together. B-BBEE and the technicalities around it are no longer for coffee table discussions. To ensure businesses sustainability and growth B-BBEE must be standing agenda item for all boards of directors and management teams.
To view the Revised Codes of Good Practice, click here.
Jako Liebenberg is the CEO of LDSW Incorporated Chartered Accountants and Auditors and is registered as a Public Auditor who may conduct B-BBEE verifications. Jako has been involved in the structuring of B-BBEE transactions and advises clients on B-BBEE policies and structures. He can be contacted at e-mail [email protected]


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