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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Amended Codes of Good Practice (2017)

Amended Code Series CSC400: Measurement of the Preferential Procurement and Supplier Development Element of Broad-Based Black Economic Empowerment in the Construction Sector

Statement CSC400: The General Principles for Measuring Preferential Procurement and Supplier Development

10. Supplier Development Contributions


The following is a non-exhaustive list of Supplier Development Contributions:


10.1 Investments in Qualifying Beneficiary Entities;


10.2 Loans made to Qualifying Beneficiary Entities;


10.3 Guarantees given or security provided on behalf of Qualifying Beneficiary Entities;


10.4 Credit facilities made available to Qualifying Beneficiary Entities;


10.5 Grant contributions to Qualifying Beneficiary Entities;


10.6 Direct costs incurred by a Measured Entity in assisting and hastening development of Qualifying Beneficiary Entities;


10.7 Overhead costs of a Measured Entity directly attributable to Qualifying Supplier Development Contributions;


10.8 Preferential credit terms granted by a Measured Entity to Qualifying Beneficiary Entities;


10.9 Preferential terms granted by a Measured Entity in respect of its supply of goods and services to Qualifying Beneficiary Entities;


10.10 Contributions made towards the settlement of the cost of services relating to the operational or financial capacity and/or efficiency levels of a Qualifying Beneficiary Entity including, without limitation:
10.10.1 Professional and consulting services;
10.10.2 Statutory licensing and/or registration fees;
10.10.3 Industry specific levies and/or other such fees; and
10.10.4 IT services;
10.10.5 Payment for BEE verification of EME companies, that is done by approved Verification Agencies


10.11 Discounts given to Qualifying Beneficiary Entities in relation to the acquisition and maintenance costs associated with the grant to those Qualifying Beneficiary Entities of franchise, licence, agency, distribution or other similar business rights.


10.12 The creation or development of capacity and expertise for Qualifying Beneficiary Entities needed to manufacture or produce goods or service previously not manufactured, produced or provided in the Republic of South Africa as provided for in Government's economic growth and local supplier development policies and initiatives.


10.13 The creation or development of new projects promoting beneficiation by the Measured Entity for the benefit of Qualifying Beneficiary Entities.


10.14 Facilitating access to credit for Qualifying Beneficiary Entities without access to traditional credit facilities owing to a lack of credit history, high-risk or lack of collateral on the part of the Qualifying Beneficiary Entity.


10.15 Provision by the Measured Entity, of preferential credit facilities to a Qualifying Beneficiary Entity. Examples of such contributions include without limitation:
10.15.1 Provisions of finance to Qualifying Beneficiary Entities at lower than commercial rates of interest. Such contributions will be measured as the value of the differential between the actual interest rate provided to the Beneficiary Entity and the applicable rate;
10.15.2 Relaxed security requirements or absence of security requirements for Qualifying Beneficiary Entities unable to provide security for loans or surety for performance bonds. Such contributions shall be measured as being 3% (three percent) of any positive differential between the initial capital value of the loan and the value of security taken; and
10.15.3 Settlement of accounts with Qualifying Beneficiary Entities over a shorter period of time in relation to the Measured Entity's normal payment period, provided the shorter period is no longer than 15 days after date of invoice. Preferential payment terms that extend beyond 15 days will not qualify as Qualifying Supplier Development Contributions;


10.16 The provision of seed or development capital to Qualifying Beneficiary Entities.


10.17 Provision of training or mentoring by suitably qualified entities or individuals to Qualifying Beneficiary Entities which will assist such Entities to increase their operational or financial capacity; and


10.18 Provision of training or mentoring to Qualifying Beneficiary Entities by the Measured Entity itself;
10.18.1 Such contributions are measurable by quantifying the cost of time (excluding travel or commuting time) spent by staff or management of the Measured Entity in carrying out such initiatives;
10.18.2 A clear justification, commensurate with the seniority and expertise of the trainer or mentor, must support any claim for time costs occurred;


10.19 Training or mentoring provided as per 10.17 and 10.18 above may not be double counted under the Skills Development scorecard once claimed as Qualifying Supplier Development Contribution and vice versa.


10.20 The maintenance by the Measured Entity of a Supplier Development unit which focuses exclusively on support of Qualifying Beneficiary Entities or candidate beneficiary entities.
10.20.1 Only that portion of salaries and wages attributable to time spent by the staff in, and the other expenses that relates to, promoting or implementing Qualifying Supplier Development Contributions, qualify for recognition.


10.21 Payments made by the Measured Entity to suitably qualified and experienced third parties to perform Supplier Development on the Measured Entity's behalf.
10.21.1 For the avoidance of doubt such contributions are regarded as having been initiated and implemented once they become payable to the third party;