Final countdown for B-BBEE Code compliance

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According to Tirhani Ngobeni, senior transformation consultant for LFP Group, the amendments highlight government’s emphasis on B-BBEE as well as the country’s zero-tolerance policy around non-compliance. “B-BBEE compliance is no longer a ‘nice to have’ and businesses who do not comply will feel the pinch,” she says.

“These amendments can greatly impact your scoring. Businesses who do not comply are at risk of a losing (or lowering) their current B-BBEE status.”

The amendments were proposed on 31 May 2019 and look to address outstanding issues and reduce Gazetting costs. “There is a host of vital amendments which will affect companies’ Enterprise and Supplier Development, Skills Development and Ownership Flow-through Principles. In addition, interpretations and definitions have been amended, including those under Absorption”.

Ngobeni believes that the changes help to clarify the confusion that has long plagued corporate SA. “Like with everything, further precautionary measures and clarifications around the B-BBEE Charter need to be put in place – regardless of some of the controversy that surrounds them.”

Key amendments to note

Ngobeni points out that various changes have been implemented to further promote the support of black-owned enterprises in South Africa.

“One of the biggest changes to note is Procurement Spend with 51% black-owned businesses. Here, points have increased from 9 to 11 and the target from 40 – 50%. Amongst other notable changes, is that the multiplier of 1.2 (for first time suppliers) is removed and replaced by a 1.2 recognition boost for purchasing from 51% black-owned or black woman-owned suppliers. These qualifications are achieved using the flow-through principle.”

Some of amendments to note under Skills Development is that of absorption, for instance, which no longer includes further education and training, and affects the five Skills Development bonus points. “The points available under Skills Development and bursary expenditure now sit at 10 (up from 8) while the combined target remains at 6%”.

Ngobeni further notes that ‘double counting’ of initiatives under Skills Development expenditure and bursaries is not permitted and that the 40% sub-minimum for Priority Element compliance is clarified as eight points. “Formal Skills Development expenditure is extended to include Category A bursary students so companies can now claim stipend expenditures for Categories A, B, C and D learners which will prove beneficial.”

“Training manager’s salary cannot exceed 15% of your Skills Development expenditure,” she explains.

Ngobeni urges businesses to implement the required changes within their companies, in-line with reputable B-BBEE service providers. “Understanding the amendments and how to implement them is crucial to a business’s success.”