Unwelcome side effects of the DTI's new B-BBEE codes

| 0 Comments


ConsequencesAhead.jpegWhen it became obvious that not all of the sectors with specific scorecards were likely to have gazetted their new amended scorecards by 1 May 2015, the Department of Trade and Industry (dti) issued a notice extending their particular deadline to 30 October 2015.


The unintended side effect of this notice has left black-owned companies falling within these scorecards, at a distinct disadvantage, writes Jenni Lawrence, Managing Director at Grant Thornton Verification Services, in this month’s SmartProcurement.


Since their sector scorecards are still in effect, black-owned companies falling within these scorecards cannot take advantage of the more favourable scoring, which now only applies to >51% black-owned companies measured under the general scorecard.


In effect, a black-owned company who falls under scorecards for tourism, construction, transport, financial services, property, forestry, agriculture, chartered accountancy or ICT, will qualify for a maximum level 3, whilethose under the general scorecard will be entitled to an automatic level 1 or 2, depending on percentage of black ownership, explains Lawrence.
 

As long as the dti is unwilling to issue a notice giving some relief to the affected businesses, black-owned companies who are intended beneficiaries of the higher ratings will bear the brunt of this dual legislation, potentially losing business to those with higher ratings.


Although the dti has indicated that it was not the intention for companies to be rated differently, the blame has been placed squarely on the sector councils themselves, for failing to meet the required deadline.


Meanwhile, another issue causing confusion is the requirement for empowering supplier status, for black-owned Qualifying Small Enterprises (QSEs).


Under the new amended codes, a generic entity (turnover exceeding R50-million) must comply with a minimum of 3 of the 5 criteria, while Exempt Micro Enterprise (EMEs) (turnover under R10-million) and start-up enterprises are given exemption from this requirement.


QSEs are required to comply with only 1 of the criteria.


The new ‘empowering supplier status’ requirement in the amended codes is vital. Failing to meet this requirement effectively deems your BEE certificate null and void, regardless of your score.


However, there is some confusion regarding the requirements for certain QSEs - those companies with a turnover between R10- and R50-million.


Clause 5 of statement 000 in the 2003 codes says nothing about black-owned QSEs requiring empowering supplier status. 5.3.3 indicates they need only obtain an affidavit confirming annual revenue and ownership. Yet, statement 400 clause 3.3 indicates QSEs need empowering supplier status and that EMEs and start-ups are exempt from this.


Could it be that the intention of statement 400, clause 3.3, was that only QSEs with less than 51% black ownership and generics required this status?


It would make sense, in that the amended codes are specifically aimed at decreasing the BEE burden on black-owned companies in order to speed up their potential growth.


A representative within the dti this week confirmed that despite the conflicting clauses in statements 000 and 400, black-owned QSEs do require one empowering supplier status to be verified. The indication is that this will be reinforced in the much awaited verification manual, now rumoured to be due for gazetting no later than August this year.


What this means is that a >51% black-owned QSE needs one of the 5 empowering supplier status’ to be verified and the result of this verification must be confirmed on the face of their BEE certificate or affidavit.


The codes are silent as to who can validate the empowering supplier status, but it would seem logical that those accredited by SANAS or registered by IRBA to issue certificates under these codes would be the responsible parties. This was confirmed in conversation with an official within the dti’s BEE unit, says Lawrence.


Contact Jenni Lawrence of Grant Thornton on Jenni.Lawrence@za.gt.com


For more information on empowering status, please refer to the article available at this link: http://www.gt.co.za/publications/2015/03/bee-in-the-know-edition-1/#link2

 

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

Career opportunites

Head: Supply Chain Management (P6)

  • <500 000 >500 000 Limpopo Permanent Procurement Management Supply Chain
North east of the Tropic of Capricorn, just ...More

Purchasing and Supply Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supply Chain
Purchasing and Supply ManagerThe CSIR has a vacancy ...More

Senior Manager Public Sector

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 Senior Manager Public SectorTotal Cost to Company: R1.1mil ...More

Senior Manager: Mining

  • >500 000 Gauteng Industrial Engineer Permanent Projects / Category Management
Senior Manager: MiningTotal Cost to Company: R900k – ...More

SUPPLY CHAIN MANAGER

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
SUPPLY CHAIN MANAGER(Total Cost to Company R750k – ...More

Master Data Management Advisor

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 MASTER DATA MANAGEMENT ADVISOR(Total Cost to Company R750k ...More

PRO - Performance Reporting

  • >500 000 Permanent Procurement Consultant Procurement Management Projects / Category Management
PRO - Performance ReportingTotal Cost to Company: R800k ...More

PRO - Risk & Governance

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
PRO - Risk & GovernanceTotal Cost to Company: ...More

Supply Chain Site Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Supply Chain Site ManagerTotal Cost to Company R1mil ...More

Chief Financial Officer

  • >500 000 Gauteng Permanent Procurement Officer / Specialist
Chief Financial OfficerTotal Cost to Company R1.5mil – ...More

Process Engineer- WMS

  • <500 000 >500 000 Industrial Engineer Permanent Projects / Category Management Western Cape
Process Engineer- WMS(Total Cost to Company R350K – ...More

Forecast Analyst

  • <500 000 Analyst Permanent Procurement Management Western Cape
Forecast Analyst(Total Cost to Company R350K – R500K) Location: ...More

Group Category Manager: Indirects

  • >500 000 Permanent Procurement Management Projects / Category Management Western Cape
Group Category Manager: Indirects(Total Cost to Company R700K ...More

Group Category Specialist: Chemical

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Group Category Specialist: Chemical(Total Cost to Company R700K ...More

Sourcing Specialist - 3rd party

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Sourcing Specialist - 3rd partyTotal Cost to Company ...More

Global Procurement Lead (Processing)

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
 Global Procurement Lead (Processing)Location: JohannesburgTotal Cost to Company ...More

Global Supplier Performance Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Global Supplier Performance Manager Location: Johannesburg  Cost to ...More

Group Customer Service Lead

  • <500 000 >500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
Group Customer Service Lead  Location: Johannesburg As the ...More

Business Intelligence Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supplier / Business Development
Business Intelligence Manager Location: JohannesburgLead the development, implementation, optimization ...More

Group Procurement Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management
Group Procurement Manager Location: Johannesburg  A Global Organization ...More