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


 

 

Career opportunites

Planner

  • <500 000 Gauteng Operations, Planning & Inventory Supply Chain
Are you looking for new career opportunities as

Procurement Specialist

  • >500 000 Gauteng Procurement Officer / Specialist Strategic Sourcing Supplier / Business Development
As a specialist Supply Chain recruiter, I am

Logistics Controller

  • <500 000 Gauteng Logistics & Warehousing Procurement Officer / Specialist
Seeking dynamic up and coming candidates looking for

Supply Chain Manager

  • >500 000 Permanent Procurement Management Supply Chain Western Cape
As a specialist Supply Chain recruiter, I am

Business Process Specialist

  • <500 000 Gauteng Procurement Consultant Procurement Officer / Specialist Supply Chain
A company within the financial services sector is

LOC Procurement Manager

  • Gauteng Permanent Procurement Management Procurement Officer / Specialist
Your Responsibilities: Job Purpose To be the interface ...More

Account Manager

  • >500 000 Procurement Officer / Specialist Supplier / Business Development Western Cape
Key Performance Areas:• To ensure that all aspects

Consultant

  • >500 000 Gauteng Procurement Consultant Strategic Sourcing Supply Chain
Key Performance Areas:• You'll be concerned primarily with

Commercial Buyer

  • <500 000 Buyer Contracts Procurement Officer / Specialist Western Cape
A well-known Mining company is seeking the services

Technical Buyer

  • <500 000 Buyer Contracts Procurement Officer / Specialist Western Cape
A well-known Mining company is seeking the services

Business Development Executive

  • >500 000 Gauteng Supplier / Business Development
A retail solutions company is seeking a New

Financial Manager

  • >500 000 Contract Operations, Planning & Inventory Procurement Management Western Cape
Looking for an unemployed CA (SA) in Cape

Chief Financial Officer

  • >500 000 Gauteng Operations, Planning & Inventory Procurement Management
An exciting opportunity exists for a CFO with

Procurement Consultant

  • >500 000 Gauteng Procurement Officer / Specialist Strategic Sourcing
Key Performance Areas: A profound knowledge of sourcing

Commodity Specialist: IT

  • >500 000 Commodities Gauteng Procurement Officer / Specialist
Key Performance Areas:• Effectively applies acquired technical/functional skills

Senior Consultant

  • >500 000 Gauteng Projects / Category Management Supplier / Business Development
Key Performance Areas:• Adheres to best practice processes

Logistics Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Procurement Management
Key Performance Areas:• Manage warehousing and distribution 3PL's

Head of Franchise Network

  • >500 000 Contracts Operations, Planning & Inventory Western Cape
The opportunity to work for a multinational retail

National Driver Manager

  • >500 000 Analyst Contracts Logistics & Warehousing Operations, Planning & Inventory Western Cape
The opportunity for an extraordinary individual to join

Commodity Specialist: Industries

  • >500 000 Commodities Gauteng Procurement Officer / Specialist
Key Performance Areas:• Under the guidance of the