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An overview of the revised Generic BEE codes of good practice
Clarification statements – application of revised & sector codes
Revised Sector Charters i.e. MAC ( Media, Advertising and
Communications, Tourism, Agri)
Implications of poor performing suppliers on your scorecard
Scenario Plan
What to do going forward
Enterprise & Supplier Development - Gezajozi
3
” the secret of change is to focus all of your energy, Not on fighting the old but on building the new”
…………………………Socrates
5
CURRENT
Ownership
Management Control
Employment Equity
Skills Development
Procurement
Enterprise Development
Socio-Economic Development
REVISED
Ownership
Management Control
Skills Development
Supplier & Enterprise Development
Socio-Economic Development
7
100% Black owned = Level 1
> 50,1% to 99% Black owned = Level 2
≤ 50% Black owned = Level 4
White owned = Level 4
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• Sworn affidavit confirming:
– Annual total revenue is less
than R10 million
– Level of black ownership
• The above must be done on an
annual basis
9
Turnover between R10m to R 50 million pa
Measure all 5 elements
Comply with at least 2 priority elements:
• Ownership (compulsory) and
• Ent & Supplier Dev or Skills Development
Entities who do not meet priority element thresholds
the overall score will with be discounted by 1 level
Sub minimum’s
Enhanced recognition for black owned QSE’s:
100% Black owned = Level 1
Greater than 51% black owned = Level 2
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For >50% Black owned entities:
Sworn affidavit confirming:
Annual revenue is less than R50 million
Level of black ownership
The above must be done on an annual basis
For <50% Black owned entities:
BEE Certificate
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Turnover > R50 m per annum
Measure all 5 elements
Comply with all 3 priority elements
• Ownership, Ent & Supplier Dev, Skills Dev
Entities who do not meet priority element
sub minimum targets the overall score will
be discounted by 1 level
12
Priority element for both Generic and QSE’s
Sub minimum requirements:
• Minimum of 40% of Net Value targets, based
on time graduation factor
Non-compliance with Threshold targets:
• Result in the achieved B-BBEE status level
being discounted by one level
13
Junior Managers now included
Staff excluded for QSE’s
Targets broken down into different race sub groups
ME can elect to apply national or provincial EAP targets
EEA2 & EEA4 are pre-requisites to qualify as empowering
suppliers.
• African Male
• Indian male
• Coloured Male
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African 40.7 African 34.2
Coloured 5.8 Coloured 5.0
Indian 1.9 Indian 1.1
White 6.4 White 4.9
54.8 45.2
Male Female
Province A C I W A C I W Total
Western Cape 17.8% 27.1% 0.2% 7.8% 16.1% 23.9% 0.1% 7.0% 100.0%
Eastern Cape 39.9% 7.7% 0.4% 5.7% 35.5% 5.5% 0.4% 4.8% 100.0%
Northern Cape 28.0% 20.7% 0.1% 4.9% 24.2% 19.0% 0.0% 3.0% 100.0%
Free State 47.1% 1.7% 0.2% 5.3% 40.4% 1.2% 0.1% 4.1% 100.0%
KwaZulu-Natal 42.3% 1.3% 7.3% 3.3% 38.3% 0.8% 4.4% 2.3% 100.0%
North West 52.2% 0.8% 0.2% 5.7% 37.7% 0.4% 0.0% 3.1% 100.0%
Gauteng 42.5% 1.9% 1.5% 9.8% 34.2% 1.9% 0.9% 7.2% 100.0%
Mpumalanga 47.8% 0.3% 0.5% 4.7% 42.9% 0.1% 0.1% 3.6% 100.0%
Limpopo 54.5% 0.2% 0.5% 1.8% 41.3% 0.1% 0.2% 1.5% 100.0%
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Targets based on overall demographic representation of
black people as defined (African, Coloured, Indian)
Require Workplace Skills Plan, Annual Training Report,
SETA approved Pivotal report, Implementation of priority
skills programme for black employees
External training for unemployed black people included
Mandatory training as prescribed by SETA has been
excluded
Trainee tracking tool developed for bonus points
Sub minimum of 40% of targets to be achieved to avoid
discounting principle
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Cat Narrative
Description
Delivery
Mode
Learning Site Learning Achievement
A Institution-based theoretical
instruction alone – formally
assessed by the institution
Institutional
instruction
Institutions such as universities
and colleges, schools, ABET
providers
Recognised theoretical knowledge resulting in
the achievement of a degree, diploma or
certificate issued by an accredited or
registered formal institution of learning
B Institution-based theoretical
instruction as well as some
practical learning with an
employer or in a simulated
work environment – formally
assessed through the
institution
Mixed mode
delivery with
institutional
instruction as well
as supervised
learning in an
appropriate
workplace or
simulated work
environment
Institutions such as universities
and colleges, schools, ABET
providers and workplace
Theoretical knowledge and workplace
experience with set requirements resulting in
the achievement of a degree, diploma or
certificate issued by an accredited or
registered formal institution of learning
C Recognised or registered
structured experiential
learning in the workplace
that is required after the
achievement of a
qualification – formally
assessed by a statutory
occupational or professional
body
Structured learning
in the workplace
with mentoring or
coaching
Workplace Occupational or professional knowledge and
experience formally recognised through
registration or licensing
D Occupationally-directed
instructional and work based
learning programme
that requires a formal
contract – formally
assessed by an accredited
body
Institutional
instruction together
with structured,
supervised
experiential
learning
in the workplace
Institution and workplace Theoretical knowledge and workplace
learning, resulting in the achievement of a
South African Qualifications Authority
registered qualification, a certificate or other
similar occupational or professional
qualification issued by an accredited or
registered formal institution of learning
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Cat Narrative Description Delivery Mode Learning Site Learning
Achievement
E Occupationally-directed instructional and
work based learning programme that does
not require a formal contract – formally
assessed by an accredited body
Structured, supervised
experiential learning
in the workplace which may
include some institutional
instruction
Workplace and some
institutional as well as ABET
providers
Credits awarded for
registered unit standards
F Occupationally-directed informal
instructional programmes
Structured information
sharing or direct instruction
involving workshops,
seminars and conferences
and short courses
Institutions, conferences
and meetings
Continuing professional
development,Attendance
certificates and credits
against registered unit
standards (in some
instances)
G Work-based informal programmes Informal training Workplace Increased understand of
job or work context or
improved performance or
skills
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Value adding suppliers replaced with
‘Empowering Supplier’
Combine Procurement & Enterprise Development
Procurement (25 points)
Supplier Development (10 points)
Enterprise Development (5 points)
Bonus points (4 points)
22
WHO QUALIFIES AS AN ‘EMPOWERING SUPPLIER’?
EME’s and Start-Ups are automatically
recognised as Empowering Suppliers
100 % Black owned QSE with turnover below
R 50 million
23
Meet at least 3 criteria if Generic and 1 if QSE:
25% of Cost of Sales (excl Labour & depreciation) procured
locally
50% jobs created are for Black people in the last measured
period
25% transformation of raw materials
12 days pa assisting Black EME & QSE’s to increase operational
and financial capacity
Atleast 85% of labour costs should be paid to South African
employees by services industry entities
24
Remains as 1% of NPAT
Approved Socio-Economic Development
contributions / Beneficiaries
75% of the Socio-Economic Development
contributions must benefit Black persons directly
Grants, Discounts, Overhead Costs = 100%
benefit
Services rendered, Employee time = 80%
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AFFIDAVITS
The wording of the affidavit must meet the guidelines
provided for in the Dti’s template (see attached)
MANAGEMENT CONTROL
ME can elect to be measured against either National or
Provincial targets
SKILLS DEVELOPMENT
Mandatory training as prescribed by the SETA does not
count towards skills development expenditure
Absorption points will only be earnt after the completion of
the learnership/apprenticeship/internship
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Training has to be inline with Annual Training Report(ATR)
Expenditure on unemployed learners will count towards skills
development expenditure
Training conducted outside of S.A. has to meet SAQA requirements
for it to count as category B,C,D otherwise its recognised as E or F
ENTERPRISE & SUPPLIER DEVELOPMENT
ESD invoices raised but are not paid within the period cannot count
towards ESD expenditure
The distinction between an Enterprise development beneficiary and
supplier development beneficiary is whether or not the beneficiary is
an empowering supplier.
An SD beneficiary can be an ED beneficiary but an ED beneficiary
can NEVER be a SD beneficiary if they are not an empowering
supplier
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Procurement – Imports based on technical specifications and brand can only
be excluded if an ESD programme has been developed and implemented
In order to obtain an additional 1.20% enhanced recognition for supplier
development the ME must demonstrate the following:-
- provide evidence that a signed, valid and acceptable contract
of a minimum 3 years exists between the ME and the beneficiary
- provide evidence that a first-time supplier has not supplied to the
ME prior to the measurement period
EMPOWERING SUPPLIER
Skills Development Levies are a pre-requisite in order to qualify as an
empowering supplier
EEA2 & EEA4 are not pre-requisites for measuring MC but they are for
determining ‘empowering supplier’ status
50% of jobs created should be for black south african citizens and the number
of black south african employees should have been maintained since the last
verification
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AGRI BEE (28/12/2012)
Integrated Transport (21/08/2009) -
Chartered Accountancy (10/05/2011) -
Property (01/06/2012) -
Information & Communication Technology (06/06/2012)
Financial Services (29/11/12)
Construction (05/06/2009)
Forestry (12/06/2009)
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INDUSTRY Sub-Sector GENERIC/Large Entity
Public Relations Industry > R 10 million
Advertising Industry > R 50 million
Marketing, Advertising and Communication Research
Industry> R 50 million
INDUSTRY Sub-Sector QSE
Public Relations Industry R 1 million - R 10 million
Advertising Industry R 10 million - R 50 million
Marketing, Advertising and Communication Research
IndustryR 10 million - R 50 million
30
ELEMENT WEIGHTING WEIGHTING
Ownership 25 25
Management Control 27 15
Skills Development 30 25
Enterprise and Supplier Development 42 30
Socio-economic Development 5 5
Responsible Marketing and
Communications
5 5
134 Points 105 Points
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Remains as 1% of NPAT
Approved Socio-Economic Development contributions / sector
specific programs of the entity to promote responsible behavioural
changes in line with Government’s strategic objectives.
75% of the Socio-Economic Development contributions must
benefit Black persons directly
Grants, Discounts, Overhead Costs = 100% benefit
Services rendered, Employee time = 80%
32
Government
Mining
Banks
Insurers
Retail
Tourism
Telecoms
M.E.
M.E.Supplier
SuppliersSuppliers
Suppliers
M.E.
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers Suppliers
Suppliers
Suppliers
Suppliers
M.E.
Suppliers
Suppliers
SuppliersSuppliers
M.E.
Suppliers
Suppliers
M.E.
Suppliers
Suppliers
33
WHAT IS THE BENEFIT?Spend with suppliers with higher BEE Levels are
advantageous. Suppliers with levels above Level4 will contribute more than the actual spendtowards your procurement spend and suppliersbelow Level 4 will contribute less than actualspend. The way in which companies haveapproached Preferential Procurement in thepast is simply no longer relevant. Innovative,strategic thinking is now required.
IMPACT ON YOUR SCORECARD?1. Reduced procurement recognition spend, thereby increasing your
TMPS (total Measured Procurement spend) target.
2. Potential discounting due to not meeting the sub-minimum target for ESD(includes Preferential Procurement)
3. Create ESD programmes , which could be costly.4. When used strategically suppliers with higher BEE levels will often
reduce the effects of having suppliers with a level lower than 4 or no
certificate or a Non-Compliant certificate because the enhanced spend with other suppliers can fill the gaps.
34
On the Codes of Good Practice five criteria are measured
1. Spend on BEE compliant suppliers
2. Spend on QSE and EME supplier
3. Spend on 50% Black Owned suppliers
4. Spend on 30% black female owned suppliers
5. Spend with designated group suppliers that are 51% black owned
(Bonus Points)
35
WHAT IS THE SCENARIO PLAN?
• Based on an in-depth analysis of your current score, we identify
initiatives that need to be undertaken in order to achieve your desired
level of compliance during the current financial period. This allows the
ME to make flexible long-term plans.
• A cost benefit analysis is compiled in the report, thereby giving the ME
an actual cost estimate in order for to achieve the desired level of
compliance.
36
ELEMENT Weighting BONUS POINTS Current Year to date Scenario: Revised Codes
OWNERSHIP EQUITY
25 0 0
MANAGEMENT CONTROL
19 0 4.59
SKILLS DEVELOPMENT
20 5 0.98
ENTERPRISE AND SUPPLIER DEVELOPMENT
40 4 5.27
SOCIO-ECONOMIC DEVELOPMENT
5 0 0.76
TOTAL SCORE 109 9 11.60
Current Year to date Scenario
ELEMENT Weighting BONUS POINTS Future Scenario: Revised Codes
OWNERSHIP EQUITY
25 0 0
MANAGEMENT CONTROL
19 0 4.59
SKILLS DEVELOPMENT
20 5 25
ENTERPRISE AND SUPPLIER DEVELOPMENT
40 4 28.73
SOCIO-ECONOMIC DEVELOPMENT
5 0 5
TOTAL SCORE 109 9 63.32
Proposed Future Scenario
Future Estimated Score NON - COMPLIANT
Discounted by 1 level YES – remains non-compliant
Procurement recognition level 0%
Empowering Supplier Status UNKNOWN
Future Estimated Score LEVEL 7
Discounted by 1 level YES to level 8
Procurement recognition level 10%
Empowering Supplier Status UNKNOWN
37
Start preparing your BEE Strategy NOW – needs to be driven from the top
down, systems in place to capture evidence, allocate a low level resource to
do the ground work.
Succession Planning - start identifying employees that you can upskill in order
for them to move up the hierarchy into management roles.
Start gearing up for the revised codes NOW.
Consider engaging a reputable B-BBEE Consultant to help you formulate a
sound strategy.
Look to recruit black disabled female employees as they have higher
recognition on the scorecard
Look for more black owned EME’s or QSE’s or Female Owned entities to
procure from
Consider offering suppliers training on the revised Codes, offer them access to
a workshop on the practical elements of how to assess the impact of the new
scorecard, and how to engage in a strategic intervention to identify how toimprove their B-BBEE scorecard over the next four years.
“If you can’t fly then run, if you can’t run then walk, if you can’t walk then crawl, but whatever you do you have to keep moving forward.”
~ Martin Luther King Jr.
38
Engage a Skills Development Facilitator to ensure that the correct
interventions have been implemented and that all learnerships
meet the learnership requirements under the revised codes.
Consider doing a Gap Analysis/Scenario Plan to understand your
areas of weakness in order to prepare you for the revised codes.
Don’t engage your suppliers like you have previously – it won’t work.
There will be many empty promises and limited buy-in and
commitment. We recommend contractual obligations, committing
suppliers to achieve four-year targets, and financial penalties for
those who do not attain them
Establish a supplier portal where prospective suppliers can register
their interest in becoming a supplier to your company
conduct an analysis into your spend and identify commodities that
could offer opportunities for a change in supply.
39
Identify an Enterprise and Supplier Development Beneficiary that
you can start to develop, as this involves setting out a detailed
program which needs to have:
Clear objectives
Priority Interventions
Key Performance Indicators
Concise implementation plan with clearly articulated milestones