Highlights: BEE Codes of Good Practice (Part 1)

Supplier complaints that “different South African customer rate our BEE (Black Economic Empowerment) efforts differently” and “each time we think that we’ve met the criteria, everything changes”, might be coming to and end soon with the recent introduction of the government’s Draft BEE Codes of Good Practice..
I’ve tried to put the salient points of the new code as they apply to South African Procurement Professionals in this article. This includes an on-line calculator (see below) which you can use to calculate your Supplier’s BBBEE rating. (or send the article to them so they can do it themselves!) Links to the various detail documents as supplied by the Department of Trade and Industry (DTI) are also included.

Please keep in mind that the Code is in DRAFT format, and for comment. (Now might be the time to make your views heard!)

Some of the key take-aways for South African procurement professionals are:

1. The government is moving towards Broad Based Black Economic Empowerment. Simply put, the intention is to empower all black people and not only a select few as is currently the case.
Differentiation is now made between “Narrow” and “Broad” based empowerment.
Narrow based empowerment scored (solely black ownership based) will apply only for another 12 months. Thereafter a broadbased scorecard will apply.

2. The government has put forward a balanced scorecard in order to measure its success in this regard.
The scorecard will measure three core elements of BEE:
a) Direct empowerment through ownership and control of enterprises and
b) Human resource development and employment equity, and
c) Indirect empowerment through preferential procurement and enterprise development.
Entities will be viewed regarding their BEE contribution as follows:
(a) “Excellent contributor to broad-based BEE” – total score of 80% and above
(b) “Good contributor to broad-based BEE” – total score of 65% to 79.9%
(c) “Satisfactory contributor to broad-based BEE” – total score of 40% to 64.9%
(d) “Limited contributor to broad-based BEE” – total score of below 40%

How are these ratings determined?
In can become quite complicated but for now a simplistic calculator is provided here to illustrate the concept…. (I will be send out the more involved / detailed version of this a bit later)
The above is simplistic because there is a further level of information that needs to be considered and calculated before the actual numbers as indicated above can be entered correctly.


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10 thoughts on “Highlights: BEE Codes of Good Practice (Part 1)”

  1. A matter of concern, IMHO, is that little or no value is given to the number of PDI employees in a company.
    It is fashionable to think the owner(s) of a company receive the most financial benefit, where in practice the biggest expence is wages and salaries.
    Surely a company with a broad employee base should score well on BEE.

  2. The scoring method prejudices the small business owner. For example, A sole owner of a business with 100% pdi employment, will lose 20-30% of the possible score.

  3. We are wanting to set up an affirmative Procurement Policy for our company – any guidelines? thanks

  4. I think there is one issue BEE is failing to address:salary differences betweek black and white employees. For some reason blacks are paid less even when carrying the same workload and responsibilities as their white colleagues. How can that be changes cause it is not fair!

  5. am very much interested in employee participation in BEE deals. Can someone maybe direct me in this regard? My will is to become a director or share holder on BEE companies,because I believe now is the time for us black guys to participate at the market.

  6. Jabulani Nkosi

    How does an individual intending buying a stake along BEE lines within a big and established company go about , especially when that individual is an aspiring entrepreneur (owns no business) ?

  7. When auditing procurement submissions and or purchse orders, is there a standard check list that exists?

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