Understanding B-BBEE For South African Companies

When the South African government introduced the Black Economic Empowerment legislation back in 2001 it was met with mixed reviews from the various sectors of the economy. In its early incarnation, BEE was criticised for not benefiting a large enough proportion of the population, and thus the rules and regulations were updated and BEE was changed to B-BBEE – Broad-Based Black Economic Empowerment – so that all South Africans could benefit.

At Röhlig-Grindrod, we view B-BBEE measure that is vital to ensure economic opportunities for individuals across the country. We are committed to complying with the regulations set out by B-BBEE and its aim of undoing the injustices of the past. We are a certified Level 2 company, with black ownership and representation at all levels of staffing – from entry level to executive. We continually contribute to upliftment through our learnership programme and various CSI initiatives.

The purpose of B-BBEE is to ensure that a more representative portion of the South African population could benefit from involvement in the economy. During the years of Apartheid, control of the economy was almost exclusively held by white hands. B-BBEE aims to address this economic unfairness of the past and level the playing field for people of all colours.

Coming to terms with the various regulations, codes, and compliance levels can be quite tricky. There are a number of different things to consider when it comes to B-BBEE and remaining compliant. We’ve simplified the 7 elements laid out in the Department of Trade and Industry’s Broad-Based Black Economic Empowerment Codes of Good Practice here to help you understand them a little better.

1 – Ownership refers to the amount of business equity in the business and how much of it is in the hands of black people. Ownership constitutes voting rights, entitlement to dividends and benefits from capital gains.

2 – Management Control is focused on national demographics and the measurement of management based on the overall demographic representation of black people who are directly involved in the management of the company. This refers to executive boards as well as senior managers.

3 – Employment Equity is the percentage of black staff working in an organisation. There is a distinction made between small enterprises and big businesses. For smaller businesses, employees of any level are counted, but for bigger businesses, only employees in management positions are counted.

4 – Skills Development refers to the amount a company invests in developing the skills of black employees. Skills development is constituted by skills and training as well as learnership opportunities.

5 – Preferential Procurement refers to the practice of awarding contracts and procurement based on a company’s B-BBEE score. Using B-BBEE compliant suppliers contributes to your B-BBEE scorecard, and depending on their B-BBEE level, you could earn more points.

6 – Enterprise Development is the act of investing time and capital in helping individuals establish, expand, or improve their business. It can be simplified as “paying it forward” with skills and opportunities.

7 – Socio-Economic Development is a measure of the amount a company invests in uplifting black individuals and communities through CSI efforts.