Firms warned on new BEE codes

COMPANIES have exactly a year from today to comply with South Africa's new empowerment codes.

Last month, Trade and Industries Minister Rob Davies published a notice in the Government Gazette, extending the transitional period for firms and parastatals to comply with the revised Broad-Based Black Economic Empowerment (B-BBEE) codes by six months, to now come into effect on April 30 next year.

The new codes were gazetted in October last year. The revised codes reduce the pillars of transformation from seven to five, but with the compliance levels for each being tougher than before.

Sage Pastel BEE123 divisional manager Saul Symanowitz said businesses must act to maximise their B-BBEE scores to avoid scrambling closer to the deadline next year.

Symanowitz said most companies would find their BEE certification tiers would drop two to three levels under the stricter new codes.

"Those that want to retain their preferred status as empowered suppliers to large companies and government when they're next audited will therefore want to urgently assess their compliance levels so they can develop a strategy to improve their credentials."

The deadline was extended to give businesses time to understand the impact of the codes on their scorecards, to create a plan, and implement the changes that will allow them to retain or improve their B-BBEE status.

The five categories companies and parastatals will be measured on are ownership, management control, skills development, enterprise and supplier development and socio- economic development.

Micro enterprises with an annual total revenue of R10-million or less will be exempted from complying with the revised codes. However, organisations with a turnover of more than R50-million a year will have to achieve a score of 40% in three of the five codes, deemed "priority elements", which include ownership, skills development and enterprise and supplier development.

"Failure to meet this threshold in just one pillar will result in a lowering of a company's overall empowerment status by a level, no matter how good its scores are in the other categories. This is the first time the B-BBEE codes include such a penalty provision," he said.

Nelson Mandela Bay Business Chamber SME Helpdesk coordinator Fezeka Matshoba said Bay business was not prepared for the revised codes.

"Businesses make strategic plans that make provision for three- to five-year implementation. Each business's BEE targets and compliance levels are strategic goals that are set by a business which are then incorporated into the business's strategic plan," he said.

"The compliance notice period is too short, especially with the increased targets.

"But this will be good news for small businesses that have turnover of more than R5-million but less than R10-million."

The Hope Factory in Port Elizabeth assists black businesses.

Its marketing and communications manager, Jolandi Snyders, said to help companies meet the new codes, The Hope Factory had added supplier development to its services to numerous companies across South Africa.

Last month, the Coega Development Corporation (CDC) became the first state-owned enterprise to achieve a B-BBEE Level 1 contribution status – the highest achievable status.

CDC small, micro and medium enterprise (SMME) development head Andile Ntloko said the certificate provided a challenge for the next audit, to maintain Level 1 and not regress. - Cindy Preller