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Aug 27, 2012

Revised codes to accelerate BEE implementation – Davies

Engineering|Mindwalk|Anthony Hartman|Rob Davies|Tony Balshaw
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The revised broad-based black economic-empowerment (BBBEE) codes, which Cabinet last week approved, would accelerate the implementation of BEE and broaden the effects of empowerment, Trade and Industry Minister Dr Rob Davies said on Monday as he outlined the key areas of refinement.

The revised BBBEE codes, which would be open for a 60-day comment period once officially gazetted, reduced the generic scorecard to five elements, with employment equity and management control being consolidated, and preferential procurement and enterprise development merged to form a supplier development element.

The points for ownership have also been broadened to include designated groups in the main points, while thresholds for exempted micro enterprises and qualifying small enterprises have been adjusted. All companies, except exempted micro enterprises, would be required to comply with the five elements of the BBBEE scorecard.

The revision would also see the introduction of priority elements: ownership, skills development and supplier development. Large enterprises had to comply with all three priority elements. The priority scores of entities that did not comply with sub-minimum requirements in each priority would be discounted.

Entities that were 100% black-owned would qualify as Level 1 and entities that were more than 50% black-owned would qualify as Level 2.

The revised codes also updated the framework for the accreditation of BBBEE verification agencies to include the Independent Regulatory Body of Auditors.

Grant Thornton head of BEE verification Tony Balshaw told Engineering News Online that the intention to revise the codes raised some concerns. “The codes are supposed to have a shelf life of ten years, and then it should have a substantial review. But is this still needed?

“It seems politically expedient to change the codes and to rectify certain things in the codes, when the technical problems have not been addressed. There are about 100 errors in the original codes,” he said.

Balshaw applauded the fact that some of these errors seemed to be corrected in the revised codes. “However, the government is moving the goal posts as well, by [proposing the] rolling up of management control and employment equity into one score. My view is that the technical errors and imperfections should be ironed out first, before changes are made to the codes,” he noted.

Verification agency Mindwalk CEO Anthony Hartman said the amendments of the codes might hold more complications for agencies.

“Because the whole process of BBBEE is voluntary, people are going to be more reluctant to submit themselves to processes which are too complicated. Ultimately, this hinders the overall aims which is transformation and change,” he noted.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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