Trade and Industry Minister Dr Rob Davies
Trade and Industry Minister Dr Rob Davies has extended the automatic recognition of empowering supplier status to all entities within South Africa until further determination.
This extension is in line with Paragraph 1(d) of Notice 444 of 2015 Government Gazette Number 38799 issued on 15 May 2015.
The notice states that holders of valid broad-based black economic empowerment (BBBEE) verification certificates, exempted microenterprise (EME) and relevant qualifying small enterprise sworn affidavits, and Companies and Intellectual Property Commission (CIPC) certificates issued on or prior to April 30, will automatically identify an empowering supplier as such, until the date of expiry of that BBBEE verification certificate, sworn affidavit or CIPC certificate.
In addition, Davies has approved, as per Notice 708 of 2016, that any entity measured on or after May 1 will automatically be recognised as an empowering supplier until a further notice is issued.
The empowering supplier provision was incorporated in the 2013 Amended Codes of Good Practice to create an environment whereby all entities must comply to regulatory requirements and comply to certain provisions.
HOW TO EMPOWER SUPPLIERS
The provisions are that at least 25% of cost of sales, excluding labour cost and depreciation, must be procured from local producers or local suppliers in South Africa. For service industries, labour costs are included but capped at 15%.
Further, 50% of jobs created are to be designated for black people, provided that the number of black employees since the immediate prior verified BBBEE measurement is maintained.
There should be at least 25% transformation of raw materials or beneficiation, which includes local manufacturing, production and/or assembly, and/or packaging.
Entities are also required to deploy at least 12 days a year of productivity to assist black EME and qualifying small enterprise (QSE) beneficiaries to increase their operation or financial capacity.
At least 85% of labour costs should be paid to South African employees by service industry entities.
A large enterprise needs to comply with at least three of the above provisions whereas a QSE needs to comply with one of the above provisions.
WHY THE HOLD-UP?
Owing to the current economic climate and feedback received from corporate South Africa on their readiness to meet certain empowering supplier provisions, such as on beneficiation, the Department of Trade and Industry took a decision to place the provisions on hold.
The empowering supplier provisions are not being removed in totality but merely placed on hold with the intention of a relaunch at a later stage to ensure effective and practical implementation.