Understanding B-BBEE

 What is B-BBEE?

B-BBEE is the viable economic empowerment of all black people in particular women, youth, people with disabilities and people living in rural areas through diverse but integrated socio-economic strategies.

 

Who does B-BBEE apply to?

B-BBEE applies to the following institutions:

  • All organs of state and public entities
  • Organization that undertake economic activities with the state or public entities
  • Organization that undertake direct or indirect economic activity with the state or public entity

 Defining businesses under B-BBEE?

Businesses are categorized as:

  • Exempted Micro Enterprise(EME)
    • Annual turnover below R10 million
  • Small Qualifying Enterprise (QSE)
    • Annual turnover between R10-R50 million
  • Large Enterprises
    • Annual turnover above R50 million

 How is the business measured under B-BBEE?

A business can be measured based on the following scorecards:

  • EME scorecard
  • QSE scorecard
  • Generic scorecard
  • Specialized scorecard
  • Sector codes
  • Equity Equivalents (Multinationals/Foreign owned)

 

Amended sector codes

The tourism, information (ICT) & communication technology and marketing, advertising & Communication (MAC) sector codes have been gazette.

The business that fall within these three sector codes have to use a sworn B-BBEE affidavits unless verified as QSE or Large enterprises.

 

Old sector codes

The following sector code still apply until such time that the new sector codes are gazetted              

  • transport

Please note if your business falls within this sector you cannot use a BBBEE Sworn Affidavit.  Compliance in line with the Transport sector code requires a B-BBEE certificate and EME’s can only be a level 3 or 4 not a level 1.

 

Repealed sector codes

Business that fall under the sector codes below are now measured under the EME scorecard, QSE scorecard or Generic scorecard until such time that the codes are aligned and gazetted.

  • Construction
  • Charted Accountancy

Qualifying EME & QSE in these sectors have to use the B-BBEE Sworn Affidavit

 

Getting B-BBEE Verified

The scorecard weighting and targets differ between QSE and Large enterprises. Ownership, skills development and enterprise & supplies development (ESD) have been identified as priority elements under B-BBEE where measured enterprises have to comply with all or be discounted a level down. Companies can qualify for BBBEE level 1-8 or obtain non-compliant status

Element

Weighting

Compliance Target

Ownership

25 points

25% + 1 vote

Management Control

19 points

(50% to 80%)

Skill development

20 points

6% of payroll

Enterprise & Suppliier Devlopment

40 points

pp = 80%

SD = 2%(NPAT)

ED = 1%(NPAT)

Socio-Economic Development

5 points

1%(NPAT)

Total

109 points

  

Exempted micro Enterprises (EME)

EMEs do not have to obtain a verification certificate but must use the BBBEE sworn affidavit. An EME may opt to be measured as a QSE where it will have to comply with two (2) of the priority elements. Start-ups qualify as EME.

  • 100% black owned EMEs qualify as a level 1
  • 51% black owned EMEs qualify as level 2
  • EMEs with less than 51% black ownership qualify as a level 4
  • EME may opt to be measured as QSE

 

Qualifying Small Enterprise (QSE)

QSEs that qualify as a level 1&2 do not have to be measured and must use the BBBEE sworn affidavit.

  • 100% black owned QSEs qualify as a level 1.
  • 51% black owned QSE qualify as level 2
  • QSE with less than 51% black ownership must be measured.

Large Enterprises

Large enterprises have to be measured and comply must be measured.