Keith Levenstein of consultancy EconoBEE is concerned that the new BEE codes for small companies will make compliance more complicated compared to the 2007 codes which they are meant to replace.
He argues that the new codes for so-called qualifying small enterprises (QSEs) could result into a company being downgraded from level 2 to 8, while meeting all stipulated requirements, depending on how their BEE score had been constituted.
“One proposed change is that QSEs are chasing points out of a total of only 100. Large companies applying the generic scorecard can theoretically achieve 118 points, meaning there is more room to fail in certain criteria.”
Though, one area where the QSEs will have it easier than larger companies is in procurement – the codes require 15% of procurement to be from 51% black-owned suppliers. However, Levenstein notes that although the target is easier, it also comes with less points. “Eventually, what we have are tougher targets and less concessions.”
QSEs are companies with an annual turnover of between R10 million and R50 million. The codes only apply to companies that are majority white-owned. Any company of that size, which is more than 51% black-owned, automatically becomes a level-2 contributor. If black ownership is 100%, the company gets a level-1 score.