The amended B-BBEE codes are quite explicit about the distinction between “the value adding supplier’ and “the empowering supplier”. From government’s zero tolerance stance on compliance, ignorance won’t be a defence for noncompliance. Thus, the onus is entirely upon companies to acquaint themselves with their scope and limitations of the two concepts.
Noteworthy, there is a critical difference between the “value-adding supplier” concept and the “empowering supplier” requirement, which now replaces it in the amended codes.
There won’t be cutting corners or conveniently using one provision in place of another, that’s what the new codes underline. For instance, if a company does not qualify as an empowering supplier, its certificate cannot be used towards its clients’ procurement score, therefore rendering the certificate to be useless,
What does it take to qualify as an empowering supplier?
In essence, an organisation should meet at least three of the following criteria if it is a large enterprise (turnover exceeding R50m), or at least one if it is a qualifying small enterprise (QSEs) – with a turnover between R10m and R50m:
- At least 25% of the cost of sales excluding labour cost and depreciation must be procured from local producers or local suppliers in SA. For service industry labour, costs are included but capped to 15%.
- -Job Creation: 50% of jobs created are for blacks, provided the number of black employees since the immediate prior verified B-BBEE measurement is maintained.
- At least 25% transformation of raw material/beneficiation which includes local manufacturing, production and/or assembly, and/or packaging.
- Skills transfer: At least spend 12 days per annum of productivity deployed in assisting black exempted micro enterprises (EMEs) and QSEs beneficiaries to increase their operation or financial capacity.
It is important to note that EMEs and start-ups are automatically recognised as empowering suppliers.
Credits: Adapted from Grant Thornton report for Transform SA
