How B-BBEE amendments will affect the various sector codes and QSE scorecards?

The new Broad-Based Black Economic Empowerment (BBBEE) Codes of Good Practice amendments that were published in May are coming into effect this December. What must companies expect?

Here is  an overview:

  • Definition of Absorption – now excludes further training and limits absorption to securing a long-term contract of employment.
  • Enhanced B-BBEE Recognition for EMEs and QSEs with 51% and 100% Black Ownership, resulting in Level 2 and Level 1 Recognition Levels respectively, must be measured using the flow-through principle and not the modified flow-through principle.
  • The previous skills development target of 6% has now been split into 2 subcategories, namely:
  • 3,5% of leviable amount on skills expenditure for 6 points, as opposed to the previous 6% for 8 points.
  • 2,5% of leviable amount must now be spent on bursaries for black students attending Higher Education institutions to earn 4 points. All ancillary costs for subsistence, catering, travel and accommodation paid to individuals on bursaries will also be counted towards the 2,5% expenditure target.
  • Double counting of initiatives under indicator 1 (3,5% expenditure target) and indicator 2 (2,5% bursary target) as per the above is not permitted.
  • The learnership target has now been merged into one indicator of 5% of total employee headcount instead of the previous 2,5% (black people) and 2,5% (black unemployed). This has now finally cleared up all confusion as to whether the previous indicator for “black people” meant employed or unemployed and removes all risks of double counting. The points for this have also been reduced from 8 to 6 points.
  • EAP targets will still apply to all the skills development indicators except disabled spend and absorption bonus points.
  • The cap on informal training (Category F & G Learning Programmes) has also been increased from 15% to 25%.
  • The target for procuring goods and services from 51% Black-Owned suppliers has been increased from 40% to 50%, with the points also going up from 9 to 11.
  • The multiplier of 1,2 for first-time suppliers has been removed and replaced with a 1,2 recognition boost for purchasing from a 51% Black-Owned or Black Woman-Owned supplier (modified flow-through excluded).
  • Generic Entities now also qualify as Enterprise or Supplier Development beneficiaries, but only if they had been an EME or QSE when they first received assistance from the Measured Entity (must have taken place within a 5-year period)

Feenix resource mobilisation manager Nyasha Njela says the amendments to the BBBEE scorecard are a positive step towards addressing the challenges that many students face in the country with regard to access to higher education and that the platform can be instrumental in helping companies fund students’ education.

“The amendments, under Skills Development in the scorecard, have a specific focus on supporting higher education students. This will encourage companies to provide funding for previously disadvantaged students for which they will earn up to four points on the scorecard,” she says.

Njela says Feenix carries out a vetting process for each student and ensures that all documentation required for BBBEE verification is obtained.

“The process is a simple, efficient and effective one that allows us to match the right students with the right sectors and corporates.”

“The amendments will make a major contribution to higher education in South Africa. The long-term benefit of this is that we will have an educated nation, who are able to make informed decisions and who will be able to actively participate in the economy,” Njela concludes.

Companies can now fund the children of their employees through bursaries or even school fees, as it allows for both basic and higher education.

People with disabilities remain an important focus for government with the need to bring them into the mainstream workforce through training. Skills development expenditure for black people with disabilities remains unchanged and will secure companies four points if 0.3% of annual payroll is utilised.

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