Broad-Based Black Economic Empowerment (B-BBEE) explained

What Is B-BBEE?

Broad-Based Black Economic Empowerment (B-BBEE) is a socio-economic process that directly contributes to the economic transformation of South Africa, by increasing the number of black people that manage, own and control the country’s economy, and diminishing income inequalities.

The Department of Trade and Industry (dti) is the custodian of B-BBEE in terms of the B-BBEE Act No.53 of 2003.

B-BBEE For SMMEs

In terms of the B-BBEE Codes of Good Practice, SMMEs are classified as enterprises with a turnover of R50 million and below, per annum. The Codes define two types (categories) of SMMEs, namely: 

• Qualifying Small Enterprises (QSEs): Enterprises with an annual revenue of between R10 and R50 million

• Exempted Micro Enterprises (EMEs): Enterprises with an annual revenue of below R10 million

The dti provides all EMEs and start-up enterprises (operational for less than 1 year) with an automatic B-BBEE status of "Level Four Contributor". If an EME has at 51% black beneficiaries, it acquires status as a "Level Two Contributor", while those with 100% black beneficiaries have a "Level One Contributor" status. EMEs are required to produce an affidavit, available on the dti website, declaring that they qualify as an Exempted Micro Enterprise based on their annual total revenue, allocated budget, or gross receipts and percentage of black beneficiaries. Customers who procure from a B-BBEE certified EME are able to claim B-BBEE points, which may B-BBEE certified small businesses with a competitive advantage over those who are uncertified.

B-BBEE Certificates And Verification

B-BBEE certificates can be issued by any of the accredited Verification Agencies that have been approved by the South Africa National Accreditation System (SANAS). The certificate can only be issued once a full verification (of documentation presented by an enterprise, among others) has been carried out. On your B-BBEE certificate you should find the following information:

• Company name

• Company registration number

• Applicable B-BBEE Scorecard

• B-BBEE Status level

• B-BBEE Recognition level (%)

• Black Ownership (%)

• Black Women Ownership (%)

• Empowering Supplier (Yes/No)

• Designated Group Supplier (Yes/No)

• Certificate Issue Date

• Certificate Expiry Date

While you do not need to provide any additional information to your customers, it is common for enterprises to provide further details regarding black ownership (in terms of voting rights, economic interest, and actual ownership), for example. Your B-BBEE Certificate is, however, regarded as sufficient supporting evidence of your B-BBEE credentials.

Why Comply With B-BBEE Legislation?

B-BBEE compliance and reporting is mandatory for all listed companies and publicly-owned enterprises. It is not compulsory for privately-owned businesses (that are not listed), however, it is advised that all enterprises become (or remain) B-BBEE compliant and maintain consistent and adequate reporting standards. Some of the advantages of B-BBEE compliance are:

• The private sector is more incentivised to coduct business with B-BBEE certified and compliant business, which therefore creates a new level of access to the corporate markets.

• The public sector and government bodies will not conduct business (for example, approve tenders or enter into partnership) with enterprises that are not B-BBEE compliant and certified.

Additionally, as mentioned earlier, B-BBEE compliance may open your business up to more opportunities with the added benefit of you (as an enterprise) gaining a competitive advantage over your non-compliant competitors. For more information on B-BBEE legislation and compliance, please visit the dti website.