Update: The State of BBBEE in 2020

At Tower Group, we realise that Broad-based Black Economic Empowerment (BB-BEE) is one of the most important matters to keep in mind when doing business, making deals, buying or selling equity, or recruiting staff in South Africa.

The Current Status of BB-BEE in South Africa

Having been in effect since 2003, the BBBEE Act and its implementation have undergone a few changes since then. Keep reading the blog as we elaborate on the latest news about BB-BEE as of the beginning of 2020.

BB-BEE Levels

The compliance levels remain more or less the same as businesses have become accustomed to over the past few years.

There are eight levels and they break down as follows:

  • Level 1 – 100 points and above – 135% procurement
  • Level 2 – 85 to 99.99 points – 125% procurement
  • Level 3 – 75 to 84.99 points – 110% procurement
  • Level 4 – 65 to 74.99 points – 100% procurement
  • Level 5 – 55 to 64.99 points – 80% procurement
  • Level 6 – 45 to 54.99 points – 60% procurement
  • Level 7 – 40 to 44.99 points – 50% procurement
  • Level 8 – 30 to 39.99 points – 10% procurement

The scoring system is still applied to companies with an annual turnover of between R10 million and R50 million. Enterprises below that level are considered automatically compliant and granted 100% procurement – more if they are black-owned

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BBBEE Score Criteria

There were previously seven criteria on which companies were scored in order to receive their BBE rating. These have been condensed into five.

The five criteria are as follows:

  1. Equity ownership (25% of the weighting): who owns the company and has voting rights? Black ownership – especially the extent to which black women are represented – is the main consideration.
  2. Management control (15% of the weighting): this accounts for the extent to which voting rights on the board are held by black members and what percentage of the senior management posts are held by black people.
  3. Skills development (20% weighting): To what extent does the company invest in its workers, improving their skills and competence?
  4. Enterprise development (40% weighting): how does the company in question support and help small, black-owned companies?
  5. Socio-economic development (5% weighting): this focuses on a company’s social investment initiatives. How is the company giving back to the community?

Closing Thoughts

So it’s clear that BBBEE is not simply a question of equity; it also depends very much on the role the company plays as a corporate citizen. Let Tower Group help you maintain a good BBBEE scorecard. For more information on HR, recruiting, South African labour law, and the latest news about BBBEE, contact us.

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