Obtaining a Broad-Based Black Economic Empowerment (BBBEE) certificate for your company may seem like a lot of hard work, tedium and jumping through bureaucratic hoops – but it doesn’t have to be. A certificate can give you an edge over competitors and open up a lot of doors for business growth – and it might be easier to acquire than you think.
BBBEE policies are set out in the BBBEE Act (No. 53 of 2003) and reinforced by the Codes of Good Practice (last revised in 2015). Under this legislation, it is not compulsory for a business to obtain a BBBEE certificate – it is an entirely voluntary process. However, a certificate brings with it a lot of benefits – particularly for Qualifying Small Enterprises (QSEs). A QSE is a company that has an annual turnover of between R10 million and R50 million.
One of the biggest benefits of having a BBBEE certificate is being able to conduct business with government sectors (including municipalities) and public entities. A certificate allows a company to tender – and the higher the level of your certificate, the better your chances of winning. There are eight levels of BBBEE compliance, with Level 1 being the highest and most desirable.
Other advantages of having a BBBEE certificate include having a better chance of securing contracts with large companies and big industry names, because they are encouraged to do business with smaller BBBEE-compliant companies. A certificate allows you to participate as a supplier in the lucrative chain of preferential procurement.
A further benefit of having a BBBEE certificate is the impression it gives. A certificate shows that you care and that your business is committed to making a positive difference in socety. Remember that BBBEE policies are focussed on effecting transformation in the business world by empowering greater black economic participation. A BBBEE certificate can be promoted in your business’s marketing materials.
BBBEE certificates can be issued by verification agencies that are approved by the South African National Accreditation System or Independent Regulatory Body. Obtaining a certificate may not require special auditing – an affidavit may suffice. For example, a QSE that has 51% black ownership is automatically qualifies for Level 2 BBBEE status. If the ownership is 100% black, this grants Level 1 status.
Exempt Micro Enterprises (EMEs), which need to have annual turnover of less than R10 million, automatically acquire Level 4 status without needing any black ownership. Having black ownership immediately upgrades them to Level 1 status.
BBBEE certificates are valid for one year from the date of issue, and need to be renewed annually. Even though rules and regulations have become stricter with the policy changes that were introduced last year, it is still perfectly feasible to obtain a BBBEE certificate – and with all the benefits that having one brings, there is no good reason not to.
We recommend talking to a BBBEE consultant to help with any questions you may have, as their extensive experience will allow them to provide answers and advice.