DTI BEE: Not an affair with a tall dark stranger

On 11th October 2013 DTI Minister Rob Davies gazetted the new DTI BEE codes. The DTI has tasked everyone to action these new codes within a year. DTI BEE: Not an affair with a tall dark stranger. The new DTI BEE plan still aligns to the same indicators as before.

1. Implementation of the DTI BEE plan is action-based

Implementing the DTI BEE codes for the first time has proven to be overwhelming and intimidating, but there are ways to tackle getting started.

Familiarise yourself with the DTI BEE plan and understand the Codes of Good Practice as found on the DTI’s website. Surf the web for toolkits that can assist you with assessing your company against the current codes and use the general scorecard to work out where you can score additional points. For example, if you buy a lot of raw materials you can score additional points by using a supplier who has an already high BBBEE rating. Consulting with your Industry Charter when setting realistic goals and time frames will ensure you are always in line with those of the broader industry.

2. You are not handing your business over to partnerships

Early definitions of black economic empowerment focused on business ownership and control. Now the focus is on broad-based BEE or BBBEE which refers to the economic empowerment of all black people including women, youth, the disabled and those in rural areas. Essentially, the DTI BEE plan is designed to position your company as a participant in the growth of South Africa’s economy, in order to assist it in reaching its full potential. Essentially, BBBEE together with the new DTI BEE plan, sets out to;

  • Increase the number of black people who own, manage and control businesses
  • Facilitate the management of such businesses by communities, workers and other collective enterprises
  • Boost human resources and skills development
  • Achieve equitable representation in all categories and levels of workforce
  • Promote preferential procurement
  • Encourage investment in black-owned or managed entities

3. The new DTI BEE plan has only five elements.

The changes in the new DTI BEE plan have caused some controversy as they impact on socio-economic development contributions however it is believed that the new plan will encourage major corporations to delve into skills development, enterprise development and black owned procurement. The five elements of the new DTI BEE plan are as follows:

  • Ownership
  • Management control
  • Skills development
  • Enterprise and supplier development
  • Socio-economic development

In addition to this plan, the minister has exempted all businesses with an annual turnover of less than R10 million (previously R5 million) from all forms of BEE. Any organisation, no matter its ownership, is automatically level 4. A business that is 100% black owned and has an annual turnover of less than R50 million is automatically level 1. If that business is more than 51% black owned and less than 100% it is level 2. A QSE (qualifying small enterprise) which is currently any business with a turnover of between R5 million and R35 million and follows a far more lenient scorecard has been adjusted to R10 million to R50 million. However, it still has to follow the entire scorecard with very few allowances or easier aspects to its scorecard than the generic.

4. There are three prioritised elements in the new DTI BEE Plan.

The new DTI BEE plan defines three of the five elements as priority elements with additional targets:

  • 40% on ownership’s net value
  • 40% of the skills development score
  • 40% of the Enterprise and supplier development score

If a business does not achieve all three targets (two targets for QSEs), it drops one level. As with a QSE who needs to meet only two targets. There is a general improvement in the targets which should result in better transformation. There will be more work and planning required in the implementing of the new DTI BEE plan and it will be important to understand how the new code works. A change in strategy will be required.

5. Approved verification agencies can issue your business with a certificate.

BEE Certificates can be issued by any verification agency as long as they are approved to do so by SANAS (South African National Accreditation System) or IRBA (Independent Regulatory Board for Auditors).The Certificate can only be issued once a full verification has been completed. On your certificate you should find the following information:

  • Company name and number
  • Type of Certificate (Group/Entity/Division)
  • BEE Category (QSE/Generic)
  • BEE Level (1-8)
  • Procurement Recognition %
  • Black Ownership %
  • Black Women Ownership %
  • Value Adding Supplier (Yes/No)
  • Certificate Issue Date
  • Certificate Expiry Date

You do not need to provide any additional information to your customers. Your BEE Certificate is regarded as sufficient as supporting evidence of your BBBEE credentials.

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Photo: Activedia

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Client Testimonial

"I would like to thank all the staff at Cenfed/Chamberlink for their professional and friendly service.

We have dealt with numerous BEE verification agencies and have found that Cenfed has a proper procedure that they stick to. We have never experienced the BEE verification process in this manner before and have come to the realisation that Cenfed are doing it correctly.

Thank you for your patience and advice and the wonderful manner in which Yolandi Storm conducted herself with the on site audit.

We would recommend Cenfed to anyone in need of assistance with their BEE verification."

Monique Beets - Accounting Clerk
TMF Construction & Electrical CC