In South Africa, Broad-Based Black Economic Empowerment (BBBEE) is a much-discussed topic in the realms of business. The complexities of the legislation mean that BBBEE, sometimes incorrectly called BEE for short, is often misunderstood and a source of confusion and concern. However, it is an integral part of the nation’s growth and advancement, and the government is taking an increasingly active approach to encouraging compliance with BBBEE policies. As a result, BBBEE accreditation is important for businesses.
The aims of BBBEE are to promote greater black economic participation, thereby empowering those who were disadvantaged during apartheid and redressing some of the ills of the past. To effect these positive changes in society, BBBEE policy has been codified into legislation. This comprises the BBBEE Act (No. 53 of 2003) and supplementary Codes of Good Practice (last revised in 2015). Compliance is, contrary to popular belief, entirely voluntary.
BBBEE compliance is called verification, certification, or accreditation. The process for BBBEE accreditation varies according to the size of a business and the sector they are in. For the smallest businesses, Exempt Micro Enterprises (EMEs) – which have an annual turnover of under R10 million, accreditation can be very simple. If the business is in the general sector, they require nothing more than a sworn affidavit that has been stamped by a Commisioner of Oaths, in which they declare their turnover and percentage of black ownership. All EMEs automatically gain Level 4 status on the BBBEE rankings (there are eight levels, with Level 1 indicating the highest degree of compliance). If they have 51% black ownership they gain Level 2 status, 100% – Level 1.
For EMEs in certain industry sectors, the BBBEE accreditation process is similar to that of Qualifying Small Enterprises (QSEs) – which have annual revenue of R10 million to R50 million. QSEs need to submit various documents, including financial statements, to obtain a BBBEE certificate.The process is a bit more complex, but well worth it, as BBBEE accreditation opens up a world of benefits.
On a national level, BBBEE accreditation can have a positive impact on society as it supports governmental initiatives for tranformation. On a business level, it can have positive effects on brand awareness and marketing campaigns. It also provides key financial and relationship advantages. These include: being able to take part in tender processes – the higher the BBBEE ranking, the greater the chances of being awarded a tender; being able to conduct business with government (at all levels, including municipal); and being able to participate as a supplier in the chain of preferential procurement.
Businesses with BBBEE accreditation have a competitive edge as they are more likely to be sourced by other businesses looking to spend their BBBEE budget. This has the effect of encouraging other businesses to get certified.
So, as can be seen, for both business and societal reasons, obtaining BBBEE accreditation is very important in South Africa. For advice on the exact accreditation procedures needed for your business, it is advisable to speak to a BBBEE verification agency.