RSM South Africa

Amendments to the B-BBEE Codes of Good Practice

On 31 May 2019, the Department of Trade and Industry (DTI) published amendments to the Codes of Good Practice. The changes include:

  • Revised Code Series 000 General Principles
  • Revised Skills Development Code Series 300
  • Revised Enterprise and Supplier Development Code Series 400
  • Revised Interpretation and Definitions Schedule 1

The Amended Codes will be effective from 1 December 2019. This means that if your verification is performed before the 1 December 2019, the Current Codes will be applicable and if it is after 1 December 2019, the new changes will be applicable.

Revised Code Series 000, Statement 000: General Principles

  • There is clear clarification about Priority Element compliance, particularly on Skills development and Enterprise and Supplier Development (ESD), which now specifies the sub-minimum points for the three categories under ESD.
  • Exempted Micro Enterprises (EME’s) or Qualifying Small Enterprises (QSE’s) that are at least 51% or 100% Black Owned will only receive the enhanced recognition if measured using the flow through principle. The modified flow through principle can no longer be used to receive the benefit of the enhanced recognition provisions.
  • The Department of Trade and Industry (DTI) has also included a new section for the Eligibility of Joint Ventures (JV). This section gives guidance on how to calculate a consolidated BEE scorecard for Unincorporated JV’s.

Revised Code Series 300: General Principles for Measuring Skills Development

The amended Skills Development Generic scorecard is detailed below with the changes noted:

Indicator

Weighting points

Compliance Target

Changes

Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for Black People as a percentage of the Leviable amount.

6

3.5%

Points reduced from 8 to 6 and compliance target reduced from 6% to 3.5%.

Skills Development Expenditure  on Bursaries for Black Students at Higher Education Institutions

4

2.5%

New indicator relating to bursaries for tertiary education.

Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for Black employees with disabilities as a percentage of Leviable amount.

4

0.3%

No changes.

Number of Black people participating in Learnership, Apprenticeships and Internships as a percentage of total employees

6

5%

Previously there were 8 points available, 4 for employed learners and 4 for unemployed learners. There are now 6 points available with no distinction between employed and unemployed black people.

Bonus Points: number of Black People Absorbed by the Measured Entity and Industry at the end of the Learnership, Apprenticeship and Internship

5

100%

No change but clearly limited to Internships, Learnerships and Apprenticeships only.

  • The application of demographic targets will apply to Skills Development Expenditure on Bursaries for Black Students at Higher Education Institutions. Double counting of initiatives under Skills Development expenditure and bursaries is not permitted.
  • The cap on informal training and informal workplace skills development expenditure has increased from 15% to 25%.
  • The provisions regarding recognisable expenses for bursaries is extended to include ancillary costs for subsistence, catering, travel and accommodation without a limit.
  • The cap on ancillary costs such as accommodation, catering, traveling and employing a skills development facilitator, remains at 15% but the cap does not apply to Bursaries.
  • The inclusion of stipends under formal skills development expenditure is extended to include bursary students. Stipends can now be claimed for employees linked to learnerships, internships, apprenticeships and bursary programmes, whereas previously they could only be claimed for learnerships, internships and apprenticeships.

Revised Code Series 400: General Principles for Measuring Enterprise and Supplier Development

The amended Enterprise and Supplier Development Generic scorecard is detailed below with the changes noted:

Indicator

Weighting points

Compliance targets

Changes

 Prefential Procurement

B-BBEE Procurement Spend from all Empowering Suppliers based on the B-BBEE Procurement recognition levels as a percentage of Total Measured Procurement Spend (TMPS)

80%

No changes

B-BBEE Procurement Spend from all Empowering Suppliers that are QSE’s based on the applicable B-BBEE Procurement recognition levels as a percentage of TMPS.

3

15%

No changes, however certain qualifying Generic entities may be recognised here. See narrative below.

B-BBEE Procurement Spend from all Empowering Suppliers that are EME’s based on the applicable B-BBEE Procurement recognition levels as a percentage of TMPS.

4

15%

No changes, however certain qualifying Generic entities may be recognised here. See narrative below.

B-BBEE Procurement Spend from all Empowering Suppliers that are at least 51% Black Owned based on the applicable B-BBEE Procurement recognition levels as a percentage of TMPS.

11

50%

The points were increased from 9 to 11 and the compliance target has increased from 40% to 50%

B-BBEE Procurement Spend from all Empowering Suppliers that are at least 30% Black Women Owned based on the applicable B-BBEE Procurement recognition levels as a percentage of TMPS.

4

12%

No changes.

Bonus Points: B-BBEE Procurement spend from Empowering Designated Group suppliers that are at least 51% Black Owned.

2

2%

No changes. 

Supplier Development

Annual value of Supplier Development (SD)  contributions made by the Measured Entity as a percentage of the Target

10

2% of NPAT

No changes except for the extension of beneficiaries to include qualifying Generic Entities

Enterprise Development

Annual value of Enterprise Development (ED) contributions made by the Measured Entity as a percentage of the Target

5

1% of NPAT

No changes except for the extension of beneficiaries to include qualifying Generic Entities

Bonus point for the graduation of one or more ED beneficiary to the SD level.

1

 

No changes

Bonus point for creating one or more jobs directly as a result of ED and SD initiatives by the Measured Entity.

1

 

No changes

The multiplier of 1.2 for the first time suppliers has been removed and replaced by enhanced recognition of 1.2 times for purchasing from suppliers who are at least 51% Black Owned or 51% Black Woman Owned using the flow through principle. The modified flow through principle cannot be used.

Beneficiaries of ED and SD contributions are EME’s, QSE’s or Generic Entities that are at least 51% black owned or black woman owned whose qualification is achieved utilising the flow through principle. In the case of a Generic Entity they will only qualify as an ED or SD beneficiary, if they were an EME or QSE, at the time that they first received contributions from the Measured Entity. The Measured Entity will be allowed to recognise ED and SD contributions to these Generic Entities for 5 years from the first time that the Measured Entity assisted them.

A similar qualification applies to procurement from Generic entities who were EME’ or QSE’s when the Measured Entity first procured from them. For a period of 5 years from the date that the Measured Entity first procured from these Entities, they can claim the spend as if they were a QSE or an EME even if they have now become a Generic entity.  

The amendments also clarify that a SD beneficiary is part of the measured entity’s supply chain, whereas an ED beneficiary is not.

The Benefit Factor Matrix has been amended to allow 50% of Guarantees provided on behalf of an ED or SD beneficiary to be claimed instead of 3% as before.

Revised Schedule 1, Interpretation and Definitions

The following amendments have made to the definitions set out in schedule 1:

Absorption

The definition of absorption has changed. Absorption is now restricted to the securing of a long-term contract of employment for the Learner, Intern or Apprentice and no longer includes further education and training.

Long-term contract of employment

This is a new definition that has been added. A long-term contract of employment, means a legal agreement between an individual and an entity, that this individual would work for, until his or her mandatory date of retirement

Designated Group Supplier

This is a new definition that has been added. A Designated Group Supplier is a  a supplier that is at least 51% owned by black people defined under Black Designated Groups, ie unemployed black people not attending or waiting admission to attend an educational institution, black youth, black people with disabilities, black people living in rural areas, black military veterans. 

Edson Munetsi

B-BBEE Consultant, Johannesburg


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