One of the most significant changes in the Codes of Good Practice for Broad-Based Black Economic Empowerment (“the New Codes”) that came into effect on 1 May 2015 was the requirement to be an Empowering Supplier.  For purposes of B-BBEE, an Empowering Supplier is a B-BBEE compliant Entity which complies with at least three criteria if it is a large Entity, or one criterion if it is a Qualifying Small Enterprise (“QSE”), as detailed in Statement 400 of the New Codes. 

In terms of the requirements of an Empowering Supplier, numerous companies found it challenging to meet the target of 25% transformation of raw materials or beneficiation including local manufacturing, particularly so, if these companies imported goods or products from offshore.  The matter was further compounded by the requirement for 25% of Cost of Sales, excluding labour cost and depreciation, to be procured from local producers or suppliers. 

If the Measured Entity failed to meet the requirements for an Empowering Supplier, then its B-BBEE Scorecard would not be taken into account in determining its customers’ Total Procurement Spend.  Without being classified as an Empowering Supplier, the Measured Entity’s compliance with B-BBEE and its B-BBEE Scorecard becomes meaningless.

The Department of Trade and Industry (“DTI”) has recognised the inherent difficulties in the requirements for an Empowering Supplier. As such, the DTI has issued Notice 708 of 2016 on 28 October 2016 stating that any Measured Entity measured on or after 1 May 2016 will automatically be recognised as an Empowering Supplier until further notice. 

As a consequence, companies who import goods or products from offshore can now prepare in earnest to obtain a B-BBEE rating, and that the B-BBEE Scorecard will be recognised by its customers for purposes of Total Measured Procurement Spend.