Ever wondered about the Government’s need to comply with B-BBEE legislation? The article below explains the basics.
The Codes of Good Practice (the Codes) in paragraph 3.1.1 of Statement 000, recognises all organs of state and public entities as measured entities, which means that they are required to
implement the B-BBEE Codes and be measured against such compliance.
The measurement of organs of state and public entities is carried in line with Statement 004 (also known as the specialised scorecard). The specialised scorecard is found under the amended
generic codes or specific sector code where applicable, and only requires organs of state and public entities to comply with the management control, skills development, enterprise and supplier development, and socio-economic development elements.
One can imagine that the level of failure of many organs of state and public entities, being as severe as it is, leaves little to no confidence in these entities’ ability to comply with the BEE requirements too. It appears from the BEE Commission’s own engagement with these entities that a lack of understanding exists when it comes to record-keeping and paperwork. That certainly is not a surprise to the average resident in South Africa.
The Commission, therefore, compiled a guide to assist such entities.
Application of the Specialised Scorecard for these entities is similar to that utilised by any other specialised entity. One can therefore not fathom how the Government’s entities 20 years later still fail to grasp the basics of record-keeping.
Statement 004 or Specialised Scorecard
Statement 004 classifies entities into three categories, that is exempted micro-enterprise (EME), qualifying small enterprise (QSE), and generic enterprise, based on the total annual revenue
(where applicable) or allocated budget or gross receipts or discretionary spending.
An EME (R10 million and less) qualifies for automatic level 4 B-BBEE Status. However, where it has 51% of black people as its beneficiaries, it will be enhanced to level 2 B-BBEE status. If it has 75% of black people as beneficiaries, the entity will be enhanced to level 1 B-BBEE Status. Specialised EMEs are only required to obtain a B-BBEE sworn affidavit for specialised EMEs.
A QSE (between R10 million and R50 Million) has to be subjected to a verification process and be measured by an accredited verification agency or professional (http://www.sanas.co.za) to obtain a B-BBEE certificate. But if it has 51% of black people as beneficiaries, it will automatically be enhanced to level 2 B-BBEE status, and where it has 75% of black people as beneficiaries, it will automatically receive level 1 B-BBEE status. Specialised QSEs with automatic levels 1 and 2 BBBEE status are only required to obtain a sworn affidavit for specialised QSEs.
A Generic Enterprise (R50 million and above) is required to be verified by an accredited verification agency or professional (http://www.sanas.co.za) to obtain a B-BBEE certificate.
Note that Ownership is not relevant to Government entities for obvious reasons.
As for the paperwork requirements of the remaining Scorecard Elements, these are all the same as for any other specialised entity. The level of attention to detail is extensive and one can only hope that these entities attempt to keep the required documentation. The Skills Development paperwork for thousands upon thousands of government employees in these entities must be a sight to behold; if proper records are kept…