Supplier Development and Enterprise Development in the Agri-BEE Scorecard

The article below summarizes the measurement aspect of the SD and ED element for the Agricultural Sector.

The measurement for these sub-elements is based on how an organisation supports Start-up Enterprises, EMEs or QSEs in becoming sustainable.

Points are optimised through contributing 3,5% of NPAT by providing grants, loans or other resources such as facilities and/or equipment.

Preferential Procurement targets may be phased in over a four-year period, provided that an organisation is prepared to contribute 3% instead of 2% towards Supplier Development for years one through to four.

The list below outlines basic Supplier Development and Enterprise Development contributions:

Investments in Beneficiary entities
Guarantees given or securities provided on behalf of Beneficiaries
Facilities made available to Beneficiary entities
Grant contributions to a Beneficiary
Direct costs incurred through assisting and hastening the development of a Beneficiary

Overhead costs directly attributable to contributions
Preferential credit terms granted to a Beneficiary
Preferential terms issued in respect of supplying goods and services to a Beneficiary
Contributions made to settle service costs relating to operational or financial capacity or efficiency levels of a Beneficiary

Discounts allowed for the acquisition and maintenance costs associated with a grant to a Beneficiary for franchise, license, agency, distribution or other similar business rights
The creation or development of capacity and expertise for a Beneficiary required to manufacture or produce goods or services previously not manufactured, produced or provided in South Africa. However, this must have been accounted for in Government’s economic growth and local Supplier Development policies and initiatives.

Facilitating access to credit for a Beneficiary without access to similar credit facilities through traditional means, owing to a lack of credit history or collateral
Providing training or mentoring by suitably qualified individuals to Beneficiary entities, which will assist the Beneficiary entities to increase their operational or financial capacity
The maintenance of an Enterprise Development and Supplier Development unit which focuses exclusively on the support of a Beneficiary or candidate Beneficiary
New projects promoting beneficiation for the benefit of an Enterprise Development or Supplier Development Beneficiary

The provision of preferential credit facilities to a Beneficiary may constitute a contribution.

Examples include:

Provision of finance to a Beneficiary at lower than commercial rates of interest
Relaxed security requirements or absence of security requirements for a Beneficiary unable to provide security for loans
Settlement of Beneficiary accounts over a shorter period. This addresses standard payment terms and provided that the shorter period is no longer than 15 days
The training and mentoring of Beneficiary communities. Such contributions are measured by quantifying the cost of time, excluding travel, spent in carrying out such initiatives.

Author Craig Tonkin

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