The amended BBBEE Codes are still a major talking point. Despite a short six month delay, implementing the Amended Codes needs to begin as soon as possible, says Keith Levenstein, CEO of BEE advisory firm, EconoBEE.
Some years ago when the ICT codes were issued, many clients were concerned about how the new ICT codes would impact them. We said that if they prepared properly they would gain more points, but if they didn’t prepare properly they would dramatically loose points.
Now the Amended Codes are seen to be much more difficult. No doubt some of the targets have increased. However, even with targets in elements such as Skills Development doubling, it is still quite plausible to maintain a high score.
In fact, our view is that if you are properly prepared you will get more points on the Amended Codes compared to the 2007 Codes of Good Practice. Why?
We have developed a solution to calculate and strategise the scorecard for the Amended Codes. Through this calculation we have found an interesting trend. Clients who previously had done well on the old codes will do better from a points perspective on the Amended Codes.
Firstly, the Amended Codes allocate 118 points compared to 107. Most of the points are on Skills Development, Preferential Procurement and Enterprise Development. Management and Employment Equity are reduced. However, the sub-minimum of 40% has been removed, meaning that some clients will actually earn more points on Employment Equity indicators.
Secondly, given enough time to adequately plan and implement activities consistent with the Amended Codes, the score almost certainly is going to result in a successful level.
An example is Skills Development where the target has increased to 6% from 3%. However, if you elect to still spend 3% you will only lose 4 points.
Businesses can gain 4 points through learnerships with unemployed people and gain another 5 for either employing those people or helping them find jobs. All in all, more points will be gained.
Elements such as Procurement (supplier and enterprise development) will be the most challenging. The good news for most large companies is that they have already worked hard on trying to find suitable suppliers.
It will most likely be the biggest challenge to find adequate black-owned suppliers. However, many black-owned suppliers will be level 2 or 1. The implication is that the spend is inflated by either 125% or 135%.
Finally, start preparing now for the Amended Codes. At this moment, there is time to implement all the activities needed to maintain your BEE points.
