Prepare, BBBEE is here to stay
One of the first questions I am generally asked during consultations is: “When is broad-based black economic empowerment set to end?” To this I can only answer, “BBBEE is just getting started”.
BEE and BBBEE legislation has been around since before 2003. However, the formalised measurement through industries only became a reality with the incorporation of the SANAS accredited verification agencies in 2010. In essence, BBBEE has only been truly active since then.
Although the current proposed amendments to the codes of good practice are still under review, businesses should sincerely start to review their risk and reward strategies regarding BBBEE.
10 key points to consider when you review your BBBEE strategy
1. If you have not already done so, investigate your organisation’s value to potential BEE shareholders. BBBEE provides an excellent platform for strategic mergers and acquisitions.
2. The current BBBEE codes indirectly provide many incentives for transformation. Identify what incentives are available to your business and how they can provide you a competitive edge.
3. BBBEE is measured retrospectively on your entities most recent financial statements. What is not implemented and measured within that measurement period does not count.
4. ‘The problem with BBBEE is not what we know, it’s what we know for sure that just isn’t so.’ Seek expert advice. Interpreting BBBEE incorrectly can have disastrous consequences.
5. Scrutinise your BBBEE strategy for elements of fronting. Ignorance is not a defence in terms of implementing BBBEE and fronting is a criminal offence.
6. Understand the relationship between the various BBBEE measurement elements. There are many relationships and dependencies that need to be accommodated.
7. Ensure your entity has short-, medium- and long-term BBBEE strategies that align with your business’ growth strategy.
8. Understand your customers’ preferential procurement requirements from your business being mindful that your BBBEE recognition is valid for a 12-month period.
9. Ensure related legislative compliances are in order.
10. Make sure your BBBEE score is predictable. Achieving a lower (or non-compliant) score can result in a customer relations disaster.
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Author: Jason Stewart is the managing director of BEE Prepared Consulting & Advisory which advises clients on all aspects of Broad-Based Black Economic Empowerment. BEE Prepared Consulting & Advisory is a member of ABVA. |
