The Benefits of having a B-BBEE Certificate
The Benefits of having a B-BBEE Certificate
Broad-Based Black Economic Empowerment (B-BBEE or BEE) aims to ensure that the South African economy is transformed so that there is meaningful participation of all citizens. This creates the capacity within this broader economic landscape at all levels, achieved through:
- Skills Development
- Employment Equity
- Socio-economic Development
- Preferential Procurement
- Enterprise Development
It also involves promoting the entry of black entrepreneurs into mainstream economic activities and sectors, along with the advancement of several operatives.
We’ve compiled this article on the benefits of having a B-BBEE Certificate for your business. Read more below.
Importance of BEE in any business
Many businesses fear B-BBEE jargon, but it is a simple government policy, involving the process whereby the government in South Africa is trying to ensure economic equality among different race groups.
B-BBEE is not compulsory, and businesses will not be forced to participate, but it is important to note that it is something that is highly recommended, because of the benefits that it brings to businesses.
Many businesses may feel lost because they think that the process involved to get verified is extensive and complex.
Even though it may seem like a long and tedious process, it can be made simple by using a trusted BEE verification agency such as DVS BEE, which has the expertise and resources to help businesses get verified and obtain their BEE scorecard.
Businesses who want to engage with a government body will need to be BEE compliant to apply for a contract tender.
Many private companies that engage in business with one another can reap the multitude of advantages of BEE compliance through preferential procurement. By being BEE compliant, businesses can harness a variety of prospective business opportunities.
Not only can a BEE certificate safeguard the existing business, but it can promote new business because a B-BBEE scorecard can open new business opportunities that are lucrative and sustainable.
BEE aims to achieve the following:
- To transform the economy of South Africa, allowing for black people to interact in a meaningful way. It also serves to bring about significant change to racial profiles of companies across all industries where owners, managers, and skilled professionals are concerned.
- To significantly increase the ownership and management of businesses in South Africa by black women, communities, workers, cooperatives, and numerous others, helping them gain access to more economic opportunities across industries.
- To promote investment which could lead to broad-based, meaningful participation in the South African economic landscape by black people.
- To help rural as well as local communities access a variety of economic opportunities that were previously not available to them.
Benefits of a B-BBEE Certificate
For South Africans
- An increase in the provision of value-added goods as well as services.
- More employable people because of extensive Skills Development.
- A decrease in crime with employment figures rising.
- An increase in the number of people productively employed.
- Entry into a global market in addition to increased foreign investment will have a positive effect on the South African economy overall.
For Businesses
- Employees will see the employer’s effort, boosting their morale and in turn, boosting productivity.
- The image of the business will be enhanced by a demonstration of leadership in the industry and perceived as on par with development initiatives.
- Clients will know that the business is dedicated to staying ahead of the competition in the industry.
- By being rated, the business will have a good overview of its performance where national requirements are concerned, how to plan, and how to change to increase business sustainability.
- Business owners will have a clear picture of the types of suppliers that are part of the business. A BEE rating can provide the business with the necessary leverage to negotiate better discounts and supplier analysis will help with procurement policy developments.
- When the focus falls on HR development, enterprise development as well as BEE, the business can demonstrate commitment towards social, educational, and economic development in the industry, sector, and community in which the business operates.
- When a business works to develop the skills of its employees, potential development and BEE Rating can enhance fair and progressive employment practices.
- Once the business is BEE rated, business owners can begin to understand the process involved with developing an effective BEE strategy to increase the annual BEE rating. This BEE strategy will inevitably form part of the business’ overall strategic plan.
- BEE can be used as a marketing tool. If a business has its B-BBEE certificate the business’ name will be listed on websites and BEE directories where other companies can see the business’ name when they search for BEE-compliant suppliers.
BEE Scorecard
The pillars of the BEE scorecard will hold a certain weight in their respective contribution towards B-BBEE compliance. Overall BEE compliance is calculated as follows:
- Ownership – 25%
- Management – 19%
- Skills Development – 20%
- Enterprise Development – 40%
- Socio-Economic Development – 5%
Changes were made to the B-BBEE codes in May 2019, with the Department of Trade and Industry (DTI) releasing a new BEE scorecard that covers updated versions of the following:
- Preferential Procurement
- Enterprise and Supplier Development
- Skills Development
- General Principles
- Interpretations and Definitions
According to the DTI, the policy surrounding Black Economic Empowerment (BEE) is not merely a moral initiative that will redress the wrongs of the past.
Instead, it should be considered a pragmatic growth strategy that aims to realize the overall economic potential, all the while bringing the black majority into the economic mainstream.
FAQ
Do small businesses require a B-BBEE certificate?
Small businesses who want to conduct business with the government and other corporates need a BEE affidavit or certificate.
Is a BEE certificate only done in South African and is it valid in other countries?
BEE is only done in South Africa and is therefore not valid in other countries.
Is there a difference in the levels if there is female ownership?
There will be a difference for businesses with an annual turnover of 50 million ZAR and more. This is because they are based on points scored. For smaller companies, it is not necessary as BEE ratings are based on race and not points.