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Thought Leadership
TO BBBEE OR NOT TO BBBEE
BROAD-BASED BEE
OVERVIEW
Introduction
Empowerdex (Pty) Ltd was established in 2001, by Vuyo Jack and Chia Chao Wu.
Our Mission is to provide support to both the public and private sectors to accelerate
the implementation of broad-based black economic empowerment in South
Africa, thereby helping to bridge the gap between the country's first and second
economies.
Empowerdex was a pioneer of the rating methodology, having worked closely with the
Department of Trade and Industry in developing the framework for BEE and involved in
the drafting of the Codes of Good practice.
Based in Johannesburg, with offices in JHB, Pretoria, Cape Town, Durban, and reach
in all provinces through partnerships with external analysts.
Founding member of the Association of BEE Verification Agencies, and accredited by
the South Africa National Accreditation System.
Experience
•Our research division has worked in the development of sector
charters, and with particular industries on the assessment of BEE in
those industries, including:
•Produce the Top Empowerment Companies with the Financial
Mail annually since 2003.
•Were involved in the drafting of the Codes, Tourism Charter ,
AgriBEE, as well as the Liquor Charter, which is not finalised as
yet.
•Completed studies for the Department of Energy on the progress
of the petroleum industry in implementing BEE, as well as a similar
study for the CASA for the state of BEE in the Casino industry.
Some Rated Clients
Standard Bank SA Hollard Ltd
African Oxygen Ltd (Afrox) Nampak Ltd
Gijima AST Bidvest Ltd
Massmart Ltd Barloworld Ltd
Oceana Ltd GlenRand MIB
Mobile Telephone Network (MTN) Foschini
Adcorp Ltd Omnia Ltd
Aspen Pharmaceuticals African Bank
Sappi Ltd Alexander Forbes
Liberty Holdings Ltd
Multinationals rated by Empowerdex
Toyota Unilever
Siemens Volvo
DHL Accenture Chevron SA Adidas
Professional Firms rated by Empowerdex
PriceWaterHouse Coopers JP Morgan
Ernst and Young Deloitte
Bowman Gilfillan KPMG
Werkmens Deneys Reitz
Webber Wentzel RMB Asset Man
Cliffe Dekker Hofmeyr Eversheds
Other Rated clients:
South African Airways Astral Foods
Tsogo Sun ACSA
Shanduka Nashua Mobile
Mineworkers Investment Comp. Primedia Outdoor
Rhodes Food Group Landbank
Group 4 Securicor Mweb
Fidelity Security Services McCarthy
Butterworths Publishers Bateleur
Protea Hotels Southern Sun
Eskom Holdings Limited Mweb
Objectives of BEE
The Poverty Barrier
Employment
Equity/Job creation
Corporate
Social Investment
The Skills Barrier
Skills
Development &
Employment
Equity
The Business Barrier
Affirmative
Procurement
Enterprise
Development
The Opportunity Barrier
Ownership
And Management
Equitable Economic Opportunities
Black unemployed
& rural poor
Black workers,
professionals,
graduates, school-
leavers
Black
entrepreneurs
Emerging black
middle class &
investors
Government
Mining
Banks
Insurers
Retail
Tourism
Telecoms
Suppliers
Suppliers
Supplier
Suppliers Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Suppliers
Business Impact of BEE
INTENTION OF BEE
• Increase the level of participation by black people in mainstream economy
• Increase the real market in the SA economy
• Increase income through resultant economic growth
Second Economy
BE
E
Up
liftme
nt
Second Economy
Mainstream Economy
Mainstream Economy
More economic participants
Higher Economic Growth
Generic Scorecard BEE ELEMENTS WEIGHTINGS CODE
REFERENCE
OWNERSHIP
20 POINTS CODE 100
MANAGEMENT
CONTROL
10 POINTS CODE 200
EMPLOYMENT
EQUITY
15 POINTS CODE 300
SKILLS
DEVELOPMENT
15 POINTS CODE 400
PREFERENTIAL
PROCUREMENT
20 POINTS CODE 500
ENTERPRISE
DEVELOPMENT
15 POINTS CODE 600
SOCIO ECONOMIC
DEVELOPMENT
5 POINTS CODE 700
BEE Recognition Levels BEE Status
Qualification
BEE procurement
recognition level
Level One Contributor
≥100 points on the Generic
Scorecard
135%
Level Two Contributor
≥85 but <100 points on the
Generic Scorecard
125%
Level Three Contributor
≥75 but <85 on the Generic
Scorecard
110%
Level Four Contributor
≥65 but <75 on the Generic
Scorecard
100%
Level Five Contributor
≥55 but <65 on the Generic
Scorecard
80%
Level Six Contributor
≥45 but <55 on the Generic
Scorecard
60%
Level Seven Contributor
≥40 but <45 on the Generic
Scorecard
50%
Level Eight Contributor
≥30 but <40 on the Generic
Scorecard
10%
Non Compliant Contributor
<30 on the Generic Scorecard
0%
Ownership
Ownership indicator Weighting
points
Compliance
Target
Exercisable Voting Rights in the Enterprise in the hands
of black people 3 25%+1 vote
Exercisable Voting Rights in the Enterprise in the hands
of black women 2 10%
Economic Interest of black people in the Enterprise 4 25%
Economic Interest of black women in the Enterprise 2 10%
Economic Interest of the following black natural people
in the Enterprise:
black designated groups;
black Participants in Employee Ownership Schemes;
black beneficiaries of Broad-Based Ownership
Schemes; or
black Participants in Co-operatives
1 2.5%
Ownership fulfilment 1 Dependent on
below
Net value 7 10 year targets
on Formula A
Involvement in the ownership of the Enterprise of black
new entrants;
2 10%
Involvement in the ownership of the Enterprise of black
Participants in:
black Participants in Employee Ownership
Schemes;
black beneficiaries of Broad-Based Ownership
Schemes; or
black participants in Cooperatives
1 10%
Scorecard measures the ability of black shareholders to exercise and enforce their ownership rights to prevent exploitation
Measures Voting Rights, Economic Interest
And Net Equity Value
Specific Target on Black Women and
Designated Groups
Funding to be repaid over ten years
Ownership - QSE
Ownership Indicator Weighting
points
Compliance target
Voting Rights:
•Exercisable Voting Rights in the Enterprise in the hands of Black people 6 25%+1 vote
Economic Interest:
•Economic Interest in the Enterprise to which Black people are entitled 9 25%
Realisation points:
•Ownership fulfilment points 1 Yes/No
•Net equity points 9 25%
Bonus points:
•Involvement of black women 2 10%
•Involvement in the ownership of the business by:
•Black participants in Employee Ownership Schemes
•Black participants of Broad-Based ownership schemes
•Black participants in co-ops
1 10%
Management
Voting Rights in the hands of black-people using the Adjusted Recognition
Bonus point for black independent directors
Management - QSE
Management Control Indicator Weighting
points
Compliance target
•Black representation at top manager level 25 50.1% of top manager
representation
•BONUS: Black women representation as top managers 2 25%
Employment Equity
40%
subminimum
applied
Adjustment for
Gender
Employment Equity - QSE
Employment Equity Indicator Weighting
points
Compliance target
•Black employees in management, as a percentage of all
management, adjusted for gender
15 40%
•Black employees, as a percentage of all employees, adjusted for
gender
10 60%
•BONUS: Meeting or exceeding the EAP (economically active population)
in each indicator above (unadjusted)
2
CONCLUSION
This level can be maintained , especially if the work on procurement
and skills development is maintained.
2008 2009
Total Points 55.17 71.32
Level contribution 5 4
Skills Development
Expenditure on
training of black
people
Black people
participating
Accredited
learning
programmes
CONCLUSION
This level can be maintained , especially if the work on procurement
and skills development is maintained.
2008 2009
Total Points 55.17 71.32
Level contribution 5 4
Skills Development - QSE
Skills Development Indicator Weighting
points
Compliance target
•Adjusted Skills Development spend on learning programmes for
black employees, as a percentage of the leviable amount
25 2%
CONCLUSION
This level can be maintained , especially if the work on procurement
and skills development is maintained.
2008 2009
Total Points 55.17 71.32
Level contribution 5 4
Procurement
Criteria
Weighting
points
Compliance targets
Years 0 -
5
Years 6 -
10
B-BBEE Procurement Spend
from all Suppliers
12 50% 70%
B-BBEE Procurement Spend
from Qualifying Small
Enterprises or Exempted Micro-
Enterprises
3 10% 15%
B-BBEE Procurement Spend
from any of the following
Suppliers:
Suppliers that are 50% black
owned
Suppliers that are 30% black
women owned
5 15% 20%
CONCLUSION
This level can be maintained , especially if the work on procurement
and skills development is maintained.
2008 2009
Total Points 55.17 71.32
Level contribution 5 4
Procurement - QSE
Preferential Procurement Indicator Weighting
points
Compliance target
•BEE procurement spend from all suppliers, based on BEE
recognition levels, as a percentage of total measured spend
25 40%
CONCLUSION
This level can be maintained , especially if the work on procurement
and skills development is maintained.
2008 2009
Total Points 55.17 71.32
Level contribution 5 4
Enterprise Development
Criteria
Weighting
Points
Compliance
Target
Average annual value of all
Qualifying Contributions made by
the Measured Entity as a
percentage of the target.
15 3% of NPAT
CONCLUSION
This level can be maintained , especially if the work on procurement
and skills development is maintained.
2008 2009
Total Points 55.17 71.32
Level contribution 5 4
Enterprise Development
- QSE
Criteria
Weighting
Points
Compliance
Target
Average annual value of all
Qualifying Contributions made by
the Measured Entity as a
percentage of the target.
25 2% of NPAT
CONCLUSION
This level can be maintained , especially if the work on procurement
and skills development is maintained.
2008 2009
Total Points 55.17 71.32
Level contribution 5 4
Socio-economic
Development
Criteria
Weighting
Points
Compliance Target
Average annual value of all Socio-
Economic Development
Contributions and Qualifying
Socio-Economic Development
Contributions made by the
Measured Entity as a percentage
of the target.
5 %
1% of NPAT
CONCLUSION
This level can be maintained , especially if the work on procurement
and skills development is maintained.
2008 2009
Total Points 55.17 71.32
Level contribution 5 4
Socio-economic
Development - QSE
Criteria
Weighting
Points
Compliance Target
Average annual value of all Socio-
Economic Development
Contributions and Qualifying
Socio-Economic Development
Contributions made by the
Measured Entity as a percentage
of the target.
25
1% of NPAT
A Practical Application
THANK YOU
Contact Person : Duncan de Groot : Regional Executive (W. Cape) E-Mail : [email protected] Cell : 082 410 6081 Tel : 021 419 5130 Fax : 021 419 5131 Physical Address: 14th Floor, Metropolitan Life Centre 7 Coen Steytler Avenue Cape Town
EmpowerDEX Details
Contact Person : Chalwyn Vorster : Managing Director E-Mail : [email protected] Cell : 082 502 7111 Fax : 086 522 0019
Transforming Minds & Futures
Details