NELSPRUIT – Preferential procurement plays an important part in obtaining a good Broad-based Black Economic Empowerment (BBBEE) score.
The new revised BBBEE codes were gazetted by the Department of Trade and Industry in October. The codes initially came into effect in 2007 and were meant to be valid until 2017. Changes to those codes were proposed last year before the final revisions were gazetted in October.
On October 30, Mr Louis McLaren from BEE 2 Business addressed the Kruger Lowveld Chamber of Business and Tourism (KLCBT) on the final codes to explain the implications to businesses. They have until October 11 next year at the latest to comply with the codes.
The main changes from the drafts include that the entity size thresholds have been adjusted. Companies with annual total revenue of up to R10 million are now considered exempt micro enterprises (EME). Large entities (LE) have also increased from earning R35 million to R50 million with qualifying small entities (QSE) being anything in between.This is relevant as long as they do not fall under one of the sector codes.
McLaren pointed out that an empowering supplier is a new concept. To qualify, an LE must comply with three and a QSE with one of four principles centred on procuring goods from local producers and retaining black jobs. This comes in with enterprise and supplier development where sub-minimum levels must be met in three different categories.
One of these is preferential procurement, where procuring only five per cent of one’s goods from an empowering QSE scores one a point, as opposed to scoring no points for buying from a non-empowering QSE. Another change is that there are now only five elements to be measured, instead of the proposed seven.
These are enterprise and supplier development (40 points), ownership (25 points), skills development (20 points), and management control (15 points). The first three are priority elements. Within these, a QSE and LE must meet 40 per cent of the subminimum requirements of they will frop a level.
A QSE must meet these in the ownership criteria and one other priority area, while an LE must score 40 per cent in all three priority areas. An additional five points are available for socio-economic development. In total, there are 18 extra points to be scored.
According to McLaren, these are important because scoring 100 points makes one 135% compliant and a level one contributor on the scorecard. The extra points are also helpful in moving from a level four contributor at 100% with 80 points to a a higher level contributor.
