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Broad-Based Black Economic Empowerment (B-BBEE) explained


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What is B-BBEE?

Broad-Based Black Economic Empowerment (B-BBEE) is a socio-economic process that directly contributes to the economic transformation of South Africa, by increasing the number of black people that manage, own and control the country’s economy, and diminishing income inequalities.

The dti is the custodian of B-BBEE in terms of the B-BBEE Act No.53 of 2003.

B-BBEE for SMMEs

In terms of the B-BBEE Codes of Good Practice, SMMEs are classified as enterprises with a turnover of R50 million and below, per annum. The Codes define two types in the SMME category in terms of the Codes, namely: 

  • Qualifying Small Enterprises (QSEs) – enterprises with an annual revenue of between R10 and R50 million
  • Exempted Micro Enterprises (EMEs) – enterprises with an annual revenue of below R10 million
  • The dti provides all EMEs and start-up (operational for less than 1 year) enterprises with an automatic B-BBEE status of level 4. If the EME is 100% black owned, it receives a Level 1 BEE status. If it is 51% black-owned, it receives a level 2. 

EMEs are required to produce an affidavit declaring that they qualify as an Exempted Micro Enterprise. Customers who procure from an EME are then able to claim BEE points, so this can provide a competitive advantages to small businesses with a BEE certificate.

BEE Certificates and Verification

BEE certificates can be issued by any Verification Agency that has been approved by the South Africa National Accreditation System (SANAS).

The Certificate can only be issued once a full verification has been performed and the documentation presented by your company has been verified. On your certificate you should find the following information;

  • Company name and number
  • Type of Certificate (Group/Entity/Division)
  • BEE Category (QSE/Generic)
  • BEE Level (1-8)
  • Procurement Recognition %
  • Black Ownership %
  • Black Women Ownership %
  • Value Adding Supplier (Yes/No)
  • Certificate Issue Date
  • Certificate Expiry Date

You do not need to provide any additional information to your customers. Your BEE Certificate is regarded as sufficient as supporting evidence of your B-BBEE credentials.

Why comply with BEE Legislation?

BEE compliance is voluntary, so is it really necessary to comply. Many experts would concur that it is. Some of the advantages are:

  • The private sector is incentivised to buy from you, so compliance creates a new level of access to the corporate markets 
  • If you want to do business with any government body or part of the public sector you will have to be 100% B-BBEE compliant (this includes applying for a tender, buying a state-owned asset or building a public-private partnership)

It will also open your business up to more opportunities with the added benefit of gaining business over your non-compliant competitors.

For more information on B-BBEE please visit the dti website.

Copyright © 2016 the Department of Trade and Industry.  All rights reserved.

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Seelan Moodliar  |  June 01, 2016