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


Family_Strong.jpgBlack economic empowerment is a term all business owners are familiar with, but not many of us really understand what it is. Let's shed some light on the subject.

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 R35 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 R5 and R35 million per annum
  • Exempted Micro Enterprises (EMEs) – enterprises with an annual revenue of below R5 million per annum
  • The dti provides all EMEs and start-up enterprises with an automatic B-BBEE status of level four for free – 65 to 75 B-BBEE points. See the template on the SME Toolkit.

B-BBEE for SMMEs refers to any form of business support that larger enterprises provide to start-up, black owned and black women-owned enterprises to help them grow. As per the B-BBEE Codes of Good Practice, such supports are encouraged through Enterprise Development (ED) and Preferential Procurement (PP) element.

Enterprise Development in a nutshell

  • ED means any type of support, either monetary or non-monetary, that a big corporate givea to SMMEs so as to contribute to their development, sustainability, financial and operational independence. Examples of monetary ED initiatives include access to finance: loans, equity, seed capital, developmental capital, etc.
  • Examples of non-monetary ED initiatives include training and mentoring, preferential credit terms, the provision of guarantees, capacity-building, procurement opportunities and so on.

Defining Preferential Procurement

Preferential procurement is another important part of developing SMMEs. Businesses are encouraged to buy the majority of their goods and services from SMME suppliers. By doing so, these enterprises would earn B-BBEE points. 

SMMEs seeking enterprise development, preferential procurement opportunities and partnerships arrangement can visit the dti’s B-BBEE IT Portal for free registration.

The dti has also established various B-BBEE development finance institutions to make funding available for the SMME sector.

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

Copyright © 2014 the Department of Trade and Industry.  All rights reserved.

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