There is more to the Broad-Based Black Economic Empowerment Act than just ownership and management concerns. The inspiration behind the economic empowerment of previously disadvantaged populations in South Africa was the need to do just that: empowerment. Empowerment is about more than just giving people titles and higher salaries, it is also about improving people’s skills and overall development for the sake of the country’ future. That is why the following five elements form the answer to the question of what BEE compliance is.
This element is the part of the B-BBEE scorecard which measures black ownership of businesses. The criteria in the Broad-Based Black Economic Empowerment Act’s Codes on ownership state that businesses must be 51% black owned to be compliant with this element.
In the beginning many businesses resolved their need to meet the above criteria by placing 51% of their ownership in the hands of black individuals, but without allowing these individuals to participate in management. That is why this element of the B-BBEE scorecard can be understood as a means of preventing this kind of practice, allowing the development and empowerment of black managers through valuable experience.
3. Skills Development
Skills development under the Broad-Based Black Economic Empowerment Act involves implementing training through learnerships, apprenticeships, internships and SETA-accredited training programmes. In order to gain points in this BEE scorecard element businesses need to empower individuals by investing in such training and skills development. If the expenditure on this meets with the expected requirements then they can earn points on their BEE scorecard.
4. Enterprise and Supplier Development
Another important factor that goes beyond management and training opportunities is the necessity of supporting black owned businesses. Giving 51% control of a business to black individuals would be a moot point if nobody did traded with these businesses. That is why this element has been added to the B-BBEE scorecard, explained as the measurement of the amounts spent on procurement from empowering suppliers as well as contributions towards Supplier Development and Enterprise Development to empowering entities.
5. Socio-Economic Development
The fifth element deals with measuring contributions made towards socio-economic development. Many previously disadvantaged communities are living in negative or even dire socio-economic conditions, rife with poverty, unemployment and crime. By contributing towards education initiatives, community improvement programmes and other such initiatives businesses help to empower communities that are still suffering under their prevailing conditions.
Many businesspeople over the years have asked: Why is B-BBEE important? The fact of the matter is that it is not about interfering with businesses and their structures, but the importance instead lies in working towards improving the outlook, potential and quality of life of disadvantaged populations. The best way to make sure that you are compliant and reaping the rewards for your part is to enlist the services of a legal compliance professional. Contact SERR Synergy to see how you can become compliant!