Frequently Asked Questions
BEE (Black Economic Empowerment) or Broad-Based Black Economic Empowerment (B-BBEE) as it is technically known, is an initiative by the South African government to address historical imbalances of the country by facilitating the participation of black people in the mainstream economy.
Black people are referred to as African, Coloured, Indian, and Chinese persons who are South African citizens by birth or by descent, or who were naturalised prior to the commencement of the interim constitution in 1993, or those who would have been able to acquire citizenship by naturalization prior to 27 April 1994 had it not been for the presence of the Apartheid policy.
BBBEE is governed by the Broad-Based Black Economic Empowerment (BBBEE) Act. The BBBEE Codes of Good Practice initially gazetted in February 2007. The following subsequent Amended Codes of Good Practices were gazetted:
- B-BBEE – Amended CoGP – Statement 000 – Gen Principles & the Generic Scorecard – 31 May 2019
- B-BBEE – Amended CoGP – Statement 300 – The General Principles for Measuring Skills Development – 31 May 2019
- B-BBEE – Amended CoGP – Statement 400 – Gen Principles of Measuring Enterprise & Supplier Development – 31 May 2019
- B-BBEE – Amended CoGP – Schedule 1 – Interpretations & Definitions – 31 May 2019
- B-BBEE – Amended CoGP – Statement 000 – Gen Principles & the Generic Scorecard – 11 October 2013
BEE contribution levels are expressed on a scorecard, with procurement recognition percentages corresponding to points:
- Level 1: 100 or above points – 135% procurement recognition
- Level 2: 85 to 99.99 points – 125% procurement recognition
- Level 3: 75 to 84.99 points – 110% procurement recognition
- Level 4: 65 to 74.99 points – 100% procurement recognition (Compliant)
- Level 5: 55 to 64.99 points – 80% procurement recognition
- Level 6: 45 to 54.99 points – 60% procurement recognition
- Level 7: 40 to 44.99 points – 50% procurement recognition
- Level 8: 30 to 39.99 points – 10% procurement recognition
- Non-compliant: Less than 30 points – 0% procurement recognition
On 6 January 2004, the South African government passed into law the Broad-Based Black Economic Empowerment Act, No. 53, 2003. The final B-BBEE Codes of Good Practice became operational from the publication in the Government Gazette No. 29617, on 9 February 2007.
Although there are no direct financial penalties for non-compliance, businesses that are BEE compliant will have an advantage in procurement opportunities under the Preferential Procurement element provisions.
Black shareholding contributes up to 23% to the Generic Scorecard, but there is no legal obligation to have black shareholders. The Generic Scorecard consists of 5 elements, with Ownership being just one of them.
For a Qualifying Small Enterprise (QSE), black ownership contributes up to 25%, and a QSE with over 51% black ownership is exempt from doing a full BEE scorecard and only measured on Ownership.
The B-BBEE scorecard has five elements, and Ownership is only one of them. Since Ownership carries a maximum weighting of 23% for Generic Scorecards and 25% for QSEs, it is possible to achieve a good rating without having black shareholders.
An EME is a business with an annual turnover of R10 million or less, or a business less than 1 year old with a turnover of no more than R50 million. Specific sectors, however, have different turnover requirements:
- General Sectors (Agriculture, Forestry, Financial)
- Construction Sector
- I.T.C. Sector
- Property Sector
- Mining and Minerals Industry Charter Sector
- Tourism Sector
- Transport Sector
Only businesses classified as ‘Exempted Micro Enterprises’ (annual turnover of R10 million or less) are automatically recognized as Level Four B-BBEE contributors. Start-up enterprises are also exempt in their first year of formation.
Businesses tendering for contracts above certain thresholds will need to submit a scorecard, with thresholds differing based on black ownership and turnover.
Qualifying Small Enterprises (QSEs) have a turnover between R10 million and R50 million. A Generic enterprise has a turnover of more than R50 million.
QSEs can elect to be rated on any four of the seven B-BBEE elements, while Generic entities must include all seven elements in their scorecard.
SANAS (South African National Accreditation System) is the only national body responsible for accreditations concerning conformity assessments in South Africa, including B-BBEE verification agencies.
The Association of B-BBEE Professionals (ABP) is an independent national membership organization established to lead the B-BBEE verification industry and support the transformation of the South African economy.
A valid BEE certificate adds credibility to your business, enhances your procurement opportunities, and assists clients in improving their own BEE score.
BEE certificates expire one year after issuance, as they are based on a 12-month measurement period (the financial year). Renewing certificates ensures the validity of compliance points.
Yes, EMEs and QSEs can obtain a scorecard based on turnover and black ownership criteria. Depending on ownership percentages, EMEs can qualify for Level 1, Level 2, or Level 4 scores.
The timeline depends on documentation preparation and the complexity of the business. First-time verifications typically take no less than 4 months.
The initial verification may involve management, but once systems are in place, the process becomes easier and can be delegated.
The cost of verification is based on the size of the company, number of employees, locations, suppliers, and sector codes. Gestalt offers a range of compliance packages.
Yes, you can pay in advance for verification, and there are monthly payment options toward future verifications.
Contact Gestalt, and we will guide you through the process from strategy to certificate.
Gestalt will train your staff to ensure they are up to speed with the process and requirements.
Sector-specific codes may require a valid sector code verification certificate. Gestalt assists with both draft and gazetted sector codes.
Gestalt focuses on service excellence and offers transparency throughout the verification process, ensuring clients understand their scores.
If you’re unhappy with your scorecard, contact Gestalt to clarify any misunderstandings. There are also formal appeal and complaint procedures in place.
SANAS accreditation ensures high credibility and consistency in verification processes. Certificates issued by SANAS accredited agencies are accepted by government and business alike.
The Preferential Procurement Regulations (promulgated on 20 January 2017) require valid BEE certificates for procurement and tenders by government and state-owned enterprises.
The revised codes came into effect on 31 May 2019. No verification agency is allowed to issue a BEE certificate later than 30 April 2015 on the old codes.
- EME – R10 Million annual turnover or less
- QSE – R10 Million to R50 Million annual turnover
- Generic – More than R50 Million annual turnover
Each company has its own policy on B-BBEE compliance, so it’s best to check with your client.
The revised codes emphasize black ownership and skills development. Without black ownership, a company’s rating may be limited to a level 7 or 8, or even non-compliant depending on the circumstances.
Yes, as long as the agency does not consult for you. Gestalt provides various products to help you navigate the revised codes successfully.
Please contact Gestalt to arrange for a consultation.