Business Link

Delays in the accreditation of Black Economic Empowerment accreditation companies by government left many business owners and managers putting off the whole question of BEE until there was some certainty.

Confusion in the market-placed caused by lack of standardisation on measurements, and with government and municipal departments having different standards and preferences didn’t help. Standards are now in place, and the first accreditation companies have been registered – which means that businesses are going to have to dust off their Broad Based Black Economic
Empowerment Plans.

They will be encouraged by the new, left-leaning government. In March, Jacob
Zuma told the Confederation of Black Business Organisations that “the ANC remains firmly committed to Affirmative Action as a policy. At the heart of the ANC’s agenda is the total transformation of our country, into a truly non-racial and nonsexist society. Affirmative action is one of the key tools of achieving this objective. It is therefore unthinkable that we can abandon affirmative action as a policy while we have not achieved the objective of transforming our society completely”.

Policies such as black economic empowerment and affirmative action, according to Zuma, contributed to the growth of South Africa’s black middle class by 2,6 million in 2007, “and small business support has been streamlined and expanded. We want to see further growth in this sector”.

Government will promote Broad Based Black Economic Empowerment (BBBEE)
through its procurement policies, which means that any company wanting to do
business with government will have to be compliant. In terms of the legislation, black-owned companies have to undergo the same process as those with white owners or shareholders. This will continue to have a ripple effect as one of the seven pillars by which BBBEE is measured is the compliance of suppliers to the tendering company.

Therefore, anyone doing business with other businesses in South Africa can
expect to be asked regularly for their BBBEE certification. For businesses turning over less than R5-million a year, this is relatively easy as they are automatically Level 4 compliant. The proof can be in the form of a letter from the company’s auditors or a certificate from an accredited verification agency. The Services Seta has also decided to fund the certification of its members. There is no consensus over which letter holds the most authority.

Government has taken note of concerns about family ownership of businesses in the next group, companies with a turnover of between R5-million and R35-million. Here, companies only have to comply with four of the seven pillars and can elect to leave out the question of ownership. The Services Seta offers a R5 000 BBBEE Discretionary Grant to levy-paying companies with an annual turnover of above R5-million. Companies qualify for the grant – which should cover most of the costs of certification – if they are BBBEE Compliant and have a SETA membership certificate that was issued in the las six months.

However, consultants warn that companies which are close to the R35-million threshold may face real challenges once they enter the next tier. These companies are advised to start planning early for the transition. Planning and management are also necessary to ensure that companies stay compliant with the regulations and the various industry charters, says Chester Wright of the BEE Verification Agency.

Firms such as his have started adding value to their certification services by providing training and free software to allow companies to measure their own progress.

“We want to eradicate the mentality that BEE means you have to give your business away,” he says. With the support of the likes of the BEE Verification Agency, companies can align their businesses to the policies of government and continue to grow by grooming and retaining the managers of tomorrow, he says.