Black Economic Empowerment Codes of Good Practice
11 July 2006
The Minister of Trade and Industry, Mr Mandisi Mpahlwa, gave an update on
the finalisation of Broad-Based Black Economic Empowerment in Johannesburg
today. This followed a meeting between himself and members of the private
sector. The Minister also elaborated on the government process for submitting
the Codes of Good Practice to Cabinet for approval, and gazetting phase two of
the Codes. The Codes provide guidelines for the implementation of Broad-Based
Black Economic Empowerment.
The second phase of the Codes of Good Practice on Broad-Based Black Economic
Empowerment was released for public comment in December 2005, and the deadline
for comment was 31 March 2006. The Department received almost 180 submissions
from various sectors, including big business, black business, government, and
state-owned enterprises.
Public comment revealed the need for research on certain elements of the
Codes of Good Practice for Broad-Based Black Economic Empowerment to get a
better understanding of the dynamics that the economy faces. As a result, the
dti has embarked on extensive research on issues of concern. It also conducted
further consultations with various stakeholders and practitioners, which led to
the refining of the Generic and QSE (Qualifying Small Enterprises) scorecards.
However, the key principles embedded in the Codes of Good Practice for
broad-Based Black Economic Empowerment have remained unchanged.
The Minister added that the complexities of the current Codes of Good
Practice make it imperative for government to release two further documents,
namely, the Practitioners Manual and the Summary document, both written in
simple language that is easy to read and understand.
He also announced that the Department would reduce the number of indicators
on the scorecard to reduce the time enterprises spend on trying to ensure
compliance and make compliance easier.
Small and Micro-Enterprises
Government is also committed to making the Codes of Good Practice less
difficult for small and medium businesses to comply with by creating a special
dispensation for Black Economic Empowerment (BEE) compliance in these
categories. The dti is currently revisiting thresholds and categories that
would define qualifying small enterprises (QSE). The thresholds used to
determine the size of companies that can qualify for special dispensation were
originally based on outdated Small Business Act thresholds that will result in
the exclusion of a majority of the intended beneficiary companies. As a result
of intensive consultations with stakeholders, it appears that there will be an
increase in the thresholds for both Qualifying Small Enterprises (QSE) and
Exempted Micro Enterprises (EME).
Qualifying small enterprises can also opt to implement only five out of
seven elements of the QSE scorecard. Comments and inputs from workshops held
with the technical working group of small business practitioners recommended
that only one threshold based on turnover be used to determine QSEs. The
original sector specific definitions for QSEs also took into account the number
of employees.
Accreditation and verification
The Black Economic Empowerment Industry has been established in close
co-operation with South African National Accreditation Systems to ensure that
the best standards are implemented.
The IT database that is currently being formulated by the Department will
ensure that mechanisms are established for self-assessment, the provision of
Black Economic Empowerment information, and the facilitation of Black Economic
Empowerment partners and business opportunities. All accredited verification
agencies will be linked to this database, and this will enable anyone in the
economy who wants to verify their BEE status or that of a supplier to access
this system through the dti website.
Government has acknowledged concerns about BEE implementation costs raised
by the economy. The IT system is intended to also facilitate the process of
self-assessment and BEE verification that should result in further cost
reductions.
National BEE Advisory Council:
The long awaited BEE Advisory Council will be established immediately after
Cabinetâs approval of the Codes, and it will report on the status of BEE in the
economy on a quarterly basis. Its membership is based on equitable
representation of business, labour, community and academics as well as equity
in gender, race, and geographical spread. Government believes that the Council
will ensure that BEE is properly implemented and monitored throughout the
economy.
Conclusion
The dti is confident that the process of finalising Codes of Good Practice
on Broad-Based Black Economic Empowerment will be presented to Cabinet for
approval in August 2006. Thereafter the first and second phase of the Codes
will be gazetted.
Please address all media enquiries to:
Henriette van der Merwe
Tel: (012) 394 1640
Cell: 082 572 8184
Bongani Lukhele
Tel: (012) 394 1643
Cell: 083 291 8680
Bethuel Mnguni
Tel: (012) 394 1647
Cell: 083 624 8888
Donavan Jacobs
Tel: (012) 394 1641
Cell: 082 751 1078
Issued by: Department of Trade and Industry
11 July 2006
