Broad-Based Black Economic Empowerment

What Is B-BBEE?

South Africa went through a system of racial segregation from 1948 until 1994 called Apartheid (Afrikaans word meaning “separateness”) where race determined social, economic and political advantages or disadvantages.
In 1994 South Africa elected its first democratic government which launched BBBEE (Broad-Based Black Economic Empowerment) in 2003 as a racially selective program to empower previously disadvantages groups and enhance economy.
The mandate of Broad-Based Black Economic Empowerment is to increase the number of black people that own, manage, control and gain employment in South Africa’s economy.
The Broad-Based Black Economic Empowerment (B-BBEE) Strategy was published as a precursor to the B-BBEE Act, No. 53 of 2003 with its clear mandate to increasing the number of black people participating in the country’s economy.

Expanding B-BBEE

The BBBEE Legislative is constantly being reviewed and adjusted, with the rollout of the latest amended BBBEE Codes of Good Practice on the 11th October 2013, effective the 1. May 2015 which made BBBEE compliance almost unavoidable for many industries and especially for larger business entities.

Who is benefiting from BBBEE?

 “Black People” means African, Coloured and Indian South African citizens.
The Definition of “black people” now accords with the definition as contained in the Revised BEE Codes and continues to refer to the generic term which means Africans, Coloured and Indians provided they are citizens of the Republic of South Africa by birth or descent or who became citizens of the Republic of South Africa by naturalisation before 27 April 1994 or on or after 27 April 1994 and who would have been entitled to acquire citizenship by naturalisation prior to that date.

The B-BBEE Levels

What is the purpose of B-BBEE

Black economic empowerment – or broad-based black economic empowerment, as it is technically known – is not affirmative action, although employment equity forms part of it. Nor does it aim to take wealth from one group and give it to another. It is essentially a growth strategy, targeting the South African economy’s weakest point: inequality. No economy can grow by excluding any part of its people, and an economy that is not growing cannot integrate all of its citizens in a meaningful way.
As such, this strategy stresses a BEE process that is associated with growth, development and enterprise development, and not merely the redistribution of existing wealth. “Black economic empowerment is an important policy instrument aimed at broadening the economic base of the country – and through this, at stimulating further economic growth and creating employment. The strategy is broad-based so it reflects the government’s approach, which is to “situate black economic empowerment within the context of a broader national empowerment strategy.”

What are the main objectives of B-BBEE

Through its BEE policy, the government aims to achieve the following objectives:

Empower more black people to own and manage enterprises. Enterprises are regarded as black-owned if 51% of the enterprise is owned by black people, and black people have substantial management control of the business.

Achieve a substantial change in the racial composition of ownership and management structures and in the skilled occupations of existing and new enterprises.

Promote access to finance for black economic empowerment.

Empower rural and local communities by enabling their access to economic activities, land, infrastructure, ownership and skills.

Promote human resource development of black people through, for example, mentorships, learnerships and internships.

Increase the extent to which communities, workers, co-operatives and other collective enterprises own and manage existing and new enterprises, and increase their access to economic activities, infrastructure and skills.

Ensure that black-owned enterprises benefit from the government’s preferential procurement policies.

Assist in the development of the operational and financial capacity of BEE enterprises, especially small, medium and micro enterprises (SMMEs) and black- owned enterprises.

Increase the extent to which black women own and manage existing and new enterprises, and facilitate their access to economic activities, infrastructure and skills training.

Why is it important to comply with the legislation

Private companies must apply the codes if they want to do business with any government enterprise or organ of state – that is, to tender for business, apply for licences and concessions, enter into public-private partnerships, or buy state-owned assets. Companies are also encouraged to apply the codes in their interactions with one another, since preferential procurement will affect most private companies throughout the supply chain.

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