The Broad-Based Black Economic Empowerment (B-BBEE) Amended Codes of Good Practice (hereafter the Codes) has not been welcomed with open arms by many companies. The implementation of these Codes had been adverse to many companies and resulted in non-compliance for some.
However, the amended Codes are here to stay and companies need to change their mindset and embrace what needs to be adhered to. The amended Codes comprises of 5 elements – a decrease from the previous 7 elements.
A crucial change was the amalgamation of the Enterprise Development (ED) and Preferential Procurement (PP) elements into a single element – Enterprise and Supplier Development (ESD). This new element has proved to be a significant element as it accounts for 40 out of the total 107 points available on the Generic Scorecard. This is more than one third of the total points available on the Generic Scorecard and companies are required to achieve a minimum of 40% of the total targets of the three subcategories of ED, PP and the new introduction, Supplier Development (SD) therefore making ESD a crucial element on the scorecard.
ESD comprises of three categories:
- Preferential Procurement
- Supplier Development
- Enterprise Development
Preferential Procurement will prescribe who companies will use as suppliers in the futur., Companies will have to adhere to strict requirements as they need to broaden their supplier database. This in turn will make Supplier Development vital, because companies are going to struggle with Preferential Procurement and they will be forced to develop suppliers in order to fulfil their supply chain requirements.
It is stringly advised to not delay the inevitable – there are solutions to everything and the faster business owners devise a sound plan for their companies, the better standing position they will have in the business arena.
ABOUT THE AUTHOR
Thashana Pillay is currently the SEESA BEE Provincial Manager at the Durban Office. She obtained her LLB and LLM degrees form the University of Kwazulu Natal. She was admitted as an attorney in 2006 after which she joined SEESA in 2007.