In terms of the Amended Codes of Good Practice, both QSE and Generic entities need to comply with all 5 of the elements on the scorecard which are Ownership; Management & Control; Skills Development; Enterprise & Supplier Development; and Socio-Economic Development.
Of these 5 elements, Ownership is the first priority element. Both QSE and Generic entities must comply with the sub-minimum requirement of 40% of the net value indicator. The target here is 25% black ownership, with at least 10% in the hands of black women. Shares obtained must be paid back in accordance with the graduation factor to ensure that the entity succeed in complying with the ownership element.
Management and Control consists of black ‘board participation’ and Employment Equity. For board participation, the minimum requirement is 50% in the hands of black people, with 25% thereof in the hands of black women. For Employment Equity, entities will be rated on black representation at senior, middle and junior management levels in accordance with the Economic Active Population (EAP) targets for each sub-race group. However, these targets are not applicable to the QSE Scorecard.
Skills Development is the second priority element. The sub-minimum of 40% on the total score needs to be reached to comply with the sub-minimum requirement. The target of this element is calculated as a percentage of the payroll (leviable amount) of the financial year you are being rated on. For a Generic entity, they need to spend 6% of the leviable amount and this needs to be spent in accordance with the EAP targets for each sub-race group. For QSEs, the target is only 3% of the leviable amount. Take note that the EAP targets is not applicable to the QSE scorecard. Generic entities also have a target of 2.5% of their total workforce to register on learnerships, apprenticeships and internships in accordance with the EAP targets.
Enterprise and Supplier Development, the third priority element, consists of the following: Preferential Procurement, Enterprise Development and Supplier Development. The sub-minimum requirement of 40% is applicable to each of these sub-indicators.
With Preferential Procurement, entities are rated on their overall spending with compliant entities in accordance with their total measured procurement spend, as well as amounts spend on suppliers which are QSE, EME, 51% black owned and 30% black female owned. QSEs are only measured on their overall spending with compliant suppliers and on 51% black owned entities.
Enterprise- and Supplier Development consist of monetary or non-monetary assistance given to at least 51% black owned entities, which must be either QSEs or EMEs. To qualify as a supplier development beneficiary you had to purchase from the entity that you identified as your supplier development beneficiary in the financial year you are being rated on. Proof of payment to the supplier developer for his service or products must be provided. The assistance, as well as the quantification of the assistance provided, must be within the financial year you are being rated on. The target is 1% for Enterprise Development and 2% for Supplier Development of the entities Net Profit After Tax (NPAT). For QSEs, the targets are 1% on Supplier Development and 1% on Enterprise Development.
The last element is Socio-Economic Development. Monetary or non-monetary assistance should have been provided to an organisation with at least 75% black beneficiaries. The target is at least 1% of the entity’s NPAT and this target is for both Generic entities and QSEs.
AUTHOR THE AUTHOR
Dominique van Deventer obtained her LLB degree from the University of the Free State and has been a SEESA BEE Legal Advisor since 2015.