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Should a Supplier Development beneficiary also be a supplier of your company?

Should a Supplier Development beneficiary also be a supplier of your company?

With the Amended Codes in effect, many companies may find themselves having to revisit their current Enterprise Development initiatives undertaken in the past to score points.

One of the main differences implemented by the Amended Codes requirements is that the Enterprise Development Element on the scorecard has now been divided into two separate sub-elements, namely Supplier Development and Enterprise Development. Furthermore the previous target of 3% of the enterprises’ net profit after tax (NPAT) has now been split into 2% for Supplier Development for a generic enterprises and 1% for QSE’s. The target for Enterprise Development for both a generic and a Qualifying Small Enterprise (QSE) company is 1% of the NPAT.

Measured entities should take note of the qualifying criteria for beneficiaries of such initiatives. The Amended Codes of Good Practice expressly requires the following from Enterprise – and Supplier Development to qualify:

  • The beneficiaries must be EME’s or QSE’s (turnover under R50 million); and
  • must be at least 51% black owned or 51% black female owned.

It is not a requirement that the beneficiary that was identified for Enterprise Development need to be a supplier to your company. A beneficiary that has been identified as your supplier development beneficiary must however be a supplier to your company and you should have purchased from them in the financial year you are being rated on. The Amended Codes refers to procurement from supplier development beneficiaries, and also encourages the alignment of Enterprise Development and Supplier Development initiatives with supply chain requirements. This presupposes that both of the elements’ beneficiaries may be a supplier of the company.

The motivation behind Enterprise- and Supplier Development is to encourage corporates to increase their efforts in finding and supporting small black and small black women owned companies, ultimately leading to job creation and economic growth.

 ABOUT THE AUTHOR

Tibely Ebersohn obtained her LLB degree after which se started working at SEESA Labour and SEESA BEE as a legal advisor in 2015. She’s currently enrolled for a LLM degree in labour law.

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