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Socio-Economic Development and the Draft Amended Construction Sector Code

Socio-Economic Development and the Draft Amended Construction Sector Code

The draft Amended Construction Sector Code has not yet been gazetted into law by the Minister.

Enterprises should be cognisant of the targets as it may come into effect at any time and all contributions must form part of the financial year that you are to be rated on.

The following are targets of what we can expect for the Socio-Economic Development element.

For a Generic entity, annual turnover exceeding R50 million

The Socio-Economic Development element is a total of 6 points which includes 1 bonus point.

  1. 25% of the Net Profit After Tax should be spent on Socio-Economic contributions for 4 points.
  2. 30% of the target above (1.25% of the Net Profit After Tax) should be spent on disadvantaged communities for 1 point.
  3. 25% of the Net Profit After Tax should be on contributions towards structured SED Projects for 1 bonus point.

For a Qualifying Small Enterprise (QSE), annual turnover between R10 million and R50 million

The Socio-Economic Development element is a total of 5 points which includes 2 bonus points.

  1. For Contractors – 1% of the Net Profit After Tax should be spent on Socio-Economic contributions for 3 points.
  2. For Built Environment Professionals (BEP’s) – 0.2% of the Leviable Amount should be spent on Socio-Economic contributions for 3 points.
  3. 50% of the target (Contractors – 1% of the NPAT and BEP’s – 0.2% of the Leviable Amount) should be spent on disadvantaged communities for 2 bonus points.

The industry norms should be considered when calculating the targets.

A Socio-Economic Development (SED) project is any contributions made for the benefit of any projects approved by an organ of state or the Construction Sector Council.

Evidence that will be required to support the SED Project:

  1. Signed SED plan signed by the Measured Entity and beneficiary.
  2. An annual project impact analysis to measure targets and milestones.

Socio-Economic Development contributions can be monetary or non-monetary. The full value of the contributions should directly benefit black people and at least 75% of the beneficiaries of the specific organisation should be black. If less than 75% of the full value of the contribution directly benefits black people, the value of the contribution is multiplied by the % of black beneficiaries.

Please note that the abovementioned targets are as per the draft Construction Sector Codes and may be amended.

ABOUT THE AUTHOR

Tashta Dayaram has been appointed as a SEESA BEE Legal Advisor since July 2015. She obtained her LLB degree from the University of KwaZulu-Natal in 2014 and is an admitted attorney.

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