The Broad-Based Black Economic Empowerment (B-BBEE) Amended Codes of Good Practice introduced, amongst other things, a new category on the scorecards being Supplier Development.
Supplier Development is more or less the same as Enterprise Development, with the big difference being that the entity receiving the assistance must be a supplier of the measured entity providing the assistance. In order to qualify for points the entity being benefitted must be at least 51% black owned with a turnover of less than R 50 million
Supplier Development forms part of the priority elements. This entails that 40% of the points under this category must be obtained, otherwise the measure entity will be discounted a level. Entities rated on the Amended Codes of Good Practice with a turnover of less than R 50 million can however choose to obtain 40% under the Enterprise and Supplier Development Element or the Skills Element in order not to be discounted a level.
The Minister of Trade and Industry (DTI) Dr Rob Davies has very recently announced the new Strategic Partnership Programme (SPP) which will enhance supplier development and support manufacturing. This was announced at the Africa Trade Summit Expo and Smart Procurement World Conference.
According to Minister Davies, the SPP is intended to support B-BBEE policy through encouraging businesses to strengthen the element of Enterprise and Supplier Development. The SPP, which is a cost-sharing grant, is targeted towards the support for manufacturing with the expectation that the strategic partner will develop programmes or interventions aimed at enhancing the manufacturing supply capacity of suppliers with linkages to the strategic partners’ supply chain
The DTI is therefore concentrating on Supplier Development. The Minister stated that if entities wish to obtain a license or incentive from government, the entity will have to progressively score on the supplier development category on the scorecard.
The target for full points on the Supplier Development category of the Amended Codes of Good Practice is 1% of Net Profit after Tax for QSE entities (turnover of less than R 50 million) and 2% of NPAT for Generic entities (turnover of more than R 50 million).
The above mentioned Net Profit is however compared to the industry norm when determining the actual Net Profit after Tax which will be used.
It is therefore clear that Supplier Development is a category which the Government considers to be of high importance.
ABOUT THE AUTHOR
Edmund Drake has been a SEESA BEE Legal Advisor since January 2016. He obtained his BCom (law) degree in 2011 and his LLB degree in 2013. He thereafter completed his articles at Greyvensteins Inc, whereafter he was admitted as an Attorney and Notary of the High Court of South Africa.