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The Amended ICT Sector Code

The Amended ICT Sector Code

The Amended Information and Communication Technology (ICT) Broad-Based Black Economic (B-BBEE) Sector Code was gazetted by the Department of Trade and Industry (DTI) on Monday 7 November 2016.

The Amended ICT Sector Code is effective and legally binding from the date of publication in the government gazette. It is therefore compulsory for all persons, organisations and entities operating in the ICT Sector in South Africa to apply the Amended ICT Sector Code for all verifications from the above mentioned date. Certificates that were issued on the old (2012) ICT Sector Code prior to 7 November 2016 will, however, still be valid until it expires.

Herewith a summary of the most important amendments to the Amended ICT Sector Code:

  1. Thresholds

The thresholds for classification as an Exempted Micro Enterprise (EME), Qualifying Small Enterprise (QSE) or Generic Enterprise increased as follows:

Exempted Micro Enterprise (EME): Annual turnover below R10 million

Qualifying Small Enterprise (QSE): Annual turnover between R10 million and R50 million

Generic (Large) Enterprise: Annual turnover of R50 million or more

  1. B-BBEE Status Recognition Levels

One of the most significant amendments was the amendment of the qualification criteria for ICT entities to achieve a specific B-BBEE compliance level. The following table represents the various B-BBEE status levels with their corresponding recognition levels and qualification criteria:

B-BBEE Status Level Qualification Criteria B-BBEE Recognition Level
Level 1 120 points or more 135%
Level 2 115 – 120 points 125%
Level 3 110 – 115 points 110%
Level 4 100 – 110 points 100%
Level 5 95 – 100 points 80%
Level 6 90 – 95 points 60%
Level 7 75 – 90 points 50%
Level 8 55 – 75 points 10%
Non-compliant less than 55 points 0%

The reason for increasing the qualification criteria is due to the fact that there are more points available on the amended ICT scorecard.

  1. Elements on the ICT Scorecard

The elements on the ICT scorecard were reduced to 5 elements. All entities apart from EMEs will be rated on the following elements:

  • Ownership
  • Management Control
  • Skills Development
  • Enterprise & Supplier Development
  • Socio-Economic Development
  1. Priority Elements

Ownership, Skills Development and Enterprise & Supplier Development elements were identified as Priority Elements.

A sub-minimum target must be achieved on each one of the Priority Elements if you are a Generic Entity in order avoid being discounted by 1 level. QSEs must comply with the sub-minimum target of the Ownership element and either the Skills Development or the Enterprise & Supplier Development elements in order not to be discounted by 1 level.

  1. Other Significant Amendments

All Enterprise Development and Socio-Economic Development contributions must be sector-specific. In other words, only ICT entities with at least 51% Black Ownership and with a turnover of less than R50 million will qualify as Enterprise Development beneficiaries. All Socio-Economic Development contributions (not only two thirds) must be spent on ICT specific initiatives. There will be no recognition for general Socio-Economic Development contributions.

ABOUT THE AUTHOR

Bernard du Preez is an admitted attorney who obtained his B.Com (Law) and LLB degrees from the University of the Free State. Bernard started as a SEESA BEE Legal Advisor and currently holds the position of SEESA BEE Provincial Manager at our Cape Town branch.

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