The Amended Agri-BEE Sector Code of Good Practice (“Agri-BEE Code”) was gazetted on 8 December 2017 with immediate effect.
The elements that differ most from the Amended Codes of Good Practice are found in the Ownership, Skills and Supplier & Enterprise Development Elements.
Exempted Micro Enterprises (EMEs) with a turnover less than R10 million, and Qualifying Small Enterprises (QSEs) with a turnover of between R10 and R50 million, which are at least 51% black-owned automatically qualify as Level 2 contributors. If the entity is 100% black-owned they will qualify for an automatic Level 1 affidavit.
The targets and points allocation for the elements Ownership, Management Control, and Skills Development are basically the same to those in the Amended BEE Codes. The target for Ownership remained at 25% + 1 vote and 10% respectively for black and black female ownership. The Skills element, however, contains an added requirement – at least 85% of the total accepted skills development expenditure must be on scarce and critical skills as identified by the Adri SETA.
The target for the Socio-Economic Development (SED) indicator has been increased from 1% of your Nett Profit after tax (NPAT) to 1.5% of your NPAT. There is also an increase in points under this element and an entity can now score up to 15 points for the SED element.
The most significant change narrates to the target for Supplier Development. The target has increased to 3% of the entity’s NPAT for year 1 – 4 (after date of publication), after which it will decrease to 2% of your NPAT. The aim of this as per the Minister of Trade and Industry is to create a pipeline of black suppliers and black industrialists within the value chain of the South African agricultural industry.
To reach this aim of creating black suppliers the target on the Procurement sub-element allocated to procurement expenditure from 51% black-owned and 30% black female owned suppliers is targeted to be gradually phased in over 5 years, ranging from 10% for the 1st year up to 40% for the 5th year for procurement from black-owned suppliers. The procurement target for the 30% black female owned suppliers is set as 6% for years 1 – 4, and then 12% from year 5 onwards. It is, however, important to keep in mind that you will only be able to benefit from the above-mentioned phasing in if you spend the full 3% of your NPAT on the supplier development element.
Given the importance in the Agricultural Industry to develop their own supply chain to meet the supplier development and procurement targets set under the Agri-BEE Codes, it would be sensible to update their planning to ensure that they adhere to the new amended Agri-BEE Codes.
ABOUT THE AUTHOR
Tibely Ebersohn has been working for SEESA Newcastle as a Labour and BEE Legal Advisor since 2015. She is currently enrolled for her LLM in Labour Law.