It is no surprise that COVID-19 has slowed economic activity, affecting your company’s revenue and profit negatively.
With constrained financial resources, enterprises will re-prioritise their budgets. Many enterprises have therefore reduced B-BBEE to a box-ticking exercise, as spending on B-BBEE will likely be sacrificed where deemed a non-strategic or non-essential.
The question on everyone’s lips is, will entities be exempted from implementing B-BBEE or from complying with the B-BBEE requirements set in the B-BBEE Act due to the impact of COVID-19 on the South African economy? Will the South African government provide any financial relief in terms of the implementation and compliance of B-BBEE?
We will review the general questions and answers made available by the B-BBEE Commission on their website as well as the impact thereof on your business.
The B-BBEE Commission has responded stating it is common cause that COVID-19 has and will have a negative impact on the South African economy at large, including the performance towards B-BBEE. The measures to address the economic consequences of the pandemic are done within the rule of law and adherence to the prescripts of the Constitution of South Africa.
The Commission also stated no relief will be made to verification cost as Exempted Micro Enterprises (EME), which are entities with an annual turnover of R0-10 million, are already exempted from the verification process and qualify for an automatic level.
The B-BBEE Commission further confirmed that contributions to the COVID-19 Solidarity Fund will not be recognised for B-BBEE purposes.
The Solidarity Fund was established to respond to the current COVID-19 pandemic and not for B-BBEE purposes, although some of its beneficiaries might be black people based on the demographics in South Africa.
The B-BBEE Commission has made it clear the B-BBEE Act is applicable during the lockdown period and all measured entities are required to comply with the requirements. Failure to comply will be a violation of the B-BBEE Act.
In light of the above, it is clear that there will be no exemption from the implementation of and compliance to the B-BBEE Act, there will be no financial relief made available by the South African government in terms of B-BBEE made available to measured entities.
It is therefore of utmost importance that you contact your dedicated SEESA legal advisor to maximise your B-BBEE points and minimise expenses to your company. Visit SEESA’s website at www.seesa.co.za for more information.
About the author:
Simone Williams is a Senior BEE Legal Advisor at SEESA Pretoria. She obtained her LLB from Nelson Mandela University. Simone started her career at SEESA East London in January 2016 and transferred to the Pretoria Head office in October 2018.