The B-BBEE Transport Sector includes many sub-sectors such as Road Freight, Aviation, Rail, Coach, etc. This sector is unique because the amended codes have not yet been gazetted, and entities under this sector will therefore be measured on the old Transport Sector Codes. For this reason, there are differences in the relevant thresholds and certain advantages available to the benefit of the measured entity.
For an entity to determine whether it will be categorised under the Road Freight sub-sector as part of the Transport Sector, it should examine whether the primary operations include any of the following examples:
- Transport brokers;
- Trucking;
- Parcel delivery services;
- Motor ferry companies;
- Cash in transit companies;
- Transport management companies;
- Supply chain management companies;
- Management companies for owner drivers; or
- Logistics.
If the entity has established that its operations form part of any of the above, the next step would be to use its annual turnover to determine whether it will be classified as an EME, QSE or Generic entity. Last, the entity will examine the applicable scorecard under the Road Freight sub-sector and determine how the most points can be scored.
Since the Transport Sector codes are not yet aligned with the Amended Codes of Good Practice (hereinafter referred to as the ‘COGP’), there are differences to be used to the advantage of the measured entity under the Transport Sector. The first to be considered is the absence of the discounting principle. The discounting principle in the COGP takes effect when an entity cannot comply with a priority element such as ownership, for example. On the other hand, the Transport Sector does not have priority elements which in turn means that no discounting will be applied. The measured entity under the Road Freight sub-sector can choose which of the elements on the scorecard to score the desired points on.
Another advantage of the Transport Sector is the available points under the elements on the QSE (an entity with a turnover of between R5 million and R35 million) Road-Freight scorecard.
This scorecard has 25 points available for Preferential Procurement, Enterprise and Socio-Economic Development. Because the entity must score only 30 points to obtain a level 8 under the Transport Codes and in the absence of the discounting principle, a measured entity can reach a compliant level with minimal effort under these codes.
The other elements on which the entity can score points include:
- Ownership;
- Management and control;
- Employment equity; and
- Skills development.
Regarding Skills Development, it is essential to note that, where the other BEE sectors require skills expenditure on black people as defined in the Act, skills expenditure in the Transport Sector must be allocated to employees within the entity. Therefore, it cannot be spent towards the development of skills amongst persons who do not form part of the employees of the measured entity.
The last important aspect to note under the Transport Codes is that there is no affidavit available for EME entities (entities with an annual turnover of below R5 million). This means that all measured entities under the Transport Codes must go through the verification process to obtain a certificate for BEE purposes.
Considering the above information on the different elements and the advantages of the Transport Sector Codes, it is quite easy to obtain the desired level under these codes if you approach the scorecard strategically.
Should your business form part of the Transport Sector and you require assistance in obtaining a compliant BEE certificate, please get in touch with your nearest SEESA office. Alternatively, leave your contact details on our website for a SEESA representative to contact you.
About the author:
Chanté du Plessis started her career at SEESA in 2018 and is currently a BEE and Labour Legal Advisor at SEESA’s Port Elizabeth branch. She obtained her LLB degree from the University of South Africa.
Resources:
- Government Gazette (no. 32511) 21 August 2009.
- Broad-based Black Economic Empowerment Act 53 of 2003.
- Government Gazette (no. 36928) 11 October 2013.