B-BBEE Changes as new Sector Codes Gazetted

The DTI released the B-BBEE Amendment Bill in December 2011. It is currently being reviewed by NEDLAC prior to being gazetted after which a new set of Codes will be released.

B-BBEE compliance is complex. Each element, each target and their implementation whilst earning maximum points, can be time consuming and challenging. Furthermore, each specific BEE sector has its own peculiarities, which further complicates matters.

If your company falls within the scope of a BEE sector code, then your requirements will differ from the Codes of Good Practice. It is likely that you will achieve a different score than if based on the generic Codes and if that score is lower, it could have a detrimental effect on your business.

The gazetted sector codes to date are;

  • Tourism
  • Transport
  • Construction
  • Forestry
  • Chartered Accountancy
  • ICT (gazetted 6 June 2012)
  • Property (gazetted 1 June 2012)

The latest sector codes to be gazetted by the DTI Minister Dr Rob Davies, are the ICT (Information Communication Technology) and Property Charters. This means that as from the date gazetted, all businesses in the ICT sector or the Property sector must use the ICT or Property Charters to calculate their B-BBEE scorecard, rather than the Codes of Good Practice.

ICT Sector Code

There are several differences between the sector code and the Codes of Good Practice, particularly in the weightings and targets for each element and indicator as follows:

  • Ownership targets have increased to 30%, from 25% in the Codes.
  • Management targets and weightings remain the same
  • Employment Equity has reduced from 18 points to 13 (including bonus points), and uses the new targets for Employment Equity
  • Skills Development increases to 17 points from 15
  • Preferential Procurement has an extra 6 bonus points totalling 26 points, increased from 20.
  • Enterprise Development targets have increased from 3% of NPAT to 5% of NPAT and the points that can be earned have decreased from 15 to 11.
  • Socio Economic Development weightings have increased from 1% of NPAT to 1.5% of NPAT. The points that can be earned have increased from 5 to 12.

The changes from the Codes of Good Practice may require a change in strategy to most effectively maximise your B-BBEE scorecard, bearing in mind that the codes apply as at the date already gazetted.

Property Sector Code

Salient features of the Property sector code are as follows:
EME’s are defined as businesses with turnover of less than R5 million, other than estate agencies and brokers which are R2.5 million. Property asset owning businesses are based on an asset threshold of less than R30 million for EME’s.

QSE’s are similarly defined: Turnover threshold of R5 million to R35 million, other than estate agencies and brokers which are R2.5 million to R35 million, and for asset owning businesses, the QSE threshold is R30 million and R280 million.

The Property sector code includes an 8th element – Economic Development which measures the values of disposal of assets and development in under-resourced areas.

The sector code also includes property unit trusts, property loan stock, asset management, property management services and estate agencies, all of which are measured differently.
The following are affected by the Property sector code:

Commercial activities in the following:

  • Houses
  • Community schemes
  • Land zoned for development
  • Commercial office development
    • Office property
    • Industrial property
    • Leisure property
    • Retail property
    • Land zoned for development
  • Other property services
    • Property ownership
    • Property letting
    • Property management
    • Property sales
    • Property valuation
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