Salient Features of the Amended QSE Codes

The DTI has finally issued the long awaited QSE (Qualifying Small Enterprises) Amended Codes for public comment. The commentary period closes on 14th November 2014 and the Amended Codes will be effective 1st May 2015. The Amended QSE Codes refer to the Generic Enterprises Codes for clarification and guidance. Any QSE verification performed after 1st May 2015 will use the Amended QSE scorecard.

QSE’s are entities that have an annual turnover of between R10m and R50m. The QSE scorecard only affects businesses that are less than 51% black owned. QSE’s that are 100% black owned are automatically rated as a level 1 Enterprise and a level 2  Enterprise if more than 51% black owned. These categories of QSE’s will only require an Affidavit attesting to their turnover level and black ownership. There is also no mention as to whether they are required to be Empowering Suppliers but this seems to be implied in the Enterprise and Supplier Development element, that only recognises a rating from an Empowering Supplier.

The QSE Scorecard: 

Amended Codes Points to Levels Table:

Salient Features of the Amended QSE Scorecard: 

• QSE’s follow all 5 elements – measured out of 100 points (compared to Generic Enterprises that have 118 points available).
• QSE’s must achieve at least 40% of the net value targets for the ownership priority element, else they too will be discounted one level.
• QSEs must also achieve the 40% minimum targets on either of the Skills Development or Enterprise and Supplier Development priority elements, else they will be discounted one level.

• Ownership: 

o   Follows the Generic Enterprises methodology – points are earned for black people, black women, new entrants and designated groups. This is more onerous than the 2007 Codes.

• Management Control: 

o   Points earned for management positions, executive and non-executive. Black women earn more points than as per the 2007 Codes.

o   The demographic representation of black people as defined in the Regulations of Employment Equity Act and Commission on Employment Equity report is not applicable to the QSE Scorecard as for Generic Enterprises.

• Skills Development: 

o   Skills spend targets for black people have increased from 2% to 3% of leviable amount. This is lower than the Generic Enterprises target of 6%. There are a further 5 points for a 1% spend target on skills for black women.

o   The demographic representation of black people as defined in the Regulations of Employment Equity Act and Commission on Employment Equity report is not applicable to the QSE Scorecard as for Generic Enterprises.

• Enterprise and Supplier Development:

o   QSE’s are required to spend 15% of total procurement with 51% or more black owned businesses.

o   Procurement target increased from 50% to 60% of Total Procurement Spend.

o   Enterprise and Supplier Development 10 points compared to 25 points in 2007 Codes. 2% of Net Profit After Tax target has been split 1% for each Enterprise Development and Supplier Development.

o   Only annual contributions to be recognised as for Generic Enterprises.

• Socio-Economic Development:

o   Only 5 points compared to 25 points in the 2007 Codes for an unchanged target of 1% of Net Profit After Tax.

o   Only annual contributions to be recognised as for Generic Enterprises.