If you are a business owner, it is a good idea to get Broad Based Black Economic Empowerment (BBBEE) compliant as soon as you can. You have to be BBBEE compliant to be able to do business in South Africa.

Why is BBBEE Important for Business?

BBBEE is intended to stimulate the process of participation of previously disadvantaged groups in the economy to lead to increased economic growth. It is intended to be temporary in scope.

Because of apartheid and colonial oppression, South African society (and business) developed unequally, favouring white men, in particular. BBBEE is intended to stimulate the process of participation of previously disadvantaged groups in the economy to lead to increased economic growth.

BBEEE is about restitution and equality. It is about opportunities, education and skills development.

The B-BEE Act is expressly aimed at boosting black-owned SMEs by requiring that both public and private entities assist black-owned supplier SMEs with financial and non-financial assistance, and to ensure they have the means to retain their employees so that they continually meet the target of 50% black employees.

How Does BBEEE work?

BBBEE comprises a scorecard with 5 elements (May 1, 2015). Companies are awarded points for each of the 5 elements to establish a total score out of 109. Based on the score, you obtain a certain level.  Level 1 is very compliant while level 8 is noncompliant.

Unlike the previous legislation, the new codes focus on all requirements to uplift economic participation and include socio-economic development, supplier development, enterprise development, skills development, employment equity and management control.

 “Gone are the days of BBBEE compliance being a costing exercise,” says LFP Group CEO, Louis Pulzone in an article on SMe South Africa. “BBBEE was implemented to promote an equal economy for all and is set to create a more competitive and inclusive landscape. By investing in people, we reap the rewards of a skilled workforce set to propel the economy.”

Five Pillars of BBBEE

It is important to understand the requirements of each pillar.

  • Ownership (25 points)
  • Management (19 points)
  • Skills Development (20 points)
  • Enterprise Development (40 points)
  • Socio Economic Development (5 points

Entrepreneur Magazine details in a substantial article how BBBEE Works, The Five Pillars and How to Qualify For BEE (B-BBEE)

We know that that boosting small business is a crucial step towards growing the South African economy. The responsibility is on the business community, together with government to ensure that we bring more people, especially black people into the mainstream economy.

Responsibilities of SME Owners

Black-owned SMEs have responsibilities, too. They need to bring something to the table, and be strategic about the skills their principals acquire.

They also need to be able to show how the relationship with the bigger partner can help them grow.

All sectors of the business community needs to ensure that not only are more jobs created, but that people are better skilled to face the future. This is why broad-based black economic empowerment should be part and parcel of any large company’s budgeting, and not just because it is a legal requirement.

All South Africans need to pull together to grow the South African economy.