Financial Data
Updated 15 Oct 2019


The revised B-BBEE codes

Significant changes to the new B-BEE Codes of Good Practice could reduce your current compliance levels by two to three levels. 


08 April 2016  Share  0 comments  Print


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To remain competitive and continue to meet the requirements set out by your customers, your business should take into consideration the revisions made to the B-BEE scorecard so that you can continue to remain on your previous B-BBEE levels.

Key changes to the B-BBEE scorecard

The amended B-BEE codes have introduced three priority elements with minimum requirements set out. The three priority elements created are:

  1. Ownership
  2. Skills Development; and,
  3. Enterprise and Supplier Development

If you are a Qualifying Small Enterprise (QSE) your business needs to obtain a 40% sub-minimum in the ownership element, and in one of the other two elements. If you don’t comply your overall scorecard could drop by one level.

There is also a strong emphasis on enterprise and supplier development. This element gives priority to procuring black-owned businesses, instead of the highest rated businesses, as with the previous codes.  

Related: Making BEE work for you

QSE’s and EME’s Thresholds 

Entities are measured on turnover as set out below:

  • EME: Exempt Micro Enterprise with Annual Turnover ≤ R10 million
  • QSE: Qualifying Small Enterprise with Annual Turnover of R10-50 million
  • GENERIC: Annual Turnover > R50million

Exempt Micro Enterprises:

  1. Is your turnover less than R10 million?
  2. Do you currently have a level four B-BBEE contributor status?
  3. Are you looking to grow your small enterprise? Small enterprises looking to grow should consider what is required in terms of your current B-BBEE levels to grow to a QSE.

Qualifying Small Enterprise:

  1. Do you primarily service Businesses and/or Government?
  2. Is your annual turnover over R10 million? QSEs looking to remain on their current B-BBEE level or to improve their scorecard should consider ownership of the business and Standard Bank can potentially assist in acquiring black partners.

Commercial/ Generic Enterprises:

  1. Do you primarily service Businesses and/or Government?
  2. Is your annual turnover over R20 million? Commercial enterprises looking to remain on their current B-BBEE level, or improve, should consider becoming an Empowering Supplier. Standard Bank can assist commercial businesses in diversifying their supplier chain through our enterprise development programme. Standard Bank can additionally assist with acquisition or mergers of various suppliers, creating an opportunity for you to diversify your procurement base.
Related: BEE codes & scorecards

Priority Elements

Black -entrepreneur

Introduction of priority elements:

  • Ownership
  • Skills Development
  • Enterprise and Supplier Development (ESD)

40% sub-minimum required:

  • Large entities are required to achieve the sub-minimum in all 3 elements. Failure to comply will result in the overall scorecard discounted by 1 level.
  • QSE’s are required to achieve the sub-minimum in ownership and in one of the other two. Failure to comply will also result in the overall scorecard discounted by 1 level.
Revised B-BBEE Scorecard

1. Changes to Ownership Element

  1. Any company trading with a turnover under R10 million per annum will automatically have a Level 4 B-BBEE status
  2. Under the new codes, businesses with turnovers between R10 million and R50 million are classified as Qualifying Small Enterprises (QSEs) and now must achieve at least 40% of the net value targets in order to comply. This equates to a minimum 10% black shareholding / ownership status.
  3. To achieve B-BBEE contribution levels:
    1. An enterprise must achieve at least 40% of the net value targets for ownership in order to comply with the new B-BBEE codes
    2. QSEs must obtain a 40% sub-minimum in the Ownership element, and in one of the other two elements. Failure to comply will mean an automatic reduction in your contribution level by one level
    3. Enterprises must obtain 80 points for a Level 4 contribution level. This has been revised from the 65 points under the old codes.

What will the affect be on your business?

Enterprises with a turnover of over R10 million could have your B-BBEE status downgraded, which will have a serious impact on your business’s competitiveness. Your competitors could begin to change their businesses to obtain higher B-BBEE levels, which means that your business will not only become less competitive but you may no longer meet your client’s supplier requirements from a B-BBEE perspective. 

Small enterprises with a B-BBEE level 4 status looking to grow should consider how they can obtain the required B-BBEE levels once they have grown to a turnover of over R10 million.

How can you obtain points for ownership?

Companies that wish to comply with the ownership element could consider securing black partnerships. This will allow your business to be counted on the scorecards of the customers under Procurement.

How can Standard Bank assist?

Standard Bank can assist businesses with acquisition or mergers of various suppliers, creating an opportunity for you to not only diversify your procurement base but also secure black partners.

Related: What B-BBEE Codes changes will require from large companies and growing SME’s

Enterprise -development

2. Changes to the Enterprise Development Element

  1. Enterprise Development and Preferential Procurement Elements are now incorporated under the priority element – Enterprise and Supplier Development.
  2. This has resulted in a combined scorecard of 40 points.
  3. Enterprise and Supplier Development is a priority element that requires a 40% sub-minimum on procurement.
  4. Only procurement spend from Empowering Suppliers are included in the Preferential Procurement score calculation. 

How can your business obtain points for Enterprise and Supplier Development?

Your business should be looking to diversify your supplier value chain and focusing your efforts on procuring from a black owned entity (>51% Black ownership/30% black women ownership). Become an Empowering Supplier by supporting your existing black-owned suppliers. 

Where can you find B-BBEE compliant and black owned suppliers?

Standard Bank’s Enterprise Development division can assist businesses by establishing a four-party partnership between the bank, large corporate-sized organisations, SMEs and accredited business development service providers, providing you with a means to diversify your supply chain.

Through partnering with us, we can assist SMEs to access a market or procurement opportunities, capital and business development. We can then facilitate the partnership between you and a pre-qualified supplier who is ready to deliver on your expectations.

3. Changes to Management Control

  1. The latest B-BBEE codes see the merger of Management Control and Employment Equity into a singular element titled Management Control.
  2. Previously, Management Control and Employment Equity were worth 11 and 18 points on the B-BBEE scorecard respectively. Under the new codes, the unified element is worth a total of 19 (15 points plus four bonus points).
  3. The representation requirements remain the same: 50% for top management, 60% for senior management and 75% for middle management. Requirements for junior management has risen from 80% to 88%.
  4. According to the latest codes, points must be “split in proportion to the EAP (economically active population) statistics”. It also states that: “The maximum points per race group need to be adhered to”. This implies that representation of any race group cannot exceed the percentage of the national economically active population when it comes to the Management Control scorecard. Since a mere 3% of the economically active population is Indian, for example, there is no benefit with regards to the score if more than 3% of a company’s employees at a management level are Indian.   

What will the affect be on your business?

The most obvious change with regards to Management Control is the rather substantial reduction in maximum points that can be accrued. At the same time, the new focus on EAP statistics could make those points harder to attain. It is important not to let the reduction in maximum points, combined with the increased difficulty in attaining those points, persuade you to abandon the process altogether.   

How can you obtain points for Management Control?

Although representation needs to now align with EAP statistics, and the maximum number of points attainable has decreased, the fundamental way in which points can be earned has not changed. As mentioned, representation requirements are 50% for top management, 60% for senior management and 75% for middle management. Requirements for junior management has risen from 80% to 88%.

Related: The new BBBEE codes: What to expect

Further -education

4. Changes to Skills Development

  1. The latest B-BBEE codes place greater emphasis on Skills Development than ever before
  2. Target spend on Skills Development within any business has risen from 3% to 6% of total payroll
  3. Previous codes awarded a maximum of 6 points for total spend – the new codes award 8
  4. Maximum number of points available has increased from 15 to 25 (20 points plus 5 bonus points)
  5. The “Adjusted Recognition for Gender” portion of the Skills Development element has been done away with, which means no distinction is now made between male and female employees when it comes to Skills Development
  6. Companies who permanently employ individuals who form part of learnerships or apprenticeships now qualify for 5 bonus points. 

What will the affect be on your business?

The emphasis placed on Skills Development by the latest B-BBEE codes mean that business owners have an excellent opportunity to accrue a significant number of points in this area. However, the doubling of target spend with regards to Skills Development could place some financial strain on your business.

How can you obtain points for Skills Development?

Your business can receive points by spending money on learning programmes for employees. Target spend on Skills Development within any business is 6% of total payroll (up from 3%). Businesses who permanently employ individuals who form part of learnerships or apprenticeships can qualify for 5 bonus points.

5. Social-Economic Development

  1. As with previous B-BBEE codes, companies that spend at least 1% of net profits after tax (NPAT) on Social-Economic Development (SED) are eligible for 5 points under this element.
  2. Social-Economic Development (SED) is not quite the same as Corporate Social Investment (CSI). SED demands that those being assisted gain long-term access to the economy and receive a lasting benefit. A feeding scheme would therefore not qualify as SED, since it doesn’t offer those in need meaningful access to the economy. According to the definition in the codes, any initiative should “facilitate income-generating activities”.

How can you obtain points for Social-Economic Development?

Your business would need to spend at least 1% of net profits after tax (NPAT) on Social-Economic Development (SED). These points can be attained by donating to a charity, for example, provided that the charity provides those it supports with income-generating opportunities.  

How Standard Bank can help business to comply with the new B-BBEE Codes:

1. Commercialising the SME business

Through partnering with Standard Bank the bank can assist SMEs to access a market, or procurement opportunities, capital and business development. This significantly reduces risks and increases SME growth. The supplier is pre-qualified and ready to deliver on your expectations. This allows the bank and the corporate/public sector entity to invest in commercialising the entity, ensuring that they move from owner-dependent small entities, to a self-sustaining viable businesses.

2. Access to finance

Once you have identified B-BBEE suppliers to include in your supply chain and awarded them a supplier contract, contact Standard Bank. We will meet with you and the contracted supplier to understand the supplier’s financial needs and make sure that our lending enables the supplier to fulfil the contractual obligation.

3. Diversifying your supply chain

Standard Bank’s Enterprise Development division can assist businesses by establishing a four-party partnership between the bank, large corporate-sized organisations, SMEs and accredited business development service providers, providing you with a means to diversify your supply chain.

4. Partnering with corporates

Once you have obtained a supplier contract Standard Bank can meet with you and the corporate to understand your financial needs and make sure that our lending enables you, the supplier, to fulfil your contractual obligation.  


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