Archive for July, 2009

BEE points for large corporates for trading with smaller businesses

Posted by Cornilius in procurement on July 8th, 2009

The B-BBEE codes have encouraged the growth of small businesses (those with annual turnover below R35 million) and Black owned businesses through the element of Preferential Procurement. Generic companies (companies with annual turnover of more than R35 million) earn 8 points for spending just 25% with suppliers with annual turnover below R35 million as well as Black owned and Black women owned businesses.

This certainly encourages large generic companies to buy from suppliers who need support to grow leading to more empowerment of the more deserving entities and individuals. The growth of any company heavily hinges on the number of customers that they have. Having customers in the form of large corporates is more desirable for any small business because they have more capacity to pay for orders.

In other words, there is a benefit to the generic companies in the form of getting more BEE points while helping the sustainability of the smaller businesses.

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Suspect scorecards

Posted by Keith in BBBEE Knowledge, Fronting, Scorecard points on July 6th, 2009

I’ve just seen a generic scorecard, verified by an accredited agency that shows:
Ownership: 20.54 points (35.4% black ownership)
Management: 0.30
Employment equity: 1.83
Skills Development: 1.19
Procurement: 3.79
Enterprise Development: 7.22
Socio Economic Development: 0.00
They are a level 8.
There can be many interpretations but this looks very suspect.
35% black ownership and almost zero management!
They earned 20.54 points so by definition the black partner (or ownership scheme) has earned full net value their shares . Why would someone invest and pay some proportion for their shares and not ask for more than one non-executive seat on the board? Why would they not make some effort to get the board to transform? Why would they not make an effort to improve employment equity.

It is possible that the company is not fronting, and has made an effort to involve staff, but even then level 8 for a 35% black owned company is not very good.

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Should B-BBEE be abolished – if so, what policy should replace it?

Posted by Gavin in General on July 2nd, 2009

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Financial Year End

Posted by patience in BBBEE Knowledge, General, Scorecard points on July 1st, 2009

Most companies have their financial periods ending February or June and in most cases companies realize it when its too late to carry out any B-BBEE initiatives that can make them earn the B-BBEE points for that period. I recently talked to a company, which is just finalizing its year-end and they already know their score and are now looking at ideas and ways of improving their B-BBEE score in their new financial period. Such a company will surely meet its customer’s needs of a good B-BBEE score and hence improve their chances of getting the much-needed business in the new financial period. However for other companies the B-BBEE quandary continues they are not doing anything and are going to continue to give their customers empty promises of becoming B-BBEE compliant in the next financial period.

Like any other business policy or strategy, B-BBEE requires all the basics of effective strategy implementation – good ideas, organisation, resources allocation, action plan, monitoring and evaluation. Our workshops/conferences and scorecard methodology can help you produce / improve your scorecard and effectively implement B-BBEE.

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