How Radical Transformation Measures Will Affect SMEs

While there has been much debate on what exactly radical economic transformation means for South Africa, many agree that the country is failing in its efforts to become a more inclusive economy.

Innovative BEE Solutions business unit manager, Hansie De Waal, says an estimated 75% of companies in South Africa are not BEE compliant.


“If any of these companies want to win tenders from government or parastatals such as Sasol, Eskom or Telkom, they need to ensure their BEE status quo aligns with the regulatory framework.”


He says from January 2017 all BBBEE accreditation needed to be renewed under the revised codes and verified by SANAS Accredited Agencies.


“Smaller businesses with an annual turnover of less than R10m are automatically Level 4 Contributors under the Act and exempted from complying with the BEE scorecard."


“Businesses with a turnover of between R10m and R50m are legally compelled to comply with the Qualifying Small Enterprise (QSE) scorecard unless the business is 51% black owned, in which case it is exempted from complying with the scorecard and is automatically deemed a Level 2 Contributor,” says De Waal.


De Waal adds that businesses that need to comply with the BEE scorecard process must consider the following five elements:

Ownership: Businesses that are 100% black owned are automatically deemed Level 1 Contributor; while 51% black owned operations are deemed Level 2.

Management and Control needs to reflect an equitable racial representation in Executive, Senior, Middle and Junior management.

Skills Development considers the training of all black people as well as unemployed people.

Enterprise and Suppliers Development, including Preferential Procurement is weighted towards black-owned businesses and valid BEE certificates.

Socio-Economic Development focuses on social responsibility.

Failure to comply with a 40% sub-minimum in any of the elements above will lead to an automatic reduction of one level in their contribution level.

De Waal says businesses that generate an income of between R10 million and R50 million will need to comply with the Employment Equity Act by submitting an Employment Equity Plan as well as the Skills Development Act and the Skills Development Levy Act.


“From a skills development perspective, the businesses must register for the Skills Development Levy (SDL) and with their relevant Sector Education Training Authority (SETA). In addition, they need to submit a Workplace Skills Plan and be approved. Training has to be registered at an Accredited Training provider.”


Many businesses find it onerous to comply with all aspects of B-BBEE and prefer to deal with organisations like Innovative BEE Solutions to ensure it is done properly and to the benefit of their own organisations.

De Waal says his team has the expertise and in-depth knowledge required to advise and handle all aspects of B-BBEE.


“We can assist companies to achieve better B-BBEE levels, which will allow them to compete for the government and parastatal business out there."


“Importantly, social and economic transformation also means more growth and business opportunities for your organisation, meaningful economic development for South Africa, more jobs for previously disadvantaged people and a more fairly represented workforce and country,” concludes De Waal.


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