“Corporate leaders must guide their companies to become ‘empowering suppliers’ under the new B-BBEE Codes of Good Practice,” says Bruce Rowe, head of BEE software solutions provider Mpowered. “While on the surface the revised codes simply reduce the measuring from seven to five elements, there are many intricacies that will play a role in how companies manage their compliance in future.”
Rowe, who offers software-based B-BBEE management tools to some of South Africa’s largest corporates and state-owned enterprises, says that to maintain their levels of BEE compliance, executives need to sit down at the boardroom table and thrash out what their immediate, mid- and long-term priorities are.
He points out two key individuals as the main drivers of successful compliance under the new codes: the Human Resources Executive and the Chief Procurement Officer. “The scorecard elements that fall under the guise of these two individuals account for a combined 80% of the final score. To retain their current compliance levels and mitigate future reductions in compliance, a change to HR and Procurement strategies is required.”
Rowe says executives can start by looking at the following key aspects:
- From a Human Resources Management perspective, companies need to double their existing training budgets from the current 3% to 6% of net profit after tax. “Training budgets of the future must largely be focused on learnership, apprenticeship and internship programs for black employees and unemployed black people. Make sure you can also measure the extent to which you absorb these previously unemployed people into the industry,” says Rowe.
- Enterprise and Supplier Development (ESD) is a new scorecard element that combines some of the old Preferential Procurement and Enterprise Development aspects. It accounts for 40% of the overall B-BBEE score. “Procurement Officers need to take the lead here and make ESD a strategic imperative. They’ll need to incorporate global best practice. While this is nothing new, suppliers being developed under the new codes must now operate at an annual turnover of less than R50m and be at least 51% black-owned.”
- ‘Empowering Suppliers’ is a term that will play a huge role in future B-BBEE initiatives, says Rowe. “These are suppliers that are largely local, employ more than 50% black South African employees, and transform at least 25% of their inputs locally. Your company also needs to allocate twelve days a year to developing the supplier.” Where previously companies could obtain 12 out of 20 points on the old Preferential Procurement scorecard based on their overall BEE spend, there are now only 5 points up for grabs. “However, companies can score 22% of their overall compliance points simply by buying from small, black-owned companies,” says Rowe.
For a more detailed explanation of the revised B-BBEE Codes of Good Practice, please visit www.mpowered.co.za
About MBS (Boilerplate)
Mpowered Business Solutions (Mpowered) is a B-BBEE IT systems provider. The systems help organisations of any size manage their B-BBEE compliance requirements in an easy, integrated manner. With more than a decade’s experience in consulting in the broader transformation environment, Mpowered ensures the correct approach is taken to managing the B-BBEE process holistically.
With a vibrant development team capable of flexible and responsive system development and a skilled support team, Mpowered is a software enabler for the implementation of industry best practice on behalf of clients, from strategy formulation to independent verification, all within a single suite of IT systems.
Mpowered is a South African company based in Johannesburg. For more information, visit www.mpowered.co.za
Tel 011 447 2966