CGF ARTICLES, OPINIONS & EDITORIALS
B-BBEE: An Act in progress... (2014-08-20)
February 20,
2015 3852 3852 
Article by Terrance M. Booysen
Since the original launch of what was first known to be the Black Economic Empowerment Act No. 53 of 2003 (‘the Act’) which was signed into South African law in January 2004, the Act has seen many changes.
The emphasis of the Act has always been on ‘black’ people and the critical need to transform their dire economic and social conditions which were brought about as a result of the past ‘apartheid’ system where Africans, Coloureds and Indians were excluded from almost all sectors of the country’s benefits and development.
With an understanding of the African National Congress’ (‘ANC’) Freedom Charter of 1955, the Act was developed and refined upon the requirements of the Reconstruction and Development Programme (‘RDP’). The RDP was developed as a South African socio-economic policy framework by the ANC government in 1994 as a forward looking plan to transform and mobilise all South Africans in an effort to -- amongst other -- alleviate poverty caused through the Apartheid regime, as well as eradicate the white business owner’s elitist privileges of pre-1994.
The efforts to build a new democratic, non-racial and non-sexist society and economy have for all intent and purpose not been achieved since the Act’s debut, and South Africa is still regarded as one of the most unequal societies in the world. Over a decade since the original BEE Act was launched, the country still experiences massive gaps in education, healthcare, job creation, unemployment and social insecurity. Indeed a lot has been achieved since the country was liberated from its apartheid shackles; however the extent to which the majority of black people participate meaningfully in South Africa’s economy remains limited. Whilst South Africa continues to remain a largely divided and unequal society, the stability and its economic prosperity continue to be undermined. If these imbalances continue, there’s no doubt that the consequences will be to the detriment of all South Africans, irrespective of their race.
Due to the fact that the Act has not yet achieved its original objectives to ‘normalise’ the country’s unbalanced racial differences, there is now an even greater chance that any party who interacts with South Africa will -- directly or indirectly -- be impacted by the additional efforts legislators are introducing through the revised Broad-Based Black Economic Empowerment Amendment Bill 2013 (‘the B-BBEE Bill’) and its revised Codes of Good Practice on B-BBEE (‘the Revised Codes’). These re-focused efforts are all designed to equalise and level the economic playing fields; and continuing to pay lip service to them is guaranteed to be costly.
The revised B-BBEE Bill and the Revised Codes provide the legal framework for the application of B-BBEE in South Africa. Both the Bill and the Revised Codes have undergone significant amendments that will impact the manner in which B-BBEE will be measured and implemented within organisations operating in South Africa. The amendments reflect a shift from a voluntary approach, to a more punitive approach in government’s new B-BBEE policy. For example, the B-BBEE Bill introduces offences and penalties, including imprisonment of up to ten years for natural persons; or a fine of up to ten percent of the organisation’s annual turnover for juristic persons. Furthermore, the Revised Codes create ‘priority elements’, where certain organisations must obtain at least forty percent of the allotted targets or points, failing which, their B-BBEE level will be ‘discounted by one level’. The Revised Codes may result in a drop in the B-BBEE level within some organisations and this may be caused by various factors which may include: (i) an increase in the points needed to qualify for the various B-BBEE levels, and (ii) adjustments to the B-BBEE elements and revised scorecards used to calculate B-BBEE points.
Organisations conducting a business, trade or profession in South Africa, with an annual turnover of less than fifty million rand may benefit from the amendments of the Revised Codes. For example, the compliance thresholds for Exempted Micro Enterprises (‘EMEs’) and Qualifying Small Enterprises (‘QSEs’) have been increased, resulting in certain organisations falling into less onerous categories. Furthermore, EMEs and QSEs are no longer required to obtain a B-BBEE certificate from a verification agency - instead an affidavit confirming the B-BBEE level of the organisation will suffice. In order for organisations to maintain (or increase) their current B-BBEE level, they must identify and address the amendments to the B-BBEE Act and the Revised Codes.
As is the case with the many good intentions which underpin the amendments of the B-BBEE Act and its Revised Codes which were introduced in October 2013; one must also consider some of the criticism being levelled against the Revised Codes which come into effect in May 2015.
