BBBEE wrong

[Greig Whitton]

Thanks for the links I filled out the affidavit and had it sworn at the police station. Nice and easy, I will post if there are any hassles.

Just remember that the affidavit only gives you Level 4 as an Exempt Micro Enterprises (unless your business is 51%+ black-owned, in which case it will be Level 1 or 2). Normally Level 4 would be perfectly fine, but I expect that the automatic entitlement to Level 1 and Level 2 for black business owners will "raise the bar" and make Level 4 sub-par. That said, a 100% white-owned business cannot achieve a rating higher than Level 4 on the scorecards anyway, so your options are either "bank" the Level 4 (if your annual turnover is under R10 million) or re-structure your ownership to achieve a higher level.

[IanF]

Lets see if the level 4 means anything then!

[bones]

Pretty much what I assumed. Good luck with that.

what a mind blowing insight that was so
no "bbbee is not that expensive anymore"

i was right it is still expensive process

no "you have options" suggestions ??

guess you have to pay extra for that

well thanks

[IanF]

My objective is to tell my customers I am BEE rated. No comebacks from the customers who asked for the rating.
This whole BEE system just adds another layer of bureaucracy to business in South Africa

[BusFact]

This whole BEE system just adds another layer of bureaucracy to business in South Africa

Exactly. To do business you generally need:

Company number (used to be CM1 form)
VAT number
Income Tax number
Tax clearance certificate
Employers numbers
BEE certificate
Workmans Comp number
Proof of address
ID books
.... plus a few others.

Its just part of the "game". I understand that its far more important when you're tendering for Government contracts or if you supply a large percentage of your customers input, but for many of us its just an irritating extra tax.

Take my one company for example. Average monthly sale to a customer is about R5000. The average annual sales of this type of customer is R10 million plus. My piddly BEE rating has absolutely no affect to their score what so ever. I could be level 1 or 8. They actually don't care. They just want a piece of paper to keep the bureaucrats happy.

Annual financial audits and BEE audits add no value to my business at all. They are merely a form of tax to keep SARS and the parastatals respectively happy. So I suck it up and cough up.

[BusFact]

There are certain things that have to be imported, but most things can be sourced from local manufacturers or suppliers. By supporting local industry, one is preserving local jobs as well as the skills to keep that industry going. Once we lose those skills we will never get it back. The problem with local industry is that we do not have the required volumes to be really competitive. If we all support local industries, it may eventually happen. Manufacturers should also look at their quality and aim to export as that will give them critical mass to be truly competitive.

Quality should be a much higher consideration as it will be cheaper in the long run. Cheap, low quality imports are devastating to any economy as it destroys all the economic principles. The poor people suffer most as they cannot afford the better quality and then opt for a cheaper alternative which does not last and has to be replaced soon. So they end up paying over and over to replace the same thing. As they say in Afrikaans "goedkoop is duur koop".

I'm going to whisper this because its probably not PC on this site, but I reckon there is some value in the BBEEE concept. I would just change two things:

1) PDI should become RDI - Recently Disadvantaged Individuals, so anybody who say 5 years ago was below a certain economic level. Take race out of entirely. It will of course still cover mainly the black population so no real change. Except the tenderpreneurs and the black elite will now be excluded - and rightly so. It will now function to genuinely give those who need it that slight advantage and act in a small way as a redistribution of wealth - but only to those actually working for it.

2) Give points for local content and penalise for imported content. I have serious doubts about the international business communities push for "free trade". I think a balance is necessary. Its not possible to compete against countries with huge local markets, established industries or those with virtually no labour laws. The playing fields are quite simply not level. So lets give local business an advantage. Lets not become over protective and uncompetitive, so some international competition should be allowed, but the inequalities need to be evened out a bit.

Points for educating and training, and community development remain good concepts.

[Greig Whitton]

2) Give points for local content and penalise for imported content.

The new Codes do award points for procuring from suppliers with a high local content (part of the "empowering suppliers" provision).

I fully agree with the rest of your post but, unfortunately, the changes introduced by the new Codes contradict the very ethos of broad-based economic empowerment. The most recent debacle with the points for employee share schemes and similar broad-based ownership initiatives being severely curtailed is a blatant indication that government is only interested in the enrichment of a politically-connected black minority.

[bones]

My objective is to tell my customers I am BEE rated. No comebacks from the customers who asked for the rating.
This whole BEE system just adds another layer of bureaucracy to business in South Africa

the thing i dont get is why we need it at all
i mean we are so tiny we dont earn large
amounts of money why do we need it?

just because some customers demands it?
nope dont think so

[IanF]

Bones
BEE does not make sense, but at least my customers can say to their bosses I am BEE rated. Whether this will make a difference I don't know

[Blurock]

The new Codes do award points for procuring from suppliers with a high local content (part of the "empowering suppliers" provision).

I fully agree with the rest of your post but, unfortunately, the changes introduced by the new Codes contradict the very ethos of broad-based economic empowerment. The most recent debacle with the points for employee share schemes and similar broad-based ownership initiatives being severely curtailed is a blatant indication that government is only interested in the enrichment of a politically-connected black minority.

Finally we get to the truth. BEE is discrimination and should be challenged in court.

[BusFact]

the thing i dont get is why we need it at all
i mean we are so tiny we dont earn large
amounts of money why do we need it?

just because some customers demands it?
nope dont think so

You don't "need" one. Its not a legal requirement. Its only something required by your customer. In the same way some corporates insist on the vendor having a VAT number, or a tax clearance certificate, or a customer wanting work references, or wanting to first tour and inspect your premises, or asking after a website you have, or a product spec sheet or a safety data sheet .....

It gets their boss of their back and makes their lives easier - hang on, doesn't that sound familiar? Isn't that why we're selling our products or services ion the first place - to make someone elses life easier or better?

You can take the moral high ground and not get one or you can cough up a few grand to get a piece of paper that will expand your potential customer base. Its a business decision.

[BusFact]

The new Codes do award points for procuring from suppliers with a high local content (part of the "empowering suppliers" provision).

That's good to hear. Is it a significant portion? I reckon it should possibly be a third of the value. A third each to: 1) RDI points, 2) Local content, 3) The rest.

[Justloadit]

The new Codes do award points for procuring from suppliers with a high local content (part of the "empowering suppliers" provision).

and exactly who or how is this going to be monitored/reported in order that you can claim points that the product has a local content?

[Blurock]

Local content means nothing. In spite of the National Procurement Policy calling for local content, the government still buy CCI (cheap chinese imports).

[Greig Whitton]

That's good to hear. Is it a significant portion? I reckon it should possibly be a third of the value. A third each to: 1) RDI points, 2) Local content, 3) The rest.

The proportion of points ring-fenced for procuring from "empowering suppliers" varies according to which scorecard a company uses (i.e. generic, QSE, or sector-specific), but for the sake of illustration 21 of the 25 Procurement points on the generic scorecard hinge on procuring from "empowering suppliers".

A company is deemed to be an "empowering supplier" if it is an Exempt Micro Enterprise (i.e. has an annual turnover below R10 million) or if it satisfies up to three of the following four criteria:

(a) 25% of cost of sales locally sourced;
(b) 25% of manufacturing, production, and/or packaging completed locally;
(c) 50% of jobs created for black people; and/or
(d) 12 days of productivity per year allocated to supporting black SMEs.

and exactly who or how is this going to be monitored/reported in order that you can claim points that the product has a local content?

Companies will need to prove that they are "empowering suppliers" (e.g. that they source locally) when they are independently certified by their auditor or verification agency. If they can't produce independently verifiable evidence, then they won't earn their points.