A lack of understanding of how the revised Broad-Based Black Economic Empowerment Codes of Good Practice will practically be implemented and measured within smaller companies is holding them back in their compliance efforts.
This is according to Mpowered, an IT systems provider, who noted that government has not provided any further clarity on precisely when a company will be required to verify their B-BBEE compliance on the revised codes.
The new BEE codes were gazetted by the Department of Trade and Industry minister, Dr Rob Davies on 11 October 2013.
According to Bruce Rowe, head of Mpowered, there are several challenges with some of the calculations of the revised scorecard that don’t appear to be aligned with the intentions outlined in the BEE Act or the BEE Amendment Bill.
“Some pundits indicate that the verification process should have commenced prior to the 11 October 2014 to obtain any recognition on the current (“old”) codes, whilst others suggest any company with a financial year end prior to the 11th will be required to measure and verify on the revised codes,” Rowe said.
According to Rowe, most small and medium businesses don’t actively manage their B-BBEE compliance on a regular basis. “SMMEs will be required to measure and verify their B-BBEE compliance on the same five scorecard elements as larger companies.
“For the majority of SMME businesses, it is going to be a huge challenge in obtaining any level of B-BBEE recognition,” he said.
He warned that many local SMME businesses that are unable to achieve ‘unreasonable expectations’ are going to shift away from being active contributors to B-BBEE compliance under the new codes.
“Companies will have to focus on implementing initiatives that improve their B-BBEE score, as non-compliance will lead to the potential loss of business in an already challenging economic environment. It’s no longer just about ticking boxes – companies will need to actively participate in driving BEE compliance,” Rowe said.