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Compliance: How to comply with the new BEE codes - Part 1

BEE codes

BEE is becoming a really critical area for most businesses, particularly with the new codes, says Richard Pruett of Format Systems speaking at a breakfast seminar held at CRS Technologies. Unless you can show a supplier that you practise the level of BEE compliance they require, they won't even look at one of your proposals. Why do we need to have new BEE codes? Didn't the old ones work?

When BEE first came in, we were told that we'd have about 10 years to work on these codes, after which the "bar would be raised", as Pruett said. In other words, the BEE codes would be changed and improved - and we'd have to show our compliance with these. So these changes are nothing new.

However, the problem with the old BEE codes is that these didn't bring about the changes needed in the South African economy. To achieve its aims, this legislation has to make a significant contribution in the following areas, among others:

  • In the world, South Africa has the largest income gap between the rich and the poor. This isn't helped by our sky-high youth unemployment rate: Pruett quoted horrifying statistics from 2012, which state that between 80 and 90% of learners who leave school without a matric can't find a job. With those types of odds stacked against you, I'd be surprised if any learner is motivated to work. "In 2012, 80 – 90% of youngsters leaving school with a matric couldn't find a job," says Pruett.

  • The National Development Plan (NDP) - which aims to eliminate poverty and reduce inequality by 2030 - has faced a number of challenges over the past couple of years. Unfortunately, the old BEE codes didn't help the NDP overcome its challenges.

  • The old BEE codes did little to maintain and develop our country's infrastructure, which is essential for our economy to grow.

  • All employment opportunities are centred in the traditionally 'white' areas, which means that those who live in the traditionally 'black' areas have to travel a great distance to get to work, so depleting their already meagre incomes.

  • The South African economy is too sensitive to fluctuations in the price of minerals, e.g. gold and platinum. If we're going to survive as a nation, we need to become a technology-led country.

3 BEE compliance areas that you need to know about

1. Improving economic opportunities: The pillars in the old BEE codes of ownership, employment equity and management control are given less points in the new BEE codes. If you engage service providers who are new entrants to the market and are involved in employment and social change, you'll get more points than if you merely hire providers who practise BEE compliance.

2. Job creation: In the old BEE codes, there was more of an emphasis on job creation and not learnerships. With the new codes, if you offer a learnership in your company and employ the graduates of this learnership, you'll receive more BEE points because you're creating jobs.

3. Upskilling people is huge: In the new BEE codes, says Pruett, you have to spend 6% of your payroll on skills development while in the old BEE codes you were only required to spend 3%. However, now you don't have to spend this 6% only on employees - you can spend it on anyone.