Minister of Trade and Industry Gives Update on Broad-Based Black Economic Empowerment Codes of Good Practice

11 July 2006

The Minister of Trade and Industry, Mr Mandisi Mpahlwa, gave an update on the finalisation of Broad-Based Black Economic Empowerment in Johannesburg today. This followed a meeting between himself and members of the private sector. The Minister also elaborated on the government process for submitting the Codes of Good Practice to Cabinet for approval, and gazetting phase two of the Codes. The Codes provide guidelines for the implementation of Broad-Based Black Economic Empowerment.

The second phase of the Codes of Good Practice on Broad-Based Black Economic Empowerment was released for public comment in December 2005, and the deadline for comment was 31 March 2006. The Department received almost 180 submissions from various sectors, including big business, black business, government, and state-owned enterprises.

Public comment revealed the need for research on certain elements of the Codes of Good Practice for Broad-Based Black Economic Empowerment to get a better understanding of the dynamics that the economy faces. As a result, the dti has embarked on extensive research on issues of concern. It also conducted further consultations with various stakeholders and practitioners, which led to the refining of the Generic and QSE (Qualifying Small Enterprises) scorecards. However, the key principles embedded in the Codes of Good Practice for broad-Based Black Economic Empowerment have remained unchanged.

The Minister added that the complexities of the current Codes of Good Practice make it imperative for government to release two further documents, namely, the Practitioners Manual and the Summary document, both written in simple language that is easy to read and understand.

He also announced that the Department would reduce the number of indicators on the scorecard to reduce the time enterprises spend on trying to ensure compliance and make compliance easier.

Small and Micro-Enterprises

Government is also committed to making the Codes of Good Practice less difficult for small and medium businesses to comply with by creating a special dispensation for Black Economic Empowerment (BEE) compliance in these categories. The dti is currently revisiting thresholds and categories that would define qualifying small enterprises (QSE). The thresholds used to determine the size of companies that can qualify for special dispensation were originally based on outdated Small Business Act thresholds that will result in the exclusion of a majority of the intended beneficiary companies. As a result of intensive consultations with stakeholders, it appears that there will be an increase in the thresholds for both Qualifying Small Enterprises (QSE) and Exempted Micro Enterprises (EME).

Qualifying small enterprises can also opt to implement only five out of seven elements of the QSE scorecard. Comments and inputs from workshops held with the technical working group of small business practitioners recommended that only one threshold based on turnover be used to determine QSEs. The original sector specific definitions for QSEs also took into account the number of employees.

Accreditation and verification

The Black Economic Empowerment Industry has been established in close co-operation with South African National Accreditation Systems to ensure that the best standards are implemented.

The IT database that is currently being formulated by the Department will ensure that mechanisms are established for self-assessment, the provision of Black Economic Empowerment information, and the facilitation of Black Economic Empowerment partners and business opportunities. All accredited verification agencies will be linked to this database, and this will enable anyone in the economy who wants to verify their BEE status or that of a supplier to access this system through the dti website.
Government has acknowledged concerns about BEE implementation costs raised by the economy. The IT system is intended to also facilitate the process of self-assessment and BEE verification that should result in further cost reductions.

National BEE Advisory Council:

The long awaited BEE Advisory Council will be established immediately after Cabinet’s approval of the Codes, and it will report on the status of BEE in the economy on a quarterly basis. Its membership is based on equitable representation of business, labour, community and academics as well as equity in gender, race, and geographical spread. Government believes that the Council will ensure that BEE is properly implemented and monitored throughout the economy.

Conclusion

The dti is confident that the process of finalising Codes of Good Practice on Broad-Based Black Economic Empowerment will be presented to Cabinet for approval in August 2006. Thereafter the first and second phase of the Codes will be gazetted.

Issued by: Department of Trade and Industry

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