New B-BBEE codes cause confusion

"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. Some pundits indicate that the verification process should have commenced prior to 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," says Bruce Rowe, head of Mpowered Business Solutions, a B-BBEE IT systems provider.

According to Rowe, most small, medium and micro enterprises (SMMEs) 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."

Unreasonable expectations

"Larger companies measuring as 'generic' companies are going to drop three or four compliance levels as it is. The result is that many local SMME businesses that are unable to achieve these unreasonable expectations are going to shift away from being active contributors to B-BBEE compliance under the new codes," according to Rowe.

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. Rowe says SMMEs will find it challenging to accurately assess the impact of these new codes. "Increasingly companies are seeking cost effective technology solutions to manage their BEE compliance processes internally, rather than using expensive third parties."

Rowe has introduced a free-to-use B-BBEE compliance management tool named LevelONE, aimed at businesses with a turnover of less than R250m. "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," warns Rowe.