BLACK ECONOMIC EMPOWERMENT & RACIAL TRANSFORMATION
The Association
Racial discrimination historically permeated and affected the building industry just as it did every other economic sector in South Africa. Just like the majority of its members, the Association developed in an environment that favoured white people to the exclusion of others in our broader society. This has created a legacy of inequality and the Association is taking active steps to counter the unfairness that this inequality has created. The Association is in its final stages of becoming certified in terms of the Broad-Based Black Economic Empowerment (BBBEE) Act (53 of 2003).
The Association is currently specifically targeting black enterprises for membership and is already reasonably well represented in this regard.
The Procurement Policy of the Association favours black suppliers and the Association employs black candidates in vacant position wherever this is possible. We are also actively involved in corporate social responsibility initiatives as well as skills development projects which are included in the objectives of the Act.
Our Members
We recognise that many of our historically white members also need to undergo, or continue, the process of transformation and become compliant with the BBBEE Act and the Construction Charter. Many of our smaller members find compliance with BBBEE requirements relatively challenging from the point of view that the legislation is complex and sometimes difficult to apply in a small enterprise environment. Access to Information can be difficult, and having a network to potentially team up with black partners is not easy.
One initiative that the Association is embarking upon is the transformation matchmaker. By offering a networking platform for members, the Association is perfectly placed to invite both black and white members who are interested to submit their names, and the degree to which they are looking for collaboration, to the Association which will then allow us to introduce these members to each other. The Association will also have an approved panel of consultants who can assist with the often complex formalities involved with joint ventures, ownership schemes and other collaborative structures.
THE LEGAL REQUIREMENTS
BBBEE is the acronym and common term used for Broad Based Black Economic Empowerment, an economic empowerment initiative that was implemented by the South African government in 2003 to improve on the existing BEE act.
The objective of Broad Based Empowerment is to ensure that wealth is distributed across a broad spectrum of society, and to discourage the possible evolvement of a new elite, and sustained inequalities.
The BBBEE scorecard is measured on weighting system, there are seven criteria and in contrast to its precursor, Ownership & Management now only account for 30% of the total contribution.
Equity Ownership - 20%
Management - 10%
Employment Equity - 15%
Skills Development - 15%
Preferential Procurement - 20%
Enterprise Development - 15%
Socio-economic Development - 5%
The Construction Charter (DOWNLOAD / VIEW)
The BBBEE Act provides for industry-specific scorecards to be formulated to address the unique dynamics of a particular industry or sector. The construction industry formulated the Construction Charter which is in the process of being finalised as a Code of Good Practice by the Department of Trade and Industry.
Construction Industry Scorecard
Ownership 25%
Control 10%
Employment Equity 10%
Skills Development 15% (BEPs 20)
Procurement 20%
Enterprise Development 15% (BEPs 10)
Residual 5%
Size Does Count
In terms of Act 53 (2003) Codes of Good Practice for Black Economic Empowerment, all enterprises in South Africa are divided into one of three categories:
1. Generic Enterprises (turnover greater than R35 Million)
2. Qualifying Small Enterprises (turnover between R5 Million and R35 Million)
3. Exempted Micro Enterprises (Turnover Less than R5 Million)
It is important to note that in Terms of the act, each of these categories have differing sets of measurement criteria.
Generic Enterprises
It is estimated that only 4% of South African Companies have a turnover of greater than R35 Million. Enterprises that fall into this category are obligated to apply all seven BBBEE pillars in order to calculate their score as per the generic scorecard.
Qualifying Small Enterprises (QSE)
Qualifying small enterprises, when calculating scorecards, are able to apply what is known as code 800. Code 800 makes allowances for a less stringent scoring system, whereby corporations are able to choose four of the seven pillars, and value them equally, each making up 25% of a score criterion of a 100.
Exempted Micro Enterprises (EME)
Companies with a turnover of less than R5 million automatically qualify as 100% contributors towards preferential procurement, and as such, do not need to be rated. They are however obligated to provide reasonable evidence that they are categorized correctly and if, as an EME, black ownership exceeds 50%, they then qualify as 110% contributors.
