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bbbee Levels – Broad Based Black Economic Empowerment
How to avoid “B-BBEE Downgrades”
This article explains what the B-BBEE levels mean, how the scorecard sets your level, and the practical steps, including B-BBEE training for your management team, that help you protect your level and avoid a downgrade. B-BBEE and employment equity training sit together in our human resources, labour and employment equity courses.
Introduction
Broad-Based Black Economic Empowerment or B-BBEE is important and should be a topic of high priority to all companies in South Africa.
Questions often asked by our clients include:
- How does Broad-Based Black Economic Empowerment (B-BBEE) affect our company?
- Why are there all these different B-BBEE Levels (bbbee Levels) and what do they mean?
AIM OF B-BBEE
The aim of B-BBEE is to ensure that the economy is transformed and structured to allow for the meaningful participation of the majority of its citizens and to further create capacity within the broader economic landscape at all levels.
B-BBEE THEORY
Simply put:
- The lower or better the B-BBEE level (bbbee Levels) , the more likely a company is to obtain government tenders/licences or be awarded contracts by company’s who themselves require a high B-BBEE score by procuring from a company with a good B-BBEE rating (or score). This effectively means that the vast majority of companies, from an economic point of view, require a good B-BBEE score. This is even before considering the moral imperatives.
But how is a companies’ B-BBEE status determined? Well for most medium to big companies (over R50 million turnover) it is determined by using “the B-BBEE scorecard” (factors include skills development, employment equity, socio economic development, preferential procurement, enterprise development). This scorecard measures a whole lot of different elements/ aspects. Ideally you need to excel in all aspects.
PRACTICALLY IMPROVE YOUR B-BBEE SCORE (bbbee Levels)
- PRACTICALLY IMPROVE YOUR B-BBEE SCORE:So how can proactive improvements in your company’s BEE status be practically applied?1. You can do this, amongst other things, by:
- Understanding the complexities of B-BBEE and having a proper tracking system.
Here BOTI can assist with providing various courses on B-BBEE (Fundamentals of B-BBEE; Advanced B-BBEE and a comprehensive course on Employment Equity).
We can further assist by providing a computerized tracking system that proactively tracks your B-BBEE Scorecard from year to year.
Please consult the following link for more details on the course or consultation OR to reserve your spot in this workshop please contact 011 882 8853.
- Procuring (buying) from companies with good BEE levels addresses the element of “preferential procurement” under the B-BBEE scorecard.
Under the preferential procurement or “buying measure”, spend from a Level 1 B-BBEE company e.g., BOTI, will be multiplied by 135% as opposed to the other extreme, where you will get 0% spend with a non-compliant B-BBEE entity. This will contribute to achieving a higher preferential procurement score, which in addition to other factors, will contribute to increasing your B-BBEE status.
- Supporting Enterprise Development initiatives.
BOTI also can assist in improving the enterprise development aspect of your scorecard.
- Scheduling training initiatives targeted at meeting your B-BBEE objectives.
BOTI offers a range of courses from Soft Skills to Technical/ Computer Skills. To view the courses offered by BOTI please consult the following link.
Thus, spending with a company with good B-BBEE ratings may aid in improving your BEE status and will positively contribute to economic transformation.
CONTACT US NOW
Please consult the following link for more details on the course or to reserve your spot in this workshop please contact 011 882 8853.
For an in-depth look at what other courses we offer click on our secure website boti.co.za or alternatively view our latest course schedules.
If you would like a copy for B-BBEE affidavit or would like us to register on your database, we will be more than happy to fill out your vendor forms.
We look forward to dealing with you and contributing towards improving your B-BBEE status.
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Frequently asked questions
What do the B-BBEE levels mean?
B-BBEE levels rate a company’s empowerment status, and the lower the number, the better the level: Level 1 is the highest. A better level makes it more likely that a company wins government tenders or licences, and contracts from customers who need a good B-BBEE score themselves. Under the procurement measure, spend with a Level 1 supplier counts at 135%, while spend with a non-compliant supplier counts at 0%.
How is a company’s B-BBEE level worked out?
For most medium to large companies, those with a turnover over R50 million, the level is set by the B-BBEE scorecard. The scorecard measures several elements, including skills development, socio-economic development, and how the company buys from and develops other businesses, and the total score sets the level. Because every element counts, a company needs to perform across all of them and track its scorecard from year to year.
Does buying from a Level 1 B-BBEE supplier improve our score?
It helps. Under the procurement measure of the scorecard, spend with a Level 1 B-BBEE supplier is recognised at 135% of its value, while spend with a non-compliant supplier is recognised at 0%. Moving spend to suppliers with good levels therefore lifts your procurement score, which, together with the other elements, contributes to your overall B-BBEE level.
How can B-BBEE training help our company?
B-BBEE training helps the managers who own your scorecard understand how each element is measured and how to track it from year to year, which is the first practical step to protecting your level. Spending on skills development also counts on the B-BBEE scorecard under the B-BBEE Act 53 of 2003 and its Codes; your verification agency confirms what is recognised.
To help the managers who own your scorecard understand how B-BBEE levels are measured and tracked, book BOTI’s one-day Black Economic Empowerment (B-BBEE) Fundamentals Training. It runs in-house at your premises, at our venue in Sunningdale, Johannesburg, or online, and delegates receive a BOTI certificate of attendance.