Empowering Supplier Status
The Amended Codes of Good Practice of October 2013 was initially issued with reference to Empowering Supplier status for all entities. An Empowering Supplier was defined as:
“A B-BBEE compliant entity, which is a good citizen of South Africa, who complies with all regulatory requirements of the country and should meet at least 3 (if it is a large enterprise with an annual turnover over R50 million) or 1 (if it is a Qualifying Small Enterprise with an annual turnover of between R10 million and R50 million) of certain criteria”.
The following list below, are the 5 criteria to which the definition above refers:
1) At least 25% of cost of sales, excluding labour costs and depreciation, must be procured from local producers or local suppliers in RSA. For Service industry, labour costs are included but capped to 15%.
2) 50% of jobs created are for Black people provided that the number of Black employees, since the immediate prior verified B-BBEE measurement, is maintained.
3) At least 25% transformation of raw material / beneficiation, which include local manufacturing, production and/or assembly and/or packaging.
4) Spend at least 12 days per annum of productivity deployed in assisting Black EME and QSE beneficiaries to increase their operational or financial capacity.
5) At least 85% of labour costs are paid to South African employees by the Service industry.
However on the 28th October 2016 the Department of Trade and Industry issued the following gazette notice:
(a) The recognition of empowering supplier status for the inaugural year of the Amended Codes of Good Practice, as determined by Paragraph 1(d) of Notice 444 of 2015, is hereby extended until further determination. All valid B -BBEE Verification Certificates, Exempt Micro Enterprise and relevant Qualifying Small Enterprise Sworn Affidavits and CIPC Certificates issued on or prior to 30 April 2016 will be automatically recognised as an Empowering Supplier until the date of expiry of that B -BBEE Verification Certificate, Sworn Affidavit or CIPC Certificate.
(b) Any Entity measured on or after 1 May 2016 will automatically be recognised as an Empowering Supplier until a further notice is issued.
To date, no further notice has been issued in this regard which means that all measured entities will be deemed to be an Empowering Supplier until such time that the DTI issues further clarification.
The exclusion of Imports for Procurement
The Automotive Industry is faced with some challenges when it comes to whether or not they may exclude imported products or services from the measurement of their Procurement spend. While some importers have the choice of whether or not to procure from a local supplier, some are contractually obliged to procure from foreign suppliers. While the Department of Trade and Industry are trying to encourage the sourcing of products and services locally, in some cases this not possible. Under the Amended Codes, the criteria for allowing any imports to be excluded, now requires further evidence in order to exclude certain imports.
As per the B-BBEE Codes of October 2013, the following imported goods and services may be excluded:
1. Imported capital goods or components for value-added production in South Africa provided that:
a. There is no existing local production of such capital goods or components; and
b. Importing those capital goods or components promotes further value-added production within South Africa
2. Imported goods and services, other than those listed above, if there is no local production of those goods and services including, but not limited to, imported goods or services that:
a. Carry a brand different to the locally produced goods or services; or
b. Have a different technical specification to the locally produced goods or services.
The exclusion of imports listed under point 2 above are subject to them having developed and implemented an Enterprise Development and Supplier Development plan for imported goods and services. This plan should include:
• Clear objectives
• Priority interventions
• Key performance indicators and
• A concise implementation plan with clearly articulated milestones
If your business therefore falls under point 2 above, it is suggested that you develop and implement a plan in order to avoid the inclusion all your imported products in your total measured procurement spend, as no foreign business would be able to supply you with a B-BBEE certificate. This means that your company will be penalised under your procurement spend.
For more information or assistance on B-BBEE please contact BEE Compliancy, as we are an associate member of NAACAM. BEE Compliancy can offer our clients solutions to their B-BBEE needs, which include:
• Monthly BEE Consulting
• Gap Analysis
• BEE Strategy Planning
• BEE Training
• Desk Top Analysis
We service clients throughout South Africa and may be contacted on 0312661106 or via email: firstname.lastname@example.org