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The new BBBEE codes

01 June 2007 FAnews

When the broad-based black economic empowerment (BBBEEE) codes were announced, many business owners were understandably ‘anxious’ regarding the possible implications of these codes. For some it was part of the transformation to the new South Africa, for others it was yet another obstacle to doing business in this country.

Despite the ‘emotional issues’ around the BBBEE codes, many companies realised that it’s here to stay, and changed their business models accordingly. This was a difficult task, as much uncertainty surrounded the codes.

On the 9th of February this year, a collective sigh of relief was breathed in the business community as the new BBBEE Codes of Good Practice kicked in and, according to Jonathan Goldberg, member and facilitator of the Institute of Directors Southern Africa (IoD), a number of welcome compromises and concessions, particularly for smaller companies, were introduced.

Positive changes for smaller companies

A very positive announcement is that the Codes automatically grant 100% BEE recognition to companies with turnover of less than R5 million. This means there is one less regulatory issue small business owners have to worry about.

Another significant concession is the decision to allow businesses with a turnover of between R5 million and R35 million to choose which four of the seven elements of BEE they wish to comply with. “These businesses are still required to contribute towards broad-based black economic empowerment, but the freedom to choose which elements suit them will provide flexibility,” says Goldberg.

The new Black

According to the new definition, only those who were South African citizens before 1994 qualify as ‘black’. Therefore, says Goldberg, “Anyone who gained citizenship after 1994 doesn’t qualify for recognition.” This is likely to have far-reaching implications on companies that are owned by, for example, Zimbabwean-born South African citizens.

A concern

The intention behind the government’s BBBEE drive is to bring previously disadvantaged individuals into the mainstream of the economy. However, one has to raise the concern that often BBBEE is a case of the rich becoming richer. The bigger companies will now, more than ever, rather approach an ‘experienced’ BEE partner, than someone ‘unknown’, without connections and ‘powers’.

Looking at the bigger picture and considering the real implications of BBBEE codes, these are positive changes. If the revised BBBEE codes will create a more positive attitude among the entrepreneurs and businesspeople in the country, who can now focus on growing their small business and creating jobs, it will have a positive ripple effect throughout the economy.

Quick Polls

QUESTION

The South African authorities are hard at work to ensure the country is removed from the global Financial Action Task Force grey-list by February or June 2025. What do you think about their ongoing efforts?

ANSWER

But what about the BRICS?
Compliance burden remains, grey-list or not.
End-2025 exit is too optimistic.
Grey-list is the new normal.
Too little, too late.
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