6) Broad based black economic empowerment act (BBBEE)

Cards (12)

  • Purpose
    • Enable wealth to be spread more broadly across all population groups.
    • Allows for development of Codes of Good Practice.
    • Aims at targeting inequality in South African economy.
  • Impact
    Positives
    • Good BEE rating improves image of business.
    • Provides variety of business codes to improve employment equity.
    • Encourages businesses to address demands for equity directly.
  • Impact
    Negatives
    • Processes may lead to corruption if not monitored.
    • Investment issues can cause unhappiness between existing shareholders.
    • Businesses that want to do business with government must have their BEE status assessed annually.
  • Discriminatory actions
    • Failing to implement affirmative action to meet BBBEE responsibilities.
    • Refusing to award tenders to black suppliers who are BEE compliant.
  • Penalties for non-compliance
    • Businesses may face imprisonment for non-compliance and fronting.
    • Businesses licenses may not be renewed and authorisations may not be issued.
    • Business can be banned from government contracts for 10 years.
  • Ways to comply
    • Develop small business/ SMME's through ESD.
    • Outsource their services to BEE compliant suppliers.
    • Send black people for skills development training.
  • Implications of the Act
    Revised BBBEE pillars
    • Management control
    • Skills development
    • Ownership
    • Enterprise and supplier development (ESD)
    • Socio-economic development/ social responsibility
  • Implications of the Act
    Implication of management control on businesses:
    • Businesses are directly penalised for not implementing this pillar.
    • Involve black people in the decision-making processes.
    • Appoint black people in senior executive positions/ to management.
  • Implications of the Act
    Implication of skills development on businesses:
    • Provide learnerships and learning programs to black employees.
    • Business benefits from increased pool of skilled/ trained workers.
    • Business must engage black employees in skills development initiatives.
  • Implications of the Act
    Implication of ownership on businesses:
    • Business should include black people in shareholding/ partnerships.
    • Encourage small black investors to invest in big companies and share ownership.
    • More opportunities are created for black people to become owners/ entrepreneurs.
  • Implications of the Act
    Implication of Enterprise and supplier development (ESD) on businesses:
    • BBBEE suppliers may be without good workmanship.
    • Smaller businesses that aren't BBBEE compliant lose business.
    • Outsource services to suppliers that are BBBEE compliant.
  • Implications of the Act
    Implications of social responsibility/ socio-economic development on businesses:
    • Business should focus on critical areas affecting national growth and development such as environmental awareness/ education, housing, poverty and unemployment.
    • Allocate limited CSI resources to selected beneficiaries in the community.