Small and micro businesses face less onerous empowerment requirements, following announcements recently by Minister of Trade and Industry Mandisi Mpahlwa. He was reacting to business comments on the draft black economic empowerment (BEE) codes of conduct, which were published in December last year.
Speaking to the press, Mpahlwa said there was a need to do more than what was done in the initial codes for small enterprises.
The Department of Trade and Industry said in a progress statement released this week that it was in the process of revisiting thresholds and categories that would define qualifying small enterprises.
Vuyo Jack, executive chair at Empowerdex, says there have been claims that the threshold of an annual turnover of R300 000 is too restrictive, and that South African businesses would welcome an increase.
Jack said most people were punting a threshold of R1million, with some pushing for a R1,5million threshold, but ultimately it was up to the department to set the level.
”The implication is if these (small) companies are black or white, it doesn’t matter,” said Jack. ”If companies buy from them, they will be considered 100% BEE.”
Theo Lombard of Empowerlogic said the mooted increase to the threshold was a good thing because the current levels made things difficult. ”It will allow those companies that thought BEE compliance was too difficult to transform,” said Lombard.
Madile Mofammere, managing director of BEE services for Siyakha Consulting, said big companies had complained because the codes said they had to spend a certain level of procurement with micro-enterprises but, once they had placed one order, it would take the micro-enterprise over the threshold and then they would have to find a new micro-enterprise as a supplier.
”Once they support them once, they are no longer a micro enterprise,” said Mofammere, who was a former director of BEE enterprise and industry development at the trade and industry department.
The deparment also highlighted the fact that qualifying small enterprises can opt to implement only five of the seven elements of the qualifying small enterprises (QSE) scorecard.
Lombard says this means that small, white-owned companies can still retain full ownership and meet BEE criteria by meeting other requirements. ”There is a bonus for companies that go with the ownership requirements,” said Lombard. ”So they are encouraged to do it, but they can avoid it.”
The department also announced that it would be simplifying the codes by reducing indicators and making the language used in the codes more easily understandable.
Mpahlwa said the department would be producing a practitioners guide and a ”simple, short, almost idiot’s guide to broad based BEE”.
Jack said the simplification would mean making the language much more accessible without compromising the substance or principles of the code.
The department is aiming to present the finalised codes to Cabinet for approval next month.