Why do SMEs need a B-BBEE certificate?

The revised Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice came into law on 1st May 2015. The government’s intention with the amended codes is to transform South Africa’s business landscape and realise the country’s full economic potential. We look at the different categories that small businesses fall into, and the advantages of being B-BBEE compliant.

Under the codes a small business with a total turnover below R10 million qualifies as an Exempt Micro Enterprise (EME). This means that they automatically achieve a level 4 B-BBEE status. If they are 51% black-owned they will receive a level 2 status, and those that are 100% black-owned will automatically be granted a level 1 B-BBEE status.

A business with a total annual turnover that is between R10 million – R50 million will fall into the Qualifying Small Enterprise (QSE) category. These businesses need to comply with all five elements of the revised codes. If they are 51% black-owned it will automatically gain a level 2 B-BBEE status, and those that are 100% black-owned will achieve a level 1 rating.

There are some of the advantages of achieving a B-BBEE certificate:

  • Companies that intend doing business with a government body or part of the public sector, need to be 100% compliant.
  • In the private sector, preferential procurement has a knock on effect throughout the chain of supply, which affects all business entities.
  • Private companies with a good scorecard ensure that business opportunities are not lost to competitors with a better B-BBEE rating.
  • B-BBEE compliant companies increase their opportunity to win businesses from competitors that are not compliant.
  • There are financial and non-financial resources available to small business owners.
  • When you have a B-BBEE certificate, it provides an incentive for bigger companies to do business with you, as it improves their scorecard.

Larger businesses now have increased pressure to support SMEs, in order to comply with the revised B-BBEE elements. So, when you have a good B-BBEE scorecard, it makes your company more attractive to big business. Entrepreneurs and business owners need to familiarise themselves with the amended B-BBEE codes to understand how they impact on their business.
LEAP experts are on hand to simplify the ‘World of B-BBEE”. For more information on compliance and how you can improve your rating, call us on 011 449 7074 or visit www.leapco.co.za.