a users guide to the forest sector bbbee charter and scorecard, …€¦ · element 4: skills...

DRAFT

A Users Guide to the Forest SectorBBBEE Charter and Scorecard

Department of Water Affairs and Forestry

Version: 8 June 2007

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Contents

1. WhatisbroadbasedBEEandwhydoweneedit? 2

2. TowhomdoesbroadbasedBEEapply? �

�. HowwillbroadbasedBEEbeimplemented? �

4.WhyandhowwastheForestSectorCharterdeveloped? 4

5.WhataretheaimsoftheForestSectorCharter? 5

6.WhatdoestheForestSectorChartercontain? 5

7.DoestheCharterapplytome? 5

8.HowwilltheaimsofbroadbasedBEEbemetthroughtheCharter?Introducingthesectorscorecards 7

9.HowdoIusetheBEEscorecard?Tipsforbusinessownersand beneficiaries 8

Element1:EquityOwnership 9

Element2:Managementcontrol 1�

Indicator�:EmploymentEquity 15

Element4:SkillsDevelopment 17

Element5:PreferentialProcurement 19

Element6:EnterpriseDevelopment 2�

Element7:Socio-economicDevelopment 25

10. Is an official B-B BEE rating necessary and how is it obtained? 27

11.WherecanIgetmoreinformation? 28

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1. What is broad based BEE and why do we need it?

BroadbasedBEE is thestrategygovernmenthasput inplace tobringaboutgreaterparticipationofblack people in the economy, and to spread the benefits of the economy more widely. This is of great importancetothegrowthandstabilityofourcountry,wherethemajorityofthepopulationwereexcludedfromparticipatingintheeconomy,andmanyarepoorandrelyonwelfaresupport.B-BBEEisastrategytoenablethepopulationtomeettheirownlivelihoodneeds,whilstatthesametimebuildingtheeconomy.

B-BBEE is not about replacing white people with black people, but rather about growing the overallsizeoftheeconomyandmakingsurethatopportunitiespreviouslyenjoyedbyaminorityareextendedto the majority. Whereas the earlier definition of BEE focused mainly ownership and management of businessesbyblackpeople,broadbasedBEEaimstoextendeconomicopportunitiestoamuchwiderrangeofblackpeople,includingwomen,youth,peoplewithdisabilitiesandthoselivinginruralareas.Thisisdonethroughencouragingchangesacrossallofthefollowingkeyareasofbusiness:

Ownershipandmanagement: § Increasingthenumberofblackpeoplewhomanage,ownandcontrolbusinesses § Providingopportunitiesforcommunities,workersandothercollectiveenterprisestoownand managebusinesses

Skillsdevelopment: § Promotingandsupportinginvestmentinskillsdevelopmentforblackemployees, includingblackwomenanddisabledpeople

EmploymentEquity: § Ensuringequitable representation inallemploymentcategoriesandatall levelsof the

workforce § ImprovingworkingconditionsthroughsettingIndustryCodesofConductonContractingand Employment

Preferentialprocurement § Promotingthepurchaseofgoodsandservicesprovidedbycompaniesthathaveastrong

B-BBEE profile § Ensuring fair contracting practices in the forest sector through the Industry Codes of Conduct

Enterprisedevelopment § Encouraginginvestmentinenterprisesthatareblackownedandmanaged

§ Industry specific initiatives. Within the forest sector this includes initiatives to support black-owned black enterprises that contribute to increased timber supply and beneficiation intheforestryvaluechain.

Socio-economicdevelopment § Encouraging businesses to implement or support development programmes amongst

needycommunities § Industry specific initiatives. Within the forest sector this includes initiatives to improve the livingconditionsandlivelihoodopportunitiesfortheruralpoor,includingforestryworkers andtheirfamilies

Who is Black? InBEEspeak,theterm“black”referstopeoplewhoareAfrican, Coloured andIndianSouth Africans,that is, all thosewhoseparticipation in theeconomywas limited through raciallydiscriminatory lawsof pre-1994 governments. Broad based BEE gives particular emphasis to black women, youth, thedisabled,andthoseinruralareas.

What BEE is NOT- a note on fronting FrontingispretendingtobeBEEcompliantwhen,infact,theempowermentisjustforshow.Toputastop to this, government has clearly defined practices that will not be acceptable in terms of BEE. These are:

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§ Windowdressing:whenblackpeopleareappointedtopositionsinthecompanybut have no real influence or power

§ Benefit diversion: when the economic benefits that a company gets from being BEE rated aredivertedawayfromtheblackparticipantswhobroughtrecognitiontothecompany

§ Opportunism:whenajointventurewithablackpartnerswhoaresuppliersissetup,but mostoftheworkisstilloutsourcedtoanon-BEEcompany

The B-BBEE Codes of Good Practice (Code 000 Statement 002) defines indicators of fronting risk and sets out specific procedures for reporting of fronting practices.

The Regulatory Framework for BEE

TheConstitutionTheconceptofB-BBEEisenshrinedintheconstitution:Thepreamblegivesasoneofthepurposesoftheconstitution:

“Improve the quality of life of all citizens and free the potential of each person”

B-BBEEAct

ThisprovidesthelegalbasisfortheB-BBEEprogramme.Itincludes:§Definition of who is a black person§InstructstheMinisterofTradeandIndustrytodraftCodesofGoodPractice

onblackeconomicempowerment§ProvidesforgazettingofIndustryChartersandSectorCodes

Broad-basedBEEStrategyandScorecard

Outlinesthegovernment’s10-yearBEEplan

CodesofGoodPractice

TheCodesexplain indetail howB-BBEE is tobe implemented.Thisuserguide is a simplified overview, for further detail you must consult the Codes.

T r a n s f o r m a t i o nCharters

ThegenericCodesaddressBEEacrosstheentireeconomy.TransformationCharters provide a sector specific BEE strategy and scorecard. A Charter can begazettedundersection12oftheB-BBEEActasevidenceofthesector’scommitmenttopromoteB-BBEE.

SectorCodes

TransformationCharterscanthenbegazettedundersection9oftheB-BBEEActasSectorCodes.ASectorCodeislegallybindingonbusinessesinthatsector, and theSectorCode replaces thegeneric codes for that particularsector.

2. To whom does broad based BEE apply?

B-BBEEappliestoallenterprisesthatconductabusiness,tradeorprofessioninSouthAfrica,whethertheyarecompanies,soleproprietors,cooperatives,multi-nationals,enterprisesownedbyorgansofstateorpublicentities.BEErequirementsapplyequallytowhiteandblackownedandcontrolledenterprises.Thereare,however,differentrequirementsdependingonthesizeoftheenterprise.Specialistenterprisesthat are not privately owned, such as non-profit organisations, and public entities are also treated differently. More informationabouthowB-BBEEismeasured insmallenterprises,NGOsandpublicentitiesisgiveninsection7below.

3. How will broad based BEE be implemented?

ThebasicmethodofimplementingBEEisthroughprocurement.IfenterprisesdonotimplementBEE,soonerorlatertheyarelikelytolosebusiness.Itworkslikethis.IntermsofGovernment’spreferentialprocurementpolicy,stateinstitutions(thatspendaverylargeamountonserviceproviders)willbuyfrom

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companiesthathaveagoodBEErating.ForanenterprisetohaveagoodBEErating,itmustalsobuyfromsupplierwithagoodBEErating.Inthisway,thereisacascadingeffect,andevencompaniesthatdonotdirectlysupplygovernmentareaffected.Inaddition,governmentdepartmentswilluseBEEratingswhenissuinglicenses,concessionsorotherauthorisationsintermsofanylaw.Theratingwillalsoapplywhenselectingpreferredbiddersforthesaleofstateownedassetsorenterprises.

TheBEEratingofanenterpriseisworkedoutusingtheBEE scorecard.ThisScorecardwilleitherbethe“generic”ScorecardoutlinedintheCodesofGoodPracticepublishedbytheDepartmentofTradeand Industryor theSectorScorecard, if thishasbeengazettedbyGovernmentasa “SectorCode”.Thescorecardsetstargetsforeachofthe7indicatorsofBEE,andallocatespointsforachievingthesetargets.Ifyoumeetthetarget,yougetallthepoints.Ifyouareonlyhalfwaytothetarget,yougethalfthepoints.PointsscoredundereachindicatorarethenaddeduptoworkoutyourBEEStatus.WhenanenterprisebuysfromaBEEsupplier,theamounttheyclaimasBEEspendmustbeadjustedaccordingtotheBEEratingofthatsupplier.IfthesupplierhasalowBEErating,thenonlyasmallproportionofthespendcanbeclaimedasBEEprocurement.Thetablebelowshowstherelationshipbetweenpointsscored,BEEStatus,andBEEprocurementrecognitionlevel.

BEE contributor status Points scoredBEE procurement recognition level

Level 1 contributor At least 100 points 135%

Level 2 contributor At least 85 points, and less than 100 125%





Level 7 contributor At least 40 points, and less than 45 50%Level 8 contributor At least 30 points, and less than 40 10%Non-compliant Less than 30 points 0

Example:Ifyourbusinessscores58points,youwillqualifyasalevel5contributor.IfyousellR10000worthofgoodstoanotherbusiness,then80%,orR8000ofthatamountwillcounttowardstheirpreferentialprocurementtarget.Ifhowever,yourscoreisonly�1points,only10%willcount.Thecustomermayneedto find an alternative supplier with a better BEE score in order to meet their procurement target. More detailonhowscoresforpreferentialprocurementarecalculatedisprovidedinSection9,Element5onpage26

4. Why and how was the Forest Sector Charter developed?

Why a Charter?Section12oftheBroadBasedBEEActmakesprovisionforsectorstodeveloptransformationcharters.WhatadvantagesaretheretodevelopingaSectorTransformationCharter?

SectorChartersenableasectorto:§Buildsector-widecommitmenttobroadbasedBEE,includingundertakingsbybothgovernmentand

theprivatesectortoimplementmeasurestofast-trackbroad-basedBEE§Set industry specific targets and timeframes tailored to the needs and circumstances of the particular

sector.WithoutaCharter,thegenericscorecardwillapply.§Identify the activities that will qualify in terms of the industry specific component of the scorecard §Establish institutional arrangements for monitoring and reporting on the implementation of

transformationinthesector

SectorTransformationCharterscanbeconvertedintoaSectorCode,givingtheCharter legalstatus.Whenthistakesplace,thescorecardintheCharterwillhaveprecedenceoverthegenericscorecard.

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How was the Charter developed? The development of the Forest Sector Charter was a two-year process involving stakeholderrepresentativesandexpertsfromthroughoutthesector.ASteeringCommitteecomprising26memberswasresponsibleforoverseeingtheworkofsub-sectorworkinggroups.The5sub-sectorworkinggroupswere:Growers,ForestryContractors,Saw-millers,Charcoal&PoleProducers;andFibre.Theworkinggroups identified challenges facing their sub-sector, developed sub-sector scorecards, and identified instrumentsandsectorundertakingsneededtoimplementthescorecards.Taskteamswereconvenedto look at specific challenges facing broad based BEE in the sector. Specific task teams were established to detail the skills development instruments, financial instruments and government undertakings in the Charter.

The Charter development process was officially launched by the Minister in April 2005 at an indaba held inMidrand.ThedraftCharterwaspresentedtothesectorbytheMinisterofWaterAffairsandForestryat a second national indaba held in June 2007.Thereafter, the Charter will be published for publiccomment. After incorporation of public comment, the final Charter will be gazetted as Transformation CharterandSectorCodeintermsofsections12and10oftheBroadBasedBEEAct.

5. What are the aims of the Forest Sector Charter?

Theforestsectorcharteroutlinesthefollowingvisionforthesector:

ü An inclusive and equitable forest sector in which black women and men fully participate.

ü A forest sector that is characterised by sustainable use of resources, sustainable growth, international competitiveness and profitability for all its participants.

ü A forest sector that contributes meaningfully to poverty eradication, job creation, rural development and economic value adding activities in the country.

6. What does the Forest Sector Charter contain? The Forest Sector Charter contains the following five key elements:

§ AsetofObjectives and PrinciplestoguidetheB-BBEEprocessintheforestsector.

§ Asummaryofchallengesfacingthesector

§ TheB-BBEE Scorecard and Targetsthatwillapplytomeasuredenterprisesoperatingwithin theForestSector.

§ Undertakings by government, industry and labourtoputinplaceinstrumentstoenablethe forestsectorasawhole,aswellasindividualbusinesses,toachievetheirB-BBEEtargets.

§ Agreement to establish a Forest Sector Charter Council to oversee and facilitate the implementationoftheCharter,aswellasproceduresforprogressreportingandreview.

TheForestSectorChartercontainsasummaryoftheaboveelements;moredetailcanbefoundintheCompanionDocumenttotheCharter.

What is the Forest Sector Charter Council?TheForestSectorCharterCouncilwillbeestablishedtooverseeandfacilitatetheimplementationoftheCharter.TheCouncilwillmonitortheimplementationof theCharter,seeto it that thescorecardandundertakingsmadebybusinessandgovernmentareimplemented, and make sure that the Charter is widely publicised. The Council shall consist of 19members that fairly reflect the stakeholders in the sector and have fair representation of black people andwomen.

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7. Does the Charter apply to me?

Sub-sectors: The Forest Sector Charter applies to all enterprises that are engaged in commercialtimber production and first level processing of wood products. This includes the following sub-sectors: Timbergrowers Contractors Fibre:pulpandpaper;woodchips;boardproducts;wattlebark Sawmilling:sawntimber;miningtimber;matches Poleproducers CharcoalproducersBeneficiaries: The Charter also applies to a wide range of potential beneficiaries, including black investors,blackentrepreneurs,blackemployeesandjobseekers,aswellasunemployedblackpeopleandtheruralpoor.

What size of business qualifies? Thegovernmentwouldliketoseeallenterprises,irrespectiveoftheirsize,participatinginB-BBEE.Thisincludessoleproprietors,co-operativesocieties,tradingtrusts,partnerships,closedcorporations,andcompanies. However, the government recognises that it is more difficult for small and micro businesses tocomplywithBEEprovisions,andhasprovided foranexemption formicroenterprises-ExemptedMicro-Enterprises,andslightlydifferentrulesforsmallenterprises-QualifyingSmallEnterprises.Thedefinition of these different categories of enterprises, Medium and Large, Qualifying Small Enterprises, andExemptedMicro-Enterpriseisgivenbelow.

Measurement of BEE for various sizes of business

Mediumandlargeenterprises

Turnover>R35 million+

QualifyingSmallEnterprises-QSE

Turnover R5 m – R35 m

ExemptedMicroEnterprisesEME

Turnover < R5 m

Large corporate businesses

Mediumsizedcommercialoperations

Owner-managerorfamilybusinessesInformalandparttimeoperationsStart up enterprises, for first year.

Medium and Large EnterprisescorecardAll7indicators

QSEscorecardAny4ofthe7indicators,eachcounts25%

ExemptedMicro-EnterprisesAutomaticlevel 4BEEstatusEnterpriseswith over50%blackownership: level 3 BEEstatusMust comply with Industry Codes of Conduct

A note on exempted micro-enterprises.Abusinessisanexemptedmicro-enterprise if theannualturnover (also referred to revenue) isR5millionor less.Themajority of owner-manager enterprisesin the sector fall into this category, including all growers that have less than approximately 2000haof plantations, small sawmills and charcoal and pole producing operations. Start-up enterprises aremeasured as ESME’s for the first year, regardless of expected total revenue.

Exemptmicro-enterprisesarenotmeasuredusingascorecard,butcanautomaticallyclaimlevel4BEEStatus, or level 3 if they are more than 50% owned by black people. It is necessary however, for ALL businessesintheforestrysector,irrespectiveofsize,tocomplywiththeIndustryCodesofConductoncontractingandemployment.WhenenterprisessubmitproofoftheirEME-status,theywillhavetosignacommitmentofcompliancewiththeIndustryCodesofConduct. FailuretodosoortocomplywithIndustryCodesofConductwillresultinadowngradingoftheirBEErecognitionlevel.

Toclaimautomaticstatus,micro-enterprisesmustsubmitevidenceof: § TurnoverwithintheR5m/annumthreshold, § BEE ownership profile if claiming level 3 status,

§ CompliancewiththeIndustryCodesofConduct.

ExemptedMicroEnterprisescanelecttobemeasuredintermsoftheQSEscorecardshouldtheywish

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tomaximisetheirpointsandmovetothenextprocurementrecognitionlevel.

What are the Industry Codes of Conduct?

Theforestindustrythroughitsrepresentativeassociationsandinconsultationwithlabour,hasundertakentoestablishIndustryCodesofConductfortheForestSector.ThefollowingCodeswillbedeveloped:

1. Codes for forestrycontracting:controlanddirect therelationshipbetweencontractingcompaniesandcontractors,

2. Codesforemergentforestgrowerschemes:TheseCodeswillcontrolanddirectrelationshipbetweencontractgrowersandcompanies

�. Codesforcharcoalcontracting:TheseCodeswillcontrolanddirecttherelationshipbetweensmallblackcharcoalproducersandthebrandnameproducersandindustrialusersofcharcoal.

4. Codes foremploymentpractices:TheseCodeswillgivepracticaleffectandweight to fair labourpracticesasprovided forunder theBasicConditionsofEmploymentAct,1997,andother labourlegislationasitappliestoemployees,includingcontractworkers,intheforestsector.

TheIndustryCodesshallbeincludedinalaterversionofthisUserGuidewhentheybecomeavailable

Rules for Qualifying Small Enterprises (QSEs) ThereisaseparatescorecardforQSEs.TheQSEscorecardissimplerthanthescorecardformediumandlargecompanies,andQSEscanselectwhich4ofthe7indicatorstheywishtobescoredon.TheQSEscorecardisexplainedfurtherinSection8and9below.

Risk of circumvention:Ifyouarethinkingthatitmaybeagoodideatobreakyourbusinessupintosmallerunitsinordertobecomemicro-exempt,orqualifyasQSE,thinkagain!Thecombinedturnoverofall“relatedenterprises”ofameasuredentitywillbetakenintoaccountwhendeterminingthecompliancerequirementsofESME’sandQSE’s.

What if my business cuts across two or more sectors?Ifyourbusinesscutsacrosstwoormoresectors,forexampleagrowerwhoalsoproducesagriculturalcrops,youwillbemeasuredagainstthesectorscorecardthatappliestothepartofyourbusinesswiththehighestmeanannualturnover.Ifyourbusinessisdividedintoseparatetradingentitiesoroperatingunits,youwillbemeasuredagainsttherelevantscorecardforeachunit.

How are organisations that are not privately owned measured? Certain types of businesses and organisations cannot transform their ownership, such as not-for-profit organisations,Section21companies,highereducationinstitutionsandenterprisesownedbytheState.Theseareknownas“specialistenterprises”,andaretobemeasuredusingadifferentscorecardthatexcludestheownershipelement.ThisscorecardiscalledtheAdjusted generic scorecard.SeeCode000,statement004formoreinformation.

8. How will the aims of broad based BEE be met through the Charter? Introducing the sector scorecards

TheScorecard isthemaintoolforsettingstandardsfortransformation,andagainstwhichindividualenterprises will be measured. In addition to setting out sector specific scorecards, the Charter commits government,industryandlabourtoputtinginplaceinstrumentstoenablebusinessestoachievetheirBEEtargets.TheseundertakingsarelistedintheForestSectorTransformationCharter.Responsibilitiesand due dates for each are clearly specified and implementation will be monitored by the Charter Council.

TheForestChartersetsthestandardsforbroadbasedBEEinthesectorthroughthesectorscorecard.Thescorecardisbasedonthegeneric scorecard assetoutintheCodesofGoodPracticeissuedbyDTI. TheCodesofGoodPracticemakeprovisionfor2scorecards:oneforsmallbusinesses,called

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QualifyingSmallEnterprises(QSE)andanotherformediumandlargescaleenterprises.TheCharterlikewiseincludesscorecardsforbothQSEsandmediumandlargescaleenterprises.

Table 8.1 shows the allocation of weighting points across the 7 elements, or business areas, for bothmedium to large scale enterprises and QSEs. The allocation of points is a reflection of the relative importance ofthisindicatortoB-BBEE.

TABLE 8.1: Forest Sector scorecards– relative weighting points of the elements and allocation of bonus points

Medium/large scale enterprises

Qualifying small enterprises

1. Ownership 20 25Bonus points 5 �2. Management Control 10 25

Bonus points - 2

3. Employment Equity 15 25

Bonus points � 2

4. Skills Development 15 25

5. Preferential Procurement 20 25

6. Enterprise Development 15 257. Socio-economic Development 5 25 Bonus points � �Total possible number of points 111 110

Medium – Large scale enterprises: Theweightingofeachindicatoristhesameasthegenericscorecard.Inadditiontothese100points,theforestsectorscorecardmakesprovisionfor11bonuspoints,asagainst7inthe generic scorecard. The additional bonus points have been included to promote sector specific targets.

Qualifying small enterprises:TheQSEscorecardmeasuresthesameindicatorsastheMediumandlarge-scaleenterprisesscorecard,butbecauseeachindicatorisallocated25points,only4oftheindicatorsneedtobemeasuredtomakeupthefull100points.Theenterpriseownercanselect4oftheindicatorstofocusonandbescoredunder.So,forexample,asmallbusinesswithonewhiteownercouldignoretargetssuchasownershipandmanagementcontrolandfocusonachievingothertargetssuchasthoseforskillsdevelopmentand preferential procurement, and still be able to obtain an acceptable BEE rating. Likewise, a black owned businesscoulddecidetofocusontargetssuchasthoseforownershipandmanagementcontrolandignoretargetssuchasthoseforenterprisedevelopmentandsocio-economicdevelopment.Bonuspointslinkedtotheindicatorsselectedcanbeearneduptoamaximumof10points,asagainst7inthegenericscorecard.

Inordertoscorepoints,enterprisesmustbemeasuredagainstthetargetssetforvariousindicatorslistedunder each of the 7 elements. Each indicator has its own sub-weighting and compliance target. In thefollowingsectionwewillseehoweachoftheelementsisbrokendown,andhowtousethescorecardtocalculateascoreforanenterprise.InformationandideasforimprovingBEEratingareprovided,aswellastips for potential beneficiaries.

9. How do I use the BEE scorecard? Tips for business owners and beneficiaries

Theaimofthissectionistogivebusinessownersthetoolstoassesstheircurrentbroad-basedBEEratingand find out more about how to improve their rating. It is also a guide for those who want to find out more about the scorecard, in order to identify opportunities available to beneficiaries.

Eachofthe7scorecardelementsispresentedinthissection.Thefollowingiscoveredforeachelement:§ The detailed scorecard is presented, showing targets and weightings. Both the main scorecard (applicable tobusinesswitha turnoverofaboveR�5million)and theQSEscorecard (applicable toenterpriseswithturnoverofbetweenR5andR�5million)arepresented.Wheretherearedifferences betweensub-sectors,theseareshown.

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§ Thescoring methodisexplained,includinganexplanationofwhatismeantbythetermsused inthescorecard.

§ Tipsandideasaregivenforhowabusinesscanscoremorepointsforthisindicator.Thisisof interest to both business owners and beneficiaries.

The informationcontained in thissectionof theguide isdrawnmainly from theDTICodesofGoodPractice for Broad-based Black Economic Empowerment, as published in Government Gazette No.29617, February 9th, 2007. For further details or clarification, readers should refer directly to the Codes. The Gazette in which the Codes are published can be downloaded from the DTI website:www.thedti.gov.za/bee/codes2005.html

CopiesoftheGazettecanbepurchasedfromtheGovernmentPrinterorobtainedfromtheDepartmentof Trade and Industry offices.

Table 9.1 An Index of the B-B BEE Codes

CODE # Heading Topic

000ConceptualframeworkofB-BBEE

GeneralprinciplesandtheGenericScorecard

100 OwnershipMeasureseffectiveownershipofenterprisesbyblackpeople

200 Managementcontrol Measureseffectivecontrolofenterprisesbyblackpeople

�00 EmploymentEquityMeasuresinitiativesintendedtoachieveequityintheworkplace

400 SkillsDevelopmentMeasuresinitiativesintendedtodevelopthecompetenciesofblackemployees

500 PreferentialProcurementMeasurestheextentthatenterprisesbuygoodsandservicesfromBEEcompliantsuppliersaswellasblackownedentities

600 EnterpriseDevelopmentMeasurestheextentthatenterprisescarryoutinitiativescontributingtoeffectiveenterprisedevelopment

700Socio-economicdevelopment

Measurestheextentthatenterprisescarryoutinitiativescontributingtosocio-economicdevelopment

800QualifyingSmallEnterprises

CodesofGoodPracticeforQualifyingSmallEnterprises

Schedule1Interpretationsanddefinitions

Provides interpretation and definitions of all terms used in theCodes

Element 1: Equity Ownership

Counts 20 points / 25 for QSEs

The scorecards below show how the equity ownership element allocates points. The first scorecard givesthetargetsandallocationofpointsformediumtolargecompanies,andthesecondgivesthoseforQSEs.Ownershippointsareallocatednotonlyfornumberofsharesownedbyblackpeople,butalsoforthevotingrightsassociatedwiththeseshares,sharesownedbyblackwomenanddesignatedgroups,andforpaymentofthesharesallocated.

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Ownership Scorecard (medium to large enterprises)

Total possible points: 20 points + 5 bonus points

Indicator description Weighting

PointsC o m p l i a n c e target

Your score

Votingrights

1.1ExercisablevotingrightsintheEnterpriseinthehandsofblackpeople

� 25%+1vote

1.2ExercisablevotingrightsintheEnterpriseinthehandsofblackwomen

2 10%

EconomicInterest

1.� Economic interest of black people in theenterprise

� 25%

1.4 Economic interest of black women in theenterprise

2 10%

1.5Economicinteresttowhichthefollowingareentitled:§Blackdesignatedgroups;§BlackParticipantsinEmployeeOwnership

Schemes;§Black beneficiaries of Broad-based

OwnershipSchemes;or§BlackParticipantsinCooperatives

2 7.5%

RealisationPoints

1.6 Ownership fulfilment 1 Yes

1.7Netequityinterest 7 YesBonuspoints

1.8Bonuspointsforinvolvementintheownershipofenterprisesofblackparticipants:

§InEmployeeOwnershipSchemes;§Broad-basedOwnershipSchemes;or§Cooperatives

1 10%

1.9Bonuspointsforinvolvementintheownershipofenterprisesofblacknewentrants

2 10%

1.10Bonuspointforachievingahighertargetforindicator1.�

1 �0%

1.11Bonuspointforachievingahighertargetforindicator1.4

1 15%

Ownership Scorecard (QSE‘s)Totalpossiblepoints:25points+�bonuspoints

Sub-indicator description Weighting

Points

Compliance target

Your score

Votingrights

1.1ExercisableVotingRightsintheEnterpriseinthehandsofblackpeople

6 25%+1vote

EconomicInterest

1.2 Economic Interest of black people in theEnterprise

9 25%

1�


Points

Compliance target

Your score

RealisationPoints

1.3 Ownership fulfilment 1 Yes

1.4Netequityinterest 9 Yes

Bonuspoints

1.5BonuspointsforinvolvementintheownershipofEnterprisesofblackwomen

2 10%

1.6Bonuspointsforinvolvementintheownershipofenterprisesofblackparticipantsin:§EmployeeOwnershipSchemes;§Broad-basedOwnershipSchemes;or§Cooperatives

1 10%

How is an ownership score calculated?

Scoresneedtobeworkedoutlineatatime.Firstyouwillhavetodetermineyourlevelofcompliance.Ifyoumeetthecompliancetarget,youscorethefullnumberofpoints.Ifnot,youscoreinproportiontoyourpercentagecompliancewiththetarget.

Thebasicformulaforcalculatingascoreis:

Pointsscored=totalpossiblepointsXactualpercentage/targetpercentage

Example:

Ablackownedcompanyownsa20%shareinyourbusiness.

Actual%is20,target%is25,andtotalpossiblepointsare6

Yourscore:6X20/25=4.8points

However,theBEEcompanyhasnoblackwomenownersandnordoesyourcompany.Youwouldscore0forthissub-indicator,andlosetwopossiblepoints.

Andsoon…Onceyouhaveworkedoutyourscoreforeachindicator,youcanaddtheseuptogetthetotalscoreoutofthe20totalpossiblepoints.

What does that mean? Scorecard definitions

Black designated groups: Theseincludeblackpeoplewhoare:youth(under�5years);agedpeople(over65);livinginruralareas;unemployedworkers.

Employee ownership schemes: Schemesthatinvolvemorethan90%ofallemployeesofabusi-ness,or90%ofemployeesinaparticularemploymentcategory

Broad based ownership schemes: schemesthatinvolvecollectiveinvestmentandincomereceivedis distributed directly or used to benefit the members in accordance with the scheme rules.

Black new entrants:NopriorequitytransactionstothevalueofR20millionormore

Ownership fulfilment pointsrefertothepaymentofshares.Onlywhenthesharesarepaidforinfullcanthispointbeclaimed.

Net equity interestisthetermusedfortheamountofdebtthatshareholderhas.Inordertoclaimthe7points,shareholdersmustbepayingoffthesharesataratethatwillensurefullpaymentwithin10years,orinthecaseofgrowers,ataratethatwillensurefullpaymentbytheendoftherotationperiodofthecrop.Paymenthastobespreadoutequallyoverthatperiod.

How to score more under the ownership indicator

Thecodesprovidefortwomodelsforincreasingownershipscore:saleofequityinexistingbusiness,orengagingina“qualifyingownershiptransaction”.Qualifyingownershiptransactionsentailsellingapartofabusiness,orassets,toblackpeopletostartaseparatebusiness.Sharesmayberetainedinthenew

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enterprise,ornot.Inordertoscorepointsfortheoriginalbusiness,thetransactionmustcomplywiththerequirementsofa“qualifyingtransaction”.

Requirements of a Qualifying TransactionItispossibletoscoreall20pointsintheownershipsectionbysellingoffapartofabusinessorassets,orusingassetstoestablishanewbusinesswithblackshareholders.The“measuredenterprise”–theoriginalbusiness-canclaimpointstowardsitsownershipscorecard-socalled“ownershipequivalency”–basedonthevalueoftheinvestmentmadebythemeasuredentityinthenewenterpriseasapercentageofthetotalvalueofthemeasuredentity.Toqualify,thetransactionmustresultinsustainablebusinessopportunitiesforblackpeople,andthetransferofspecialistskillsorproductivecapacitytoblackpeople.Itmustnotresultinunnecessaryjob-losses.Thetransactionmustalsoinvolveaseparateassociatedenterprise,notencumberedbyunreasonablelimitationsthroughitsrelationshipwiththeinitiatingenterprise.Anyoutsourcingarrangementswiththeinitiatingenterprisemustbeconcludedatarms-lengthonafairandreasonablebasis.

Note that if an equivalency percentage is claimed under the ownership indicator of the scorecard,additionalpointscannotbeclaimedundertheenterprisedevelopmentindicatorofthescorecard.

Formoredetail,andfortheformulausedtocalculatetheequivalencypercentageforyourownbusiness,seeCode100Statement101.

Therearealsorulesforsaleofshares.Insimpletermstheseare:§thenewBEEshareholdersareallocatedvotingrights;§womenanddesignatedgroups/broadbasedparticipantsareamongsttheshareholders;§ financing arrangements are in place to ensure the shareholders are able to pay off their debts withintheperiodofonerotation.

Tips for sole proprietors/ family owned businessesSellingashareinyourbusinessisfairlystraightforwardifthebusinessisinthenameofacc,companyor trust. If yours is a family owned business, you cannot sell shares without first forming a legal entity suchasacc,companyor trust.The IncomeTaxActhadbeenadjusted toenable theconversionofprivatelyownedbusinesses, including forestryenterprises, intoacompany,withoutanytaxorcapitalgainimplications.TheonlylimitingprovisionisthattherecanbenosaleofsharestoB-BBEEpartnersfor the first 18 months after the conversion into a company. However, you can identify black partners immediately, and give them a formal option to purchase. On this basis, you can claim points underownershipimmediately.

To whom can an equity share be sold? Sharescanbesoldtoorboughtbyindividuals,companiesorgroups.Eachoptionhasitsmeritsandlimitations, and the option selected depends on the circumstances of the beneficiaries and the nature of thebusinessentitywantingtosellshares.

i) Established black investment companies:+ These tend to be high profile companies with significant influence and capital. - Tend to have many other commitments and may not be able to spare much of their time for thebusiness.Suited to: Large operations. Investment companies will not be interested in investing in small companies orcc’sHow to structure and finance: Sale of shares, financed by the black investment company. Note the flow throughprincipleapplies(seebelow).

ii) Key high profile individuals + Often will have significant influence and capital resources - Lack local level connections, commitment may be short term, have limited specialised technical expertiseSuited to: Large operations, these individuals busy and will not have much interest in investing in small operations

iii) Group schemes Theseareschemesdesignedtoextendbusinessequitytothosewhounableorunwillingtomakein-vestmentsontheirown.Thesepeoplecangrouptogetherandformaschemethatmakesinvestments

15

ontheirbehalf.Thecodesmakeprovisionfor�typesofschemes:

§ Broad –based ownership schemes thatinvolvecollectiveinvestmentandincomereceivedisdistributed directly or used to benefit the members in accordance with the scheme rules.

§ Employee share ownership schemesthatinvolvemorethan90%ofallemployeesofabusi-ness,or90%ofemployeesinaparticularemploymentcategory.

§Trusts; a legal entity for managing and distributing benefits to members of a group schemesPositive and negative features of Group schemes

+ Credible,longtermcommitment;qualifyforadditionalpointsinthescorecard;buildimprovedrela-tionshipswithinthecommunity/withemployees;basedonalreadyestablishedrelationships;existingknowledgeofthebusiness.

- Participantslikelyto lack finance and influence. Can only score up to a maximum of 40% of total ownershippointsforbroadbasedschemesandemployeeownershipschemes,unlesstheycomplywith the additional qualification criteria given in Code 100 Annex 100b.

How to structure and finance:Therearestringentrulesinthecodesforhowtheseschemesaretobestructuredandmanagedinordertoqualify(seeCode100,annex100b).

Case studyofanemployeescheme:TheBonagude-ManziniPartnership.TheManziniEstateisafamilyownedfarmthatproducestimber.TheowneroftheManziniEstateandthe200workersem-ployedonManzinienteredintoapartnershiptopurchaseaneighbouringtimberfarmcalledSpesBona.Theworkersestablishedabusinessvehicle,theBonagudeTrust,inordertocontractwiththeManzini Estate in the new venture. A loan from the Standard Bank was used to finance the purchase ofSpesBona.TheBonagudetrusthas20%oftheshares,ManziniEstate70%andtheremaining10%areyettobeallocated.

The Flow Through Principle Ifyousellasharetoacompanythatispartlyblackowned,thentheblackequityinyourbusinessonlyincreasesbytheamountequivalenttotheblackownershipshare.Forexample,ifacompanythatis50%blackownedbuysa25%shareinyourbusiness,theblackequityinyourbusinesswillbe50%of25%,i.e.12%.Thisisknownastheflow-through principle.Ifthecompanyyousellsharestoismajorityblackowned(over50%)thenthefullvalueofthestakeisrecognised.Thesameappliestoscoringvotingrights

Blackshareholderscanselltheirshares,justlikeanyothershareholders.Iftheydo,theytaketheblackequitypointswiththem,unlessthereiscompliancewithasetofcriteriaassetoutinCode100para�.5.Thesecriteriarelatetotheneedtomakesurethatthetransformationthathastakenplaceasaresultoftheblackownershippriortothesalewillnotjustfallawayafterthesale,butwillhavealastingeffect.Alternatively,themechanismofwarehouse fundscanbeusedtosellshares.Theware-house fund owns the shares and your BEE profile is not affected if black shareholders sell out.

Element 2: Management control

Counts 10 points 25 for QSEs plus 2 bonus points

Thiselementmeasureswhohasasayinthestrategicdirectionofthebusiness.Itiscloselylinkedtotheequityownershipindicator.Saleofequityisanopportunitytoappointblackdirectorsandincreaseblackrepresentationatseniormanagementlevel.

Managementcontrolscorecard(mediumtolargeenterprises)

Total possible points 10


PointsCompliance target

Your score

BoardParticipation

16

2.1 Exercisable Voting Rights held by blackBoardmembersusingtheAdjustedRecognitionforGender

� 50%

2.2BlackExecutiveDirectorsusingtheAdjustedRecognitionforGender

2 50%

ManagementParticipation

2.� Black Senior Top Management using theAdjustedRecognitionforGender

5 40%

2.4BlackotherTopManagement,adjustedusingtheAdjustedRecognitionforGender

2 40%

As QSEs may not have a board, the scorecard is simplified to measure black representation at owner- managerlevel,andgivesbonuspointsrepresentationofblackwomen:

Management control Scorecard (QSEs)

Total possible points: 25 plus 2 bonus points



Your score

2.1BlackrepresentationatTopManagementlevel 25 50.1%

2.2 Bonus points for black women representation at TopManagementlevel

2 25%

How is a management control score calculated?

Scoringisasdescribedintheownershipelement,theonlynewthingtotakeaccounthereistheadjustedrecognition for gender. The scorecard for medium and large enterprises does not have a separateindicator tomeasure involvementofblackwomen,but incorporatesatarget forparticipationbyblackwomenbywayofanadjustmentfactortermedthe“Adjusted Recognition for Gender”.Thewaythisworksisasfollows:

Step 1:Workoutthenumberofblackpersonsinthatcategory(e.g.boardmemberswhoareblack)andadjustforgender.

Total number of black board members with voting rights (men and women) divided by 2. Add the number that are women.

Examples:1.Therearefourblackboardmembers,nonearewomen:4/2+0=2.2.Therearefourblackboardmembers,twoarewomen:4/2+2=4

�.Therearefourblackboardmembers,allfourarewomen:4/2+2=4

NOTE:Whyisthescorethesameforexample2and�above?Isthisamistake?No,theCodeslimitthenumberofwomenusedinthecalculationtoamaximumof50%ofthetotalnumberofblackpeople.Inthisexample,eventhoughthereare4womeninmanagement,thenumberusedinthecalculationislimitedto50%of4whichis2.

Step 2:Calculatetheoverallpercentageinthatcategory(e.gblackboardmemberswithvotingrights)usingtheadjustedscore.

Total number of black persons in that category adjusted for gender / total number in that categoryaltogetherX100

Example1above:Adjustedscorefornumberofblackboardmembersis2.Thereare8board membersintotal.2/8X100=25%

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Step 3:Calculateyourscore

Points scored = total possible points X actual percentage / target percentage

Example:Totalpossiblepoints=�X25/50=1.5points.

Note:Withoutadjustingforgender,thecompanywouldhavescoredthefull�points.ThisunderscorestheimportanceofensuringgenderrepresentivityinBEE.

What does that mean? Scorecard definitions

Board members arepersonselectedbyshareholderstoservetheboard.

Executive Directors areboardmembersthatareinvolvedinthedaytodaymanagementand/orthefulltimeemployofthecompanyand/oranyofitssubsidiariesTop management includes:

§Senior Top Management includes the chief executive officer, chief operating officer, chief financial officers and other people holding similar management positions

§ Other Top Management includes the chief information officer, the head of marketing, head ofsales,headofpublicrelations,headoftransformation,headofhumanresourcesandotherpeople holdingsimilarmanagementpositions.

How to score more for management control

Itisagoodideatoputinplaceasuccessionplanforexistingemployeestodevelopmanagementstaff.Thiscouldincludeamentorshipprogrammetogroomatalentedmanagerforanexecutiveposition.AdditionalpointscouldtherebybescoredunderSkillsDevelopment-seebelow.Placingemphasisonwomenimprovesscoresforalltheindicatorsforblackparticipation(mediumtolargeenterprises)orearnsbonuspoints(QSEs).

A word of caution for QSEsOwner-managerenterprisesmaybereluctanttosellsharesand/ortogiveovercontroloftheirbusiness.Inthiscase,ratherthan“windowdressing”,itisbettertofocusontheotherindicatorsinthescorecard.

Paul Janisch, B-BBEE specialist, advises small businesses that are reluctant to go the ownershiproute: “Workonotheraspectsofempowermentthatwillhaveabetterimpactonthebusinessandthe countryasawhole.Ialwaysrecommendenterprisedevelopmentastheindicatorinthescore card that will have most positive spin for beneficiaries and businesses.”

Thefollowingelementspromotethe“broad-based”partofB-BBEE.Theyareveryimportant,becausethey provide opportunities to a wide range of beneficiaries than do the ownership and management controlelements.

Indicator 3: Employment Equity

Counts 10 points, QSE 25 points

Thisindicatoraimstopromotetheemploymentofblackpeoplethroughoutanenterpriseorbusiness.Allbusinesseswith50ormoreemployeesarerequiredintermsoftheEmploymentEquityActtoprepareemploymentequityplansandreports.Thescorecardformediumandlargescaleenterprisesmeasures%ofblackpeopleatprofessionalandmanagementlevelsonly,whereastheQSEemploy-mentequitytargetsincludeallblackpeopleemployedbythebusiness.

Employmentequityscorecard(mediumtolargeenterprises)

Total possible points: 10


PointsCompliance

target Your score

Yr0-5 Yr6-10

18

�.1BlackemployeeswithdisabilitiesasapercentageofallemployeesusingtheAdjustedRecognitionforGender

2 2% �%

�.2 Black employees in Senior Management as apercentage of all employees using the AdjustedRecognitionforGender

54�% 60%

�.� Black employees in Middle Management as apercentage of all employees using the AdjustedRecognitionforGender

46�%

75%

�.4 Black employees in Junior Management as apercentage of all employees using the AdjustedRecognitionforGender

4

�*68% 80%

3.5 Bonus points for meeting or exceeding the EAP targets

in each category under 3.1 to 3.43

Employmentequityscorecard(QSEs)



PointsCompliance target Your score

Yr0-5 Yr6-10

�.1 Black employees of the Measured Entitywho are Management as a percentage of allManagementusingtheAdjustedRecognitionforGender

1� 40% 60%

�.2BlackemployeesoftheMeasuredEntityaspercentageofallemployeesusingtheAdjustedRecognitionforGender

7 60% 70%

�.�CompliancewithIndustryCodesofConductonemploymentfortheForestSector

5 Yes Yes

3.4 Bonus points for meeting or exceeding the EAP

targets in each category under 3.1and 3.22 Yes Yes

How is an employment equity score calculated?

Representivity: The first thing you will need is accurate information about the racial and gender breakdownofyourcompanystaff.Thisinformationshouldhavebeencompiledforthepurposeofdraftinganemploymentequityplan,orEEreport.Ifnot,youwillneedtoaskeachstaffmembertocompleteanEEA1 form (obtainable from the Department of Labour), in which they will state the race they believe themselves to be. You will then be able to compile figures required to calculate your score, using the sameformulaasfortheotherindicators:

Pointsscored=totalpossiblepointsXactualpercentage/targetpercentage

Remember you need first to adjust for gender when calculating actual percentage. You should divide the totalnumberofblackpeopleinthatcategoryby2andaddthenumberofwomen,toarriveatanadjustednumber.This number is then converted into a percentage of the total number in that category. Formorehelponhowtocalculatepointsscoredaftertheadjustmentforgenderrecognitionseetheworkedexampleonundermanagementcontrolonpage20above.

The employment categories in the medium and large enterprise scorecard are defined in terms of form EEA9oftheRegulationsissuedundertheEmploymentEquityAct,andthesebusinesseswillalreadythereforebefamiliarwiththesecategories.

Compliance with industry codes of conduct on employment: itmustbenotedthatmeasuredentitiesreceivepointsontheEmploymentEquityelementoftheScorecardonlyiftheyareincompliancewiththe

19

IndustryCodesofConductforemploymentpracticesasoutlinedintheCharter.Enterprisesthatdon’tcomplyforfeitallthepointsunderthiselement.QSE’smustalsocomplywiththecodes,butunlikethemediumandlargeenterprises,theycanscore5bonuspointsiftheydoso.SeenextpageformoredetailontheIndustryCodesofConduct.

How to score more for employment equity

Representivity: Whenmakingnewappointments,givepreferencetoblackpeople,andinparticularblackwomenandblackpeoplewithdisabilities.Byputtinga trainingandpromotionplan inplace toenable a flow of black staff up through the ranks of your business, you can prepare to meet your targets in the medium to long term. Link your employment equity plan with your skills development plan, investing in developing skills of black people to fill job categories where black people are currently under represented.Formediumtolargeenterprises,takenotethatemployinglargenumberofunskilledblackworkersisnotgoingtoearnyouanyEEpoints.

Industry Codes of conduct: Theforestindustrythroughitsrepresentativeassociationsandinconsultationwithlabour,hasundertakentoestablishIndustryCodesofConductonemploymentfortheForestSector.ThesecodesareaimedatgivingpracticaleffectandweighttofairlabourpracticesasprovidedforundertheBasicConditionsofEmploymentAct,1997,andotherlabourlegislationasitappliestoemployees,includingcontractworkers,intheforestsector.Thecodesarestillbeingdeveloped,butinthemeantimeitisagoodideatoensurecompliancewithalllabourrelatedlegislation.Toensurecompliance,carryoutanauditofexistingpracticesandputinplaceaplanofactiontoremedynon-compliances.Thereafter,regularin-houseauditsmaybeneededtomakesurenon-compliances are identified and remedied. In this way you are less likely to be caught out when an independent verification is carried out.

More information: Basic guides to labour legislation can be obtained from the Department of Labour’s websitewww.labour.gov.za.

Element 4: Skills Development

Counts 15 points, 25 points QSEs

Skillsdevelopmentliesattheheartofbroad-basedBEEandisthekeytoincreasingtheoverallscoreofabusiness.Thispresentsalotofopportunitiesforemployeeswhowouldliketofurthertheirskillsandeducation,andforthoseinthebusinessofskillsdevelopment.Businessmanagers/ownersneedalsopayparticularattentiontothiselementiftheywishtoimprovetheirBEEratingonemploymentequityandmanagementcontrol.Thegoodnewsisthatbusinessescanscoredoublepoints,scoringunderforskillsdevelopmentANDundertheotherelements,iftheirskillsdevelopmentplansarewellfocussed.

Skills development scorecard (medium and large enterprises)


Indicator description WeightingPoints

Compliance target

Your score

4.1 Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for black employees as a percentage of Leviable Amount using the AdjustedRecognitionforGender

6�%

4.2 Skills Development expenditure on Learning Programmes specified in the Learning Programmes Matrix for black employees with disabilities as a percentage of Leviable Amount usingtheAdjustedRecognitionforGender

� 0.�%

4.3 Number of black employees participating in Learnerships orCategoryB,CandDProgrammesasapercentageoftotalemployeesusingtheAdjustedRecognitionforGender

6 5%

20

Skills development scorecard (QSEs )



Compliance target

Your score

4.1 Skills Development spend on Learning Programmes for black employees as percentage of Leviable Amount using the AdjustedRecognitionforGender

252%

How is a skills development score calculated?

To score points for skills development, Medium and Large enterprises must produce evidence of: §Compliance with Skills Development Act and Skills Development Levies Act §RegistrationwithapplicableSETA§Aworkplaceskillsplan§Implementation of programmes to develop of Priority Skills generally, and black employees

specifically TheserequirementsdonotapplytoQSE’s.

TheQSEscorecardisrelativelysimple,measuringonlyoneitem:skills development spend-thisisoverandabovethestatutory1%skillsdevelopmentlevy.

The medium to large enterprise scorecard measures two aspects of skills development: skills development spendoverandabovethestatutory1%skillsdevelopmentlevy(brokendownintodifferentcategoriesofemployees);and%ofblackemployeesparticipatinginlearning programmesspecified in theLearning Programmes Matrix.

What does that mean? Scorecard definitions and rules

Skills development spendThisistheamountofmoneythebusinessspendsonskillsdevelopment,overandabovetheskillsdevelopmentlevy.Unlikethelevy,themoneyisnotpaidintoanationalfund,butistobespentbytheemployerdirectly.Rulesregardingwhatcanbeclaimedasskillsdevelopmentspendaregivenbelow.Skillsdevelopmentspendismeasuredasapercentageofleviable amount.

Leviable amount This is the amount against which the Skills Development Levy is paid under the Skills Development Levies Act. In simple terms, it is the total salary bill of the enterprise.

Learning programmes and the learning programme matrix Toqualify,theskillsdevelopmentmustfallintooneofthe7categoriesoflearningprogrammesoutlinedinthelearningprogrammematrixintheCodes(code400Annex400A).Thematrixmakesprovisionforawiderangeofinstructionalandwork-based learning programmes, from formal qualifications offered by educational institutions to informal programmes with no specific accreditation or qualification requirements.Toworkoutpointsscored,thesamebasicformulaapplies


Thefullnumberofpointsallocatedinthescorecardcanbeclaimedifthetargetpercentageexpendi-tureismet.SoifaQSEcompanyspends�%oftheirsalarybillonskillsdevelopment,overandabovetheskillsdevelopmentlevy,theywouldscorethefull25points.Iftheyonlyspentandextra1%theywouldscoreonethird(1/�)of25,whichis8.��.Pointsarealwaysroundedofftothenearestwholenumber:8.

What qualifies for skills development spend? § Trainingmaterials§ Trainersfees/salaries§ Facilitiesincludingcatering§ Scholarshipsandbursaries*§ Coursefees§ Accommodationandtravel§ Administrativecostsofrunningaskillsdevelopmentprogramme,includingsalariesoftraining

21

managerorskillsdevelopmentfacilitator§ Salariesoflearnersparticipatinginlearningprogrammescanonlybeclaimedforcertaintypes ofprogrammes(Code400annex)

*Cannotclaimforscholarshipsorbursariesifthestudentisexpectedtorepayallorpartofthefees,orifthegrantisconditional.Onlythefollowingconditionsareallowed:thatthelearnermustcontinuetoworkfortheemployerforaperiodnotexceedingtheperiodofstudy,thatthelearnertocompletethestudieswithintheallocatedtimeframe.

Adjusting for gender: Welookedathowtoadjustthenumberofblackpeopleinagivencategoryforgenderinthemanagementcontrolelementonpage19.Torecap,youneedtodividethetotalnumberofblackpeopleinthatcategoryby2andaddthenumberofwomen,toarriveatanadjustednumber.Thisnumberisthenconvertedintoapercentageofthetotalnumberinthatcategory.Intheskillsdevelopmentscorecard,however,themeasureisnotthenumberblackemployeesonlearningprogrammes,buttheexpenditure on learning programmes for black employees. How is this figure adjusted for gender? The samebasicformulaapplies:dividethetotalamountspentonblackemployeesinthatcategoryby2,andaddtheamountspentonblackwomeninthatcategory.Thisisthenexpressedasapercentageofthetotalspendonallemployeesinthatcategory.Ifexpenditurecannotbedirectlylinkedtothegenderof thosebeing trained, thisshouldbeallocated in thesameratioas thespend thatcanbe linked togender.Other rules § ExpenditureonABET(AdultBasicEducationandTraining)programmescanbemultipliedby 1.25

§ Expenditure on uncertified learning programmes cannot account for more than 15% of the total valueofclaimedexpenditure.

How to score more for skills development

1.ContactFIETA(ortheSETAbestsuitedtoyourtrainingrequirements)toobtainalistofthelearningprogrammesavailablefordifferenttypesoftraining;andalistofaccreditedtrainingprovidersabletoofferthese.

2.Carryoutaskillsneedsassessmentandproduceaworkplaceskillsplan.ForassistancewiththiscontactFIETA,oratrainingproviderinyourarea.Trainingprovidersareoftenwillingtoassistemployerstodevelopaskillsplanfreeofcharge,astheycanthenclaimbackyourskillsdevelopmentlevyfundsfromtheSETAforthecoursestheyrunforyourstaff.Includeaplanforlearningprogrammes,takingaccountoftheneedtoincludeblackwomenandblackemployeeswithdisabilities.

�.Yourskillsplanshouldincludeboththe1%thatwillbefundedthroughtheskillsdevelopmentlevyandyouradditional�%spend.Whenplanningtheadditional�%,takeaccountoftherulesregardingallowablespend,directandindirectexpenses,andmakesureyoukeepgoodrecordsofyourexpenditurefor verification purposes.

Industry training providers AlistofaccreditedtrainingproviderscanbeobtainedfromtheForestrySeta-FIETA

ForestIndustriesEducationandTrainingAuthority Phone0117120600fax011��91166 Email : [email protected]

The list of accredited training providers can also be found on the FIETA website : www.fieta.org.za

Element 5: Preferential Procurement

Counts 20 points, 25 points for QSE

ThePreferentialprocurementelementofthescorecardmeasurestoextenttowhichabusinessissourcinggoodsandservicesfromsupplierswithagoodBEErating.BusinessesthatbuyfromsupplierswithahighBEEratingscoremoreforpreferentialprocurement(thetableonpage5showshowBEEstatusis

22

linkedtopointsscoredonthescorecard).Byscoringmore,theiroverallBEEratingwillincrease.Thisisgoodforbusiness,ascustomersandclientsneedtosourcefromsuppliersandserviceproviderswithahighratinginordertoscorepointsunderpreferentialprocurementthemselves.Preferentialprocurement points provide an incentive for businesses to source from black owned companies,orothersuppliers thathaveahighBEErating. Thiselementalsoprovidesopportunities fornewsupplierstocomeontothesceneandcompetefavourablywithexistingsuppliersthatarenotblackowned,orhavealowBEErating.

Preferential Procurement Scorecard (medium to large businesses)



Compliance target

Your

Yr0-5 Yr6-10

5.1B-BBEEProcurementSpendfromallSuppliesbasedon their B-BBEE Procurement Recognition Levels as a percentageofTotalMeasuredProcurementSpend

1210*

50% 70%

5.2 B-BBEE Procurement Spend from Qualifying SmallEnterprisesorExemptedMicro-Enterprisesbasedontheapplicable B-BBEE Procurement Recognition Levels as a percentageofTotalMeasuredProcurementSpend

�10% 15%

5.�B-BBEEprocurementspendfromanyofthefollowingSuppliersasapercentageofTotalMeasuredProcurementSpend§Suppliersthatare50%blackowned(�outof5points);

and§Suppliersthatare�0%blackwomenowned(2outof

5points).

54*

15% 20%

5.4 Compliance with Industry Codes of Conduct oncontractingoftheForestSector

�* Yes Yes

*Weightingsthatapplytoenterprisesengagedincontractingschemes

Preferential Procurement Scorecard (QSEs)


Sub-indicator description WeightingPoints

C o m p l i a n c e target

Y o u r score

Yr0-5 Yr6-10

5.1BEEProcurementSpendfromallsuppliersbasedon their BEE Procurement Recognition Levels as percentageofTotalMeasuredProcurementSpend

2520*

40% 60%

5.2CompliancewithIndustryCodesofConductfortheforestrycontractingindustry/charcoalindustry 5*

Yes Yes

*Weightingsthatapplytoenterprisesengagedincontractingschemes

Howdoesthescorecardmeasurepreferentialprocurement?

The key measure is BEE procurement spend as a percentage of total procurement spend. If allsupplierswereeitherempoweredornotempowereditwouldbesimple.Youcouldclaim100%ofyourspendonBEEsuppliersand0%ofyourspendonnon-empoweredcompanies.Inreality,suppliersareempoweredtodifferentdegrees.Theirdegreeofempowermentismeasuredbythescorecard.The

2�

tablebelowshowshowmuchofyourexpenditureyoucanclaimasBEEprocurementspenddependingontheBEEcontributorstatusofyoursupplier.

Table 9.1 Links BEE score of supplier with the benefit its customers will gain

BEE contributor status

Q u a l i f i c a t i o n (points scored)

BEE procurement recognition level

Amount claimable on a R10 000 spend

Level 1 contributor 100 and above 135% R 13 500Level 2 contributor 85-99 125% R12 500Level 3 contributor 75-84 110% R11 000Level 4 contributor 65-74 100% R10 000Level 5 contributor 55-64 80% R8 000Level 6 contributor 45-54 60% R6 000Level 7 contributor 40-44 50% R5 000Level 8 contributor 30-39 10% R1 000

Non-compliant Less than 30 0 0

How to calculate a score for BEE procurement spend:

Step 1. You will first need to get a complete list of your suppliers and their BEE contributor status. The amountspentoneachsupplierwillhavetobecalculated,takingintoaccounttherulesformeasurablespend(Table9.�belowgivesanoverviewoftheserules,butthefulldetailscanbefoundinCode500).

Step 2: These figures will give you the information you need to work out total procurement spend and totalBEEprocurementspendasshownintheexampleinTable9.2below.YouwillalsoneedtorefertothetableabovetoconvertBEEcontributorstatustoBEEprocurementlevel

Table 9.2: Example of how to calculate total procurement spend and total BEE procurement spend

Supplier Procurement SpendBEE procurement recognition level

BEE procurement spend

1 R10000 50% R50002 R25000 100% R25000

� R120000 10% R12000

Allothersuppliers

Sumoftheabove=Total procurement spend

Sumoftheabove=Total BEE procurement spend

Note that the BEE Procurement spend on a supplier that has benefited from contributions made by the samecompanytoenterprisedevelopmentcanbemultipliedbyafactorof1.2

Step 3: ConvertyourtotalBEEprocurementspendintoa%ofthetotalprocurementspend: total BEE procurement spend/ total procurement spend X 100%

Step 4:Applytheusuallyformulatoworkouthowmanypointsyouscore % BEE procurement spend/ target % BEE procurement spend X total number of points X weighting

What is measurable procurement spend? Therearerulesaboutwhatcanbecountedasmeasurableprocurementspend,andwhatisexcluded.Table9.�belowisasimpleguidetowhatismeasurableandwhatisexcluded.YouwillneedtoconsultCode500formoredetail.

Verification of suppliers BEE contributor status

§ BEEcontributorstatusofmediumandlargeenterprisesandQSEsmustbesubstantiatedbya

24

verification certificate. In cases where such certificates are not provided, you may rely of other credible forms of evidence of BEE compliance. Without a certificate or evidence, the spend cannotcounttowardsyourBEEprocurementspend.

§ Public entities are not excluded from having to supply verification certificates. There is a specific scorecard that applies to public entities, and this is what will be used to measure the BEE contributorstatusoftheseentities(seeCode004).

§ Exempted micro-enterprises automatically enjoy a BEE Procurement Recognition Level 4, which increases to Level 3 if they have over 50% black ownership or 30% black women ownership status.Theymusthoweversubmitproofthattheyqualifyasexempt,andasignedundertaking thattheyarecompliantwiththeIndustryCodesofGoodConduct(seepage8).

Table 9.3 Rules for measurable procurement spend and exclusions.

Measurable spend Excluded

Procurement from public entities listedin Schedule 2 & � of the Public FinancesManagementAct.Schedule 2 are public enterprises andsuppliers.

Schedule1organsofstateandpublicentities (donotgenerallysellservices)Taxesandlevies,includingVATSpendonanygoodsorservicesfromapublicentitythathasamonopoly(sothisexcludedthoseinSchedule2thathaveamonopolylikeESKOM

All goods and services procured that areoperational expenditure

Allgoodsandservicesprocuredthatmakeupthecosts of sales.

Importedgoodsandservicesorcomponentsforvalueaddedproductionexceptthoseonright

Importedgoods:§Notproducedlocally§ThatpromotevalueaddinginSouthAfrica§That have a different brand name to those locally

produced§With different technical specifications to locally

producedgoods

All capital expenditure incurred (cost ofloans)

Investmentorloansinanassociatedenterprise

BBBEErelatedprocurementspend

InvestmentsorloanstoassociatedenterprisesInvestment,loansordonationsgiventhatqualifyforrecognitionunderenterprisedevelopmentorsocio-economicdevelopmentindicatorsinthescorecard.

Payment to independent contractors andlabourbrokersContributions made to employee pensionfundsorprovidentfunds

Salaries and benefits paid to employeesDirectorspayments

How to score more for preferential procurement

Beginbycarryingoutananalysisofyourprocurementexpenditure.Thistaskwillbemademuchsimplerifyouhavealreadyworkedoutyourscoreasdescribedabove.IfyoucompareprocurementspendwithBEEprocurementspendforeachofyoursuppliersinturn,youwillbeabletoidentifywheretheproblemslie.Thebiggerthegapbetweenthesetwoamounts,themorethissuppliercontributestoloweringyourPPscore.Youshouldthentargetthesesuppliers.YoucaneithertakestepstoensuretheyincreasetheirBEEstatus,orswitchtosupplierswhoalreadyhaveahigherBEEcontributorstatus.

RememberthatyoucanmultiplyBEEprocurementspendfromenterprisesthatyouhaveassistedunderyourenterprisedevelopmentprogrammeby1.25.Soitisworthconsideringprovidingassistancetoanenterprisethatcouldbecomeoneofyoursuppliers.

Compliance with the relevant industry code of conduct can earn M&L enterprises in the Growers,

25

CharcoalandFibresubsectorsanextra�points,andQSEsanextra5(seepage8formoredetailonIndustrycodesofconduct).Toensurecompliance,carryoutanauditofexistingpracticesinrelationtotherelevantcode,andputinplaceaplanofactiontoremedynon-compliances.Thereafter,regularin-house audits may be needed to make sure non-compliances are identified and remedied. In this way you are less likely to be caught out when an independent verification is carried out or non-compliance is reportedtotheCharterCouncil.

Element 6: Enterprise Development Counts 15 points, 25 for QSE

Theenterprisedevelopmentelementofthescorecardaimstopromotetheemergenceandgrowthofnew enterprises able to contribute towards broad-based BEE. The primary beneficiaries of enterprise developmentaresmallandmediumenterprisesownedandcontrolledbyblackpeople.Toscorepointsunder this indicator, you need to make contributions towards the development of a beneficiary enterprise (or enterprises). Points are scored in relation to the target spend of 3 % of net profit after tax. If a business has not made a profit the previous year, or on average over the last 5-years, or if the profit marginislessthanaquarterofthenormintheindustry,thenadifferenttargetapplies(seeStatement600oftheDTICodesofGoodPractice).

Thereisasevereshortageof logandsawtimbersuppliesinthecountry.Forthisreason,pointsareassignedtogrowersandsawmillingenterprisesthatselllogsandsawtimbertoBEEcompliantandblackownedenterprises.Wherenosalesarerecordedforthatyear,companiescannotbemeasuredusingthisindicatorandwillbemeasuredontheindicatorsthatapplytootherforestenterprises.

Enterprise Development Scorecard (medium to large businesses)



Compliance target

Your score

6.1 Average annual value of all Enterprise DevelopmentContributions and Sector Specific Programmes made by the MeasuredEntityasapercentageofthetarget

15

12*�%ofNPAT

6.2Annualsalesoflogsandsawtimber(asapercentageoftotalsalesintermsoftonnage)toenterprisesbasedontheirBEE Procurement Recognition Levels

2* 20%

6.�Annualsaleoflogsandsawtimber(asapercentageoftotalsalesintermsoftonnage)toenterprises(regardlessoftheir BEE Procurement Recognition Level) that are:§morethan50%blackowned;or§morethat�0%blackwomenowned

1* 5%

*WeightingforGrowersandsawmillers

Enterprise Development Scorecard (QSEs)



Compliance target

Y o u r score

6.1 Average annual value of all Enterprise DevelopmentContributions and Sector Specific Programmes made by the MeasuredEntityasapercentageofthetarget

25

20*2%ofNPAT

6.2Annualsalesoflogsandsawtimber(asapercentageoftotalsalesintermsoftonnage)toenterprisesbasedontheirBEE Procurement Recognition Levels

�* 20%

26

6.�Annualsaleoflogsandsawtimber(asapercentageoftotalsalesintermsoftonnage)toenterprises(regardlessoftheir BEE Procurement Recognition Level) that are:§morethan50%blackowned;or§morethat�0%blackwomenowned

2* 5%

*WeightingforGrowersandsawmillers

How is an enterprise development score calculated?

Scoring for Indicator 6.1 Step 1:Identifyandquantify qualifyingenterprisedevelopmentcontributions(seebelowforanoverviewof qualification rules, see Code 600 for details) and sector specific programmes.

Notethat:Average annual enterprise development contributions can be calculated starting from the date ofcommencementofthecodes,orfromanearlierdate,upto5yearsprevioustothecommencementofthecodes.

There are two categories of contributions depending on the status of the beneficiary:

§Category A contributions: Exempted Micro-enterprises or QSE’s which are 50% black owned.Contributionsarevaluedat1.5timestheactualamountspent.

§CategoryBcontributions:Anyotherentitythatis50%blackowned,or25%blackownedwithaBEEstatus of between Level One and Level Six. The full value of the contribution is taken.

Youcannotclaimpointsunderbothenterprisedevelopmentandsocio-economicdevelopmentindicatorforthesamecontribution.

Step 2: Calculate total contributions using the Benefit Factor Matrix (Annex 600A in code 600).

Step 3: Work out Enterprise development contributions as a percentage of your after tax profit

Step 4:Calculateyourscoreaccordingtothestandardformula:


What enterprise development contributionsqualify?

Qualifyingenterprisedevelopmentcontributionscanbemonetaryornon-monetary,recoverableornonrecoverable, aimed at assisting the beneficiary to become more operationally and financially sustainable. Qualifyingenterprisedevelopmentcontributionsinclude:

§Direct enterprise development assistance as defined and designed by each contributing enterprise (e.g.directinvestments,grants,loans,seedcapital,training,mentoringetc)

§Enterprisedevelopmentcontributionstogovernmentapprovedenterprisedevelopmentprojects(e.g.infrastructuredevelopment,ruraldevelopment,urbanrenewaletc)

§Contributions to sector specific initiatives. These include contributions that support, encourage and nurture emerging black enterprises. The Charter Council will issue guidelines for sector-specific enterprisedevelopmentandsocio-economicdevelopmentcontributionsundertheScorecard.

Scoring for Indicators 6.2- 6.3NotethatscoringforGrowersandSawmillingsub-sectorsdifferstothatfortherestofthesector.�pointshavebeendeductedfromindicator6.1andallocatedto2additional indicators thatmeasuresalesoflogsandsawtimbertoenterprisesbasedontheirBEEprocurementrecognitionlevelandtoenterprisesthatareblackowned.Theaimofthisistomeasuretheextenttowhichthesesub-sectorsaresupportingenterprisedevelopmentthroughmakingscarcematerialavailabletoblackownedbusinesses.

27

How to score more for enterprise development

The codes make provision for a very wide range of contributions (see above). The benefit factor that canbeclaimedforthisspendisreducedifitisarecoverablespend,asopposedtoagrant(refertothebenefit factor matrix in Codes 600 Annex 600A). You can score full marks for expenditure that is not recoverable,butonlyapercentageforloans.

In thenextelementof thescorecard,socio-economicdevelopment,�bonuspointsareallocated foradditional spend on sector specific enterprise development initiatives. You cannot claim the same spend under enterprise development and again under socio-economic development. The additional spendmustbedividedbetweenboththeseelementsifyouwanttoscorepointsforboth.

What type of businesses should I support?Startwithyourexistingsuppliersandotherblackownedenterprisesyoualreadyhaverelationshipswith.Analyseyourcurrentprogrammesofsupport,ifany,andplanhowtoyoucouldassistthesebusinessesfurther.Supporttoforestrycontractingenterprises,smallgrowercontractingschemesandsmallcharcoalproducersshouldtakeintoaccount.

Toidentifyadditionalopportunitiesforenterprisedevelopment,ausefulguidelineistothinkofbusinessopportunities thatarise fromthe inputandoutputstreamsofyourbusiness.Examine thegoodsandservicesyourequire,andlookforopportunitiestosupportnewblackownedsupplyenterprises.Youcanusethistoalsoboostyourpreferentialprocurementscore.Someservicescurrentlyprovidedinhousecouldbeoutsourced.Next,examinealltheproductsandby-productsofyouroperations.Arethereanyvalueaddingopportunities,oropportunitiestoutiliseby-productscurrentlygoingtowaste?

Alternatively, you can contribute to an enterprise development fund or provide financial or other support to�rdpartiestocarryoutdevelopmentalactivitiesonyourbehalf

Element 7: Socio-economic Development

Counts 5 points, 25 for QSE

This is the last element of the scorecard and it measures contribution towards social investmentprogrammes. This element is specifically aimed at supporting poor and uneducated black people to accessthemainstreameconomy.Toscorepointsunderthiselement,youneedtocontribute,eitherincash or kind, towards an appropriate beneficiary.

Socio-economic Development Scorecard (medium to large enterprises)

Total possible points: 5plus�bonus



Your score

7.1AverageannualvalueofallSocio-EconomicContributionsmadebytheMeasuredEntityasapercentageofthetarget

51%ofNPAT

7.2 Bonus points for additional Qualifying Contributions made by the Measured Entity to Industry Specific Initiatives on Enterprise Development (indicator 6.1) or Socio-economic Development (indicator 7.1) (I bonus for every 0.25% NPAT)

30.75% of

NPAT

Socio-economic Development Scorecard (QSE)

Total possible points: 25plus�bonus



Your score

28

7.1 Average annual value of all Qualifying Contributionsmade by the Measured Entity as a percentage of Net Profit AfterTax(NPAT)orRevenue

25

22*

1%NPAT

7.2 Bonus point for additional Qualifying Contributions to Industry Specific Initiatives on Enterprise Development (indicator 6.1) or Socio-economic Development (indicator 7.1) (I bonus for every 0.25% NPAT or 0.33% revenue)

�* 0.75%NPAT

How is a socio-economic development score calculated?

Points are scored in relation to the target spend of 1 % of net profit after tax. This applies except under circumstances where the company has not made a profit the previous year or on average over the last 5-years, or where the profit margin is less than a quarter of the norm in the industry. In this case the enterprise development spend is based on turnover according to the formula provided in Statement600oftheCodesofGoodPractice.Investmentsmadepriortothecommencementofthecodeswillberecognised.

Socio-economic development contributions are monetary or non-monetary contributions made tobeneficiaries with the aim of assisting them to access the economy. Contributions may be:

§Direct socio-economicdevelopment (e.g.direct investments,grants, loans, seedcapital, training,mentoringetc)

§Sector specific initiatives, including contributions that improve the living conditions and livelihood opportunitiesfortheruralpoorinforestryareas,includingworkersandtheirfamilies.

The Charter Council will issue guidelines for sector-specific enterprise development and socio-economic developmentcontributionsundertheScorecard.

Arangeofcostscanbeincluded:

§Directoverheadcostsofrunninganin-housesocio-economicdevelopmentprogramme

§Enterprise development contributions to �rd parties engaged in socio-economic developmentinitiatives

The Benefit Factor Matrix (code 700, Annex 700A) is used to calculate the amount of allowable spend madeonavarietyofdifferentcontributiontypes.

If the beneficiaries of the contribution are a mixed group, at least 75% of the benefits must accrue to blackmembers.Iftheproportionofblackpeopleinthegroupisbelow75%theexpenditureisadjustedproportionately.

Contributionsmustbe“extraneous to regularbusinessactivities “Soyoucannotcountspend that isactually part of your day to day business, normal responsibilities as an employer, or that benefits your businessdirectlyorindirectly.

How to score more for socio-economic development

Thereare twobasicapproaches thatcanbe taken toachieving the targetofspending1%ofNPAT:through an in-house social programme OR through contributing to programmes implemented by �rdparties.Thesecouldbegovernment,privatesectorororNGOsinitiatives.

Tipsforin-housesocio-economicdevelopmentprogrammes

§ It isoftenbest toworkwithin thecommunity inwhich thebusiness is located,withagreateremphasisonthosewhoareinclosestproximity,aswellasthoseingreatestneed.Theforestindustryiswellplacedtotargettheruralpoor,beingmainlyarural-basedindustry.Seebelowforkeysocio-economicdevelopment opportunities and needs identified during the development of the Forest Charter.

29

§Community development work requires specialist knowledge and skills. It is important to eitheremploya full timesocio-economicdevelopment facilitator,or contract in theservicesof suchanindividualorgroup.

§Obtaininformationaboutexistingsocio-economicdevelopmentinitiativesinyourlocalareaandtheagencies responsible for implementing these. The municipal officer dealing with the Local Economic DevelopmentProgrammeforyourareawouldbeoneusefulcontact.Usethisinformationtoidentifyopportunitiesformakingdonationsto�rdparties.

§Bonuspointscanbeearnedforadditionalspend(onebonusforevery0.25%NPATor0.��%revenue)on sector specific initiatives in socio-economic development.

Socio-economic development priorities for the Forest Sector

Theprovisionofservicesandamenitiestotheruralpoor,suchashousingprovisionforworkersandtheirfamilies,supporttohealthandHIV/AIDSprogrammes,provisionofcommunityeducationfacilities,community training in fire prevention and resource management, and support with rural road maintenance thathasaneconomicspin-offaresomeoftheareasworthinvestigating.Forforestryenterprisethereisanopportunitytosupportsocio-economicdevelopmentbyprovidingregulatedaccesstonon-timberforestproducts such as firewood, building poles, medicinal plants and edible fruits by local communities.

10. Is an official B-B BEE rating necessary and how is it obtained?

Asexplainedinthesectionabove,itisadvisabletocalculateandmonitoryourownB-BBEEscoreaspartofmanagingyourbusinessand improvingyour levelofcomplianceonanon-goingbasis. AnyclaimyoumakeaboutyourB-BBEEcompliancemustbesupportedbyevidence.Ifyouareunabletoprovideevidenceforanyindicator,yourscoreunderthatindicatorwillnotberecognised.Businessesare not required by law to use an accredited BEE verification agency to verify their BEE compliance, but it is advisable to do so. The role of the Verification Agency is to ensure that a measured entity’s BEE contributions are verified, and that the entity’s reported BEE status is valid and accurate. The agency needstobeaccreditedbySANAS(SouthAfricanNationalAccreditationSystem).

You will need to supply evidence of your B-BBEE rating, or a verification certificate, under the following circumstances:

§Government: tendering for government work, purchase of a state-owned entity, application for alicenseorforenteringintoapublicprivatepartnership.

§Privatesector:CustomerswillrequireproofofBEEstatusinordertoclaimpointsunderpreferentialprocurement.IfyourcompanyisnotcompliantorunabletoproduceanaccreditedB-BBEErating,youmaylosebusiness.

No verification agencies have yet been accredited in terms of the New Codes of Good Practice by SANAS.Therearemanyagenciesalreadysetupandawaitingaccreditation(seesection11below).

Low or no cost verification for QSEs Verification agencies that provide low or no cost verification services to Qualifying Small Enterprises can scoreadditionalpointsundertheEnterpriseDevelopmentindicatorofthescorecard.

When will the sector scorecard apply?ThescorecardsprovidedforintheCharterwillapplyoncetheCharterhasbeenadoptedandpromulgatedasaSectorCodeintermsofsection9oftheB-BBEEAct.

Before this, thegenericscorecardsunder theCodesofGoodPractice issuedby theDepartmentofTradeandIndustrywillapply.Enterpriseswillbegivenaone-yeartransitionalperiodtogearuptotheCodes’ formal implementation after the Codes of Good Practice, containing the Generic Scorecard,havebeenpromulgated.EnterprisesmayuseeitherthegenericscorecardintheCodesORthenarrow-basedBEEtransitionalscorecard.Thenarrow-basedBEEscorecardisbasedonjusttheownershipandmanagementcontrolindicators.

�0

Ifanenterpriseelectstobemeasuredusingthenarrow-basedBEEscorecard,thesumofthemeasuredenterprise’sscoreforownershipandmanagementcontrolwillbemultipliedbyafactorof1.92.

IftheForestSectorCharterispromulgatedasaSectorCodewithinthistransitionalperiod,thechoiceisbetweenusingthescorecardintheSectorCodeandusingthenarrow-basedBEEscorecard.

Verification of status of ESME In order to qualify for their automatic BEE status (Level 4 contributor, or Level 3 contributor for those that are50%blackorblackwomenowned)theymustbeabletoprovideproofoftheirESMEstatus(thatis,anannualturnoverofR5millionorless).WhensubmittingproofoftheirESME-status,enterprisesmayalsoberequiredtosubmitevidenceofcompliancewiththeIndustryCodesofConduct.Enterprisesthatdon’tcomplystandtolosetheBEEstatusaffordedtoESME’s.

11. Where can I get more information?Codes of Good Practice on Black Economic EmpowermentThe “Codes”, are they are sometimes called for short, are the official source of all information about the scorecards and calculating a BEE rating. The final Codes were published in February 2007 in the Government Gazette number 29617. A number of guides to the codes have been written and areavailableonlineorinbookletform(seebelow)butitisimportanttoknowthatthesourcematerialforalltheseguidesistheCodes.Ifthereisanydoubtorconfusion,consulttheCodes

YoucanobtainacopyofthecodesontheDTIwebsite:http//www.thedti.gov.za/bee/beecodes.htm

YoucanalsoobtainapapercopyoftheGazettewiththeCodesfromtheGovernmentPrinter

Manuals, booklets and websites

All the booklets and guides written prior to the new Codes are now out of date. Will need to add when updated versions are produced

http://www.empowerdex.com/

Government Support

DTI-DepartmentofTradeandIndustry.TheDTIisresponsiblefortheimplementationoftheB-BBEEact, includingtheissuingoftheCodesofGoodPractice.AhelpfuloverviewofthecodesiscontainedintheB-BBEECodesofGoodPracticeBooklet,issuedbytheDTI.ThebookletcanbeobtainedfromtheDTIdirectly,orcanbedownloadedfromtheDTIwebsite(seeabove)

FIETAForestIndustriesEducationandTrainingAuthority:

Consultancy and rating resources

On-line rating services enable you to establish and manage your BEE profile for an affordable fee. MWEB Commercezone provides a comprehensive B-BBEE verification and consulting service. See http://beeprofiler.commercezone.co.za

The empowerdex website provided information about the services they offer, including software thatenablesyoutocalculateyourBEEscore,doscenariosimulationsfortargetsetting,andmanageyourcompany’sBEEplanning.Thesoftwarealsogeneratesaself-assessmentreport thatallowstheusertocalculateanestimatedBEEScoreaccordingtotheCodesofGoodPractice,aswellastheirestimatedEmpowerdexRating.Thecompanyalsooffersaratingservice.UnliketheMWEBservice,thisservicehasafee.http://www.empowerdex.com/

a users guide to the forest sector bbbee charter and scorecard, …€¦ · element 4: skills...

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