Government introduces new empowerment scorecard

A NEW scorecard to calculate black economic empowerment (BEE) ratings will come into effect for all companies on December 1, following the publication of revised codes of good practice by Trade and Industry Minister Rob Davies yesterday.

Like the amendment of the Black Empowerment Act, which is expected to come to Parliament this month, the new codes are aimed at ensuring more meaningful black empowerment and the creation of genuine black-owned supplier companies. They will however require companies to recalculate their scores and will significantly affect existing empowerment ratings.

The codes have been published for 60 days of public comment, after which they will become binding.

Department of Trade and Industry director-general Lionel October said yesterday the codes were not dependent on the amendment of the act and would come into effect after the public comment period.

Mr Davies said the act and codes would help in “plugging the gaps businesses have taken advantage of such as fronting, ‘tick-box’ compliance, and the exorbitant amounts of money that small enterprises have to pay to consultants to prove they were BEE compliant”.

The new scorecard would con- tain five elements: enterprise and supplier development; ownership; skills; employment equity; and corporate social investment.

The first three would be considered “core elements” in which companies would be obliged to score at least 45%. Failure among large companies not to score in any one of these categories would lead to an automatic downgrade by two levels, Mr October said.

Of the three core elements, enterprise and supplier development is viewed as most important as it alone counts for 45 of the 105 points in the card. Mr October said this was to “create genuine suppliers and bring black-owned companies into the supply chain”.

The element of employment equity would also be revised, with points being scored only for black employees being appointed to senior management.