Criticality of Supplier-, Enterprise- and Socio-Economic Development
By Pieter Viviers
Many companies are finding it difficult to survive financially during these challenging times, trying to keep their doors open, and to not contribute to the high unemployment rate of South Africa. In the same breath, implementing your B-BBEE strategy can become incredibly challenging and more often than not, may appear financially impossible. For Supplier-, Enterprise- and Socio-Economic Development, there are creative, non-monetary contributions, that can really contribute to both transformation as well as your B-BBEE compliance status.
Contributions for these three development elements need to occur within your measured financial period.
Supplier and Enterprise Development are Priority Elements, meaning you need to achieve at least 40% of each of the elements’ total points, in order not to be discounted 1 B-BBEE Compliance Level.
- For Enterprise Development, 2 out of 5 points need to be achieved for both Large and QSE enterprises
- For Supplier Development, 4 out of 10 points for Large Enterprises, and 2 out of 5 points for QSE’s need to be achieved
A Measured Entity can only be discounted 1 B-BBEE level, even if they are not meeting the sub-minimum of 40% for each of the priority elements.
Making a loss and having expenditure targets for all 3 of these elements, can make it hard to reach 40% of the element or even get the points that you need. There are however non-monetary contributions, which can make it easier for you as the measured entity to achieve your desired points on Enterprise, Supplier and Socio-Economic Development.
As per the Amended Codes Series 400, Annexure 400 (B) for Generic entities, the following are non-monetary contributions for Enterprise, Supplier and Socio-Economic Development:
1. Donations:
- Donations of goods to your beneficiary is recognised at 100% of the value of the donated goods.
2. Direct Cost:
- Supporting your beneficiary with resources/material that would in any other way have been a direct expenditure for them. This contribution type is recognised at 100%.
3. Overhead Cost:
- Supporting your beneficiary with resources/material or providing them with a place to operate (inclusive of overhead costs for rent, electricity, water, internet, telephony etc.) that would otherwise have been an Overhead Cost for them. This contribution is recognised at 70%
4. Discounts:
- Discounted amount in addition to normal business practice. This contribution type is recognised at 100%
5. Professional services rendered at no cost:
- Operating in the professional environment and delivering professional services – You could use the commercial hourly rate of the professional to assist you in reaching your relevant targets. This contribution is recognised at 60%
6. Professional services rendered at a discount:
- The value of the discount based on commercial hourly rate of professional can be used as your non-monetary contribution. This contribution is recognised at 60%
7. Time of employees of Measured Entity:
- You can deploy your employees in a productive manner to assist your beneficiary with whichever needs they might have. The hourly rate of said employees can be used as your non-monetary contributions. This contribution is recognised at 60%
8. Shorter Payment Terms:
- This non-monetary contribution is only relevant to Supplier Development and is capped at 15% of the total obtainable points under Supplier Development (1,5 out of 10 Points). Settling/payments of invoices from your Suppliers between day 1 and 15 will be recognised under Shorter Payment Terms.
