Broad-based Black Economic Empowerment

Although this is not an Act which is compulsory to all Businesses, until such time that business will be conducted with the State or with major businesses, whom will require or ask for the compliance of such Act.

Levels of Classification

In terms of the Act, there are 3 levels (depending on the industry)

Fact

Any African not born within SA or nationalized prior to 27 April 1994 (aka Foreign individuals) is eliminated from the acknowledgement as Designated Groups is correct.

Myth

All businesses must hand 51% of their businesses to local Africans is an incorrect statement. A business can achieve a Level 4 (110% procurement recognition) by corrective placement of local staff.

 

Definition of “Black People”
As per the Broad-Based Black Economic Empowerment Act 53 of 2003 as amended by Act No 46 of 2013 “Black People” is a generic term which means Africans, Coloureds and Indians –

• Who are citizens of the Republic of South Africa by birth or descent; or
• Who became citizens of the Republic of South Africa by naturalization;
  – Before 27 April 1994; or
  – On or after 27 April 1994 and who would have been entitled to acquire citizenship by naturalization prior to that date

EME classified companies are required to complete an Affidavit (standard) to classify as either

Level 1 (100% Black Owned),
Level 2 (51% Black Femal Owned), or
Level 3 (below threshold)

 

QSE classified companies can only be Level 1 or Level 2 as per above indications.

Generic classified entities are required to complete and comply with the 5 pillars of operations, to which 40% minimum average must be maintained. The failure to comply with the priority pillars (Ownership, Skills and Procurement) will see the Business discount a level although the scoring is good.

The summary is as follow:

• Ownership – Ownership or voting rights count
• Management Control – Placement of staff in senior or decision-making positions
• Skills Development – 3.5% of salary bill to be used for staff training and The company provides a moderation service over a period of 12 months with monthly progress reports on what is required to be put in place, and what is to be spent to obtain a maximum level.
• Directly aligned to a reputable SANAS verification agency, the verification is managed on behalf of the client and all documentation submitted.