6. Broad-Based Black Economic Empowerment Act, 2003, (Act 53 of 2003), (Amended In 2013)

Question 1

6.1 Purpose of the BBBEE

Answer 1

• Enable wealth to be spread more broadly across all population groups.
• Outline areas that would give the government a platform for bringing equitable spread of wealth.
• Allows for the development of Codes of Good Practice.
  -It aims at targeting inequality in the South African economy.

Question 2

6.2 (a) Impact of the BBBEE on businesses (ADVANTAGES)

Answer 2

• The skill level of previously disadvantaged people will increase as businesses are compelled to train them.
• Businesses complying with BBBEE will be highly regarded on the BEE scorecard.
• A good BBBEE – score will improve the image of the business.
• Provides for human resource development through training or skills development.
• Fronting is discouraged as it can lead to disqualification of a business’s total scorecard.

Question 3

6.2 (b) Impact of the BBBEE on businesses (DISADVANTAGES)

Answer 3

• Processes may lead to corruption / nepotism if it is not monitored properly.
• Non-compliance may have huge financial implications for businesses.
• Processes and procedures can be very expensive for a business as there are a lot of legal requirements to obtain a grading.
• Investments / ownership issues may lead to dissatisfaction between current shareholders.
• Businesses that want to do business with the government must have their BEE status assessed annually.

Question 4

6.3 Actions regarded as non-compliance by the BBBEE

Answer 4

• Failing to implement affirmative action to meet BBBEE responsibilities.
• Refusing to award tenders to black suppliers who are BEE compliant.
• Promoting unsuitable people into management positions at the expense of qualified PDI’s.

Question 5

6.4 Penalties / consequences for non-compliance to the BBBEE

Answer 5

• Business licenses may not be renewed, and authorization may not be issued.
• The penalty could be a fine of up to 10% of the company’s annual turnover.
• Businesses may face imprisonment for non- compliance and fronting practices.
• A business can be banned from participating in government contracts for period of 10 years.

Question 6

6.5 Ways in which businesses can comply with the BBBEE

Answer 6

• Develop small businesses / SMMEs through ESD.
• Improve the standard of living of the communities in which they operate.
• Businesses must appoint black people in managerial positions.
• Send black people for skill development training.

Question 7

6.6.1 Management control

Implications of the revised BBBEE pillars on businesses

Answer 7

• Business must ensure that transformation is implemented at all levels.
• Appoint black people in senior executive positions/to management.
• Involve black people in the decision-making processes.
• Ensure that black females are represented in management.

Question 8

(ii)

6.6.2 Skills Development

Implications of the revised BBBEE pillars on businesses

Answer 8

• Business must engage black employees in skills development initiatives.
• Provide learnerships and learning programmes to black employees.
• Business benefits from the increased pool of skilled or trained workers.
• Business must go the extra mile to train staff where learnerships are not offered.

Question 9

6.6.3 Ownership

Implications of the revised BBBEE pillars on businesses

Answer 9

• Business should include black people in shareholding, partnerships or franchises.
• Encourage small black investors to invest in big companies and share ownership.
• More opportunities are created for black people to become owners or entrepreneurs.
• Businesses sometimes find it difficult to locate suitable black business partners or shareholders.

Question 10

6.6.4 Enterprise and supplier development (ESD)

Implications of the revised BBBEE pillars on businesses

Answer 10

• Business must create jobs as ESD promotes local manufacturing.
• Identify black owned suppliers that can supply goods and services.
• Outsource services to suppliers that are BBBEE compliant.
• Businesses are encouraged to invest/support black owned SMMEs.

Question 11

6.6.5 Social responsibility/Socio-economic development

Implications of the revised BBBEE pillars on businesses

Answer 11

• They should distribute scarce CSI resources to selected beneficiaries in the community.
• Businesses should focus on critical areas which can affect growth and development in the country e.g., environmental awareness, education, housing, poverty or unemployment etc.

Question 12

6.7 Difference between BEE and BBBEE

(a) BEE

Answer 12

1. It is a government policy, which may not be enforced.
2. Benefits only a few previously disadvantaged people in the economy.
3. Few previously disadvantaged individuals share in the wealth of the economy.
4. Focuses only on three pillars that did not include all previously disadvantaged people.

Question 13

6.7.1 Difference between BEE and BBBEE

(b) BBBEE

Answer 13

1. It is an Act that is enforced must be complied with by businesses.
2. Encourages a wider group of previously disadvantaged people including people in rural areas to participate in the economy.
3. Aims at distributing the country’s wealth across a broader spectrum of society.
4. Focuses on five pillars which includes all sectors of the society especially the previously disadvantaged.