BBBEE

Question 1

The purpose of BBBEE

Answer 1

• Enables wealth to be spread more broadly across all population groups.
• Aims at targeting inequality in the South African economy.
• Outlines areas that would give the government a platform for bringing the
  equitable spread of wealth amongst all population groups.
• Allows for the development of Codes of Good Practice.
• Increases the number of black people that manage/control
  South African businesses.

Question 2

BBBEE pillars

Answer 2

Management Control
Ownership
Enterprise and supplier development
Skills Development
Socio-Economic

Question 3

The positive impact of the BBBEE on businesses

Answer 3

Encourages businesses to address the demand for redress or equity directly in
the workplace.
* Provides for enhanced human resources development through effective
training and development.
* Promotes enterprise development by developing entrepreneurial skills of
designated people to establish their own businesses.
* Businesses that focus on BBBEE show commitment towards the social
education/economic developments in the community/country.
* Improves the image of the business because a good BBBEE rating attracts
more investors in the business.

Question 4

The Negative impact of the BBBEE on the Business

Answer 4

The implementation of BBBEE is time-consuming, expensive, prescriptive and
administratively burdensome, especially attaining BBBEE Scorecard ratings and
training of employees.

• Businesses have to endure rigid processes of having their BBBEE compliance
  measured/verified by an independent BBBEE verification agency.
• Some processes associated with BBBEE—if not monitored properly—may lead
  to corruption/nepotism/cronyism.
• BBBEE advocates Enterprise and Supplier Development (ESD), which means
  certain businesses that are not approved BBBEE vendors may be excluded
  from supplying goods and services.
• Businesses that wish to acquire government tenders and conduct business
  with the state, must have their BBBEE status assessed annually. This increases
  the administrative burden of businesses.

Question 5

Actions regarded as non-compliance by BBBEE

Answer 5

Employers who incorrectly implement the means to achieve the requirements
of the five BBBEE pillars.
* Employers who fail to correctly implement affirmative action in the context of
employment equity to meet BBBEE responsibilities.
* Employers who promote unsuitable people into management positions at the
expense of qualified previously disadvantaged people.
* Employers who are deliberately involved in fronting, corruption, nepotism and
cronyism, and because of this, certain individuals benefit at the expense of
other individuals.

Question 6

Penalties/consequences for non-compliance with BBBEE

Answer 6

Businesses that do not comply with BBBEE may receive a compliance order
from the Labour Court, which forces the business to comply with BBBEE.

• Businesses who neglect to comply with BBBEE may receive large fines for
  fronting practices and may even be given a jail sentence (imprisonment),
  which will be dependent on the severity of the non-compliance.
• Businesses may be fi ned with a penalty of up to 10% of the annual turnover
  of businesses.
• The state may decide not to renew business licenses or revoke the business
  license, or refuse to grant authorizations to conduct business activities.
• The state may cancel any contract awarded to businesses that have acquired
  them based on false information regarding their BBBEE status.

Question 7

Ways in which businesses can comply with BBBEE

Answer 7

Businesses need to fi nd all means to achieve the requirements of the
fi ve BBBEE pillars, such as promoting affi rmative action when making
appointments.
* Conduct business activities with BBBEE compliant vendors/suppliers
participate in preferential procurement.
* Conduct regular skills development training with black employees.
* Sell shares to more black individuals within and outside the organization.