Broad Based Black Economic Empowerment Flashcards
What is the aim of the Broad Based Black Economic Empowerment (BBBEE) Act?
To address the shortcomings of the EEA, AA, and BEE Acts and spread wealth more broadly
It encourages black involvement in economic development, management, employment equity, and skills training.
What are the three aspects of the BBBEE Act?
- Direct Empowerment
- Skills Development
- Indirect Empowerment
Indirect empowerment involves preferential treatment in government contracts for BBBEE compliant businesses.
What are the five elements of the BBBEE scorecard?
- Ownership
- Management Control
- Skills Development
- Enterprise & Supplier Development
- Socio-Economic Development
These elements help assess the BBBEE compliance of a company.
What categories are companies classified into under the BBBEE Act based on annual turnover?
- Exempted: Micro Enterprises (under R10 million)
- Qualifying: Small Enterprises (R10 to R50 million)
- Generic Enterprises (more than R50 million)
This classification determines the BBBEE compliance requirements for different sizes of businesses.
Which three pillars of BBBEE are considered priority pillars?
- Ownership
- Skills Development
- Enterprise & Supplier Development (ESD)
A minimum of 40% compliance is mandatory for these priority pillars.
True or False: Companies that cannot achieve the minimum requirement for priority pillars will drop at least one BBBEE level.
True
This emphasizes the importance of meeting compliance standards in the BBBEE framework.
Fill in the blank: The BBBEE Act allows for the development of _______.
[Codes of Good Practice]
These codes provide guidelines for implementing BBBEE initiatives effectively.
What are the two compulsory priority pillars for QSE’s?
Ownership and ESD or Skills Development
QSE stands for Qualifying Small Enterprises.
How many pillars are there in the B-BBEE scorecard?
Five pillars
What does the Ownership pillar of B-BBEE measure?
The percentage of shares in the business that are owned by black people
What must businesses do to increase their BEE scorecard points regarding Ownership?
Make provision for black people to become owners by selling shares to them
What BEE scorecard level does a business reach if its black ownership is 50% or more?
Level 3
True or False: Black people must be included in decision-making processes according to the Management Control & Employment Equity pillar.
True
What is required for the Skills Development pillar?
Training and upskilling of previously disadvantaged individuals
Fill in the blank: Businesses must use only suppliers that are at a certain _______ level for Enterprise and Supplier Development.
BEE
What types of initiatives are included in the Socio-Economic Development pillar?
CSI programmes for child welfare, prevention and treatment of HIV/Aids, etc.
According to the Skills Development Act, what percentage of their payroll must businesses use for learnerships and learning programmes?
1%
What is encouraged for black-owned SMMEs under the Enterprise and Supplier Development pillar?
Support through investments, donations, or providing consulting/advisory services
What types of areas should CSI initiatives focus on to develop the country?
Providing housing and education
Fill in the blank: Businesses should also distribute scarce resources to _______ in the communities surrounding the business.
beneficiaries
What will not earn you additional points under the new ESD pillar?
Value Added Suppliers
Previously, Value Added Suppliers contributed to point accumulation.
What will earn you additional points under the new codes?
Empowered Suppliers
Empowered Suppliers are recognized for their contributions under the revised codes.
What is a positive impact of a good BBBEE rating?
Improves the image of the business
A positive BBBEE rating can enhance a company’s reputation in the market.
How does BBBEE boost staff morale?
By developing the employees’ potential and skills
Investing in employee development can lead to a more motivated workforce.
In what way can BBBEE be used as a marketing tool?
To attract businesses looking for a BBBEE compliant supplier
Compliance with BBBEE can serve as a competitive advantage in business relations.
What does BBBEE improve in terms of social structure?
Income distribution and standard of living of the growing black middle class
BBBEE aims to address economic disparities in society.
What are some negative impacts of BBBEE?
Investment and ownership issues causing shareholder animosity
Conflicts may arise among shareholders due to differing views on BEE compliance.
What can BBBEE lead to in terms of employment practices?
Corruption, nepotism, and cronyism
These issues can undermine fairness in hiring and promotions.
What issue arises from job allocations based on BEE rating?
Employees getting jobs based on BEE rating rather than qualifications
This can lead to a mismatch between job requirements and employee capabilities.
What has been a major issue with the implementation of BEE?
Poor implementation and failure to uplift the masses
The intended goals of BEE have not been fully realized, leading to criticism.
What has emerged as a result of poor BEE implementation?
An economic elite black group with political connections
This elite group may not reflect the broader goals of economic empowerment for all.
What is the Skills Development Act?
Skills Development Act (97 of 1998)
This act aims to promote skills development in the workforce.
