BBBEE for SMEs

The department of trade and industry’s broad-based BEE codes of good practice, approved by cabinet in December, were gazetted last month (February 2007).

There is good news for SMEs with them falling into one of two categories being either an Exempt Micro Enterprise (EME) or a Qualifying Small Enterprise (QSE). An EME is an enterprise whose annual turnover is R5m or less while a QSE is an enterprise whose turnover falls between R5m and R35m.

EMEs (Exempt Micro Enterprises) are regarded as level four contributors which means that companies may claim R1 for every R1 they spend with EMEs on their own scorecard. Despite their exempt status, EMEs will need to understand aspects of the BEE code so as to clarify their position to their clients. Bigger companies (known as generic companies, with annual turnover greater than R35m) are awarded points on their own preferential procurement scorecard for buying from EMEs. It would appear that there is little need for EMEs to be officially rated by a verification agency. It is possible a letter from their auditors verifying their annual turnover is R5m or under will suffice.

QMEs (Qualifying Small Enterprises) need only select four of the total seven elements on the full BBBEE generic score card. If they submit more than four elements then the best four elements will be used for measurement. They will, however, need to be verified and at this stage with no officially accredited verification agencies it is a little hard to know who to partner with.

Another piece of good news is that any start-up enterprise in their first year following formation or incorporation will be regarded as an EME regardless of expected revenue.

The full document can be downloaded from the Department of Trade and Industry web site. Alternatively a more concise and understandable summary can be downloaded from The Caird Group.

DTI BEE Codes of Good Practice
The Caird Groups BBBEEE Scorecard Summary