Under the new Black Economic Empowerment Codes of Good Practice, all points for procurement require that the suppliers are ‘Empowering Suppliers’.
In terms of business-to-business procurement, the BEE status level of the business will therefore mean nothing unless it is also an Empowering Supplier.
Vivesha Annoop, Compliance Manager for AQRate KZN, provides a quick reminder of what makes a supplier an Empowering Supplier, in this month’s SmartProcurement.
An Empowering Supplier is a BEE-compliant entity that is a ‘good citizen’ South African entity that complies with all regulatory requirements of the country.
All exempt micro enterprises (EMEs) automatically qualify as Empowering Suppliers.
Furthermore, of the following criteria a large enterprise (turnover more than R50-million) should meet at least three, and a qualifying small entity (QSE – turnover between R5-million and R35-million) at least one:
1. At least 25% of cost of sales excluding labour cost and depreciation must be procured from local producers or local suppliers in South Africa. For the service industry labour cost is included, but is capped at 15%.
2. In terms of job creation, 50% of jobs created must be for black people, provided that the number of black employees since the immediate prior verified B-BBEE Measurement is maintained.
3. There must be at least 25% transformation of raw material/beneficiation, which includes local manufacturing, production and/or assembly and/or packaging.
4. At least 12 days a year must be spent productively assisting black EMEs and QSE beneficiaries to increase their operation or financial capacity.
5. Service industry entities should pay at least 85% of labour costs to South African employees.
