1. Broad-Based Black Economic Empowerment, and
Enterprise and Supplier Development
Framework, Codes and Scorecard Workshop
Presented by :
Janeez Hafizulla
Director of Operations, J
AZ Strategic Investments (Pty) Limited
Broad-Based Black Economic Empowerment
Specialist Consulting Service Provider
Former Deputy Director, the dti, B-BBEE Unit
Verification, Procurement and Transformation
Adv. Shuaib Rahim
Senior Lecturer, Rhodes University:
The Law of Property; Banking and Payment Instruments; Ethics and Professional Responsibility and International Trade
Senate Representative of the Rhodes University Institutional Forum
Elected Board Member of the NTEU Rhodes University Branch

3. “It always seems impossible, until it’s done”
B-BBEE Overview
“It always seems impossible, until it’s done”
Nelson Mandela

4. “while poverty persists, there can be no true freedom” Nelson Mandela
B-BBEE Preamble
WHEREAS, under apartheid, race was used to control access to South Africa’s productive resources and access to skills;
WHEREAS, South Africa’s economy still excludes the vast majority of its people from ownership of productive assets and possession of advanced skills;
WHEREAS, South Africa’s economy performs below its potential because of the low level of income earned and generated by the majority of its people;
AND WHEREAS, unless further step are taken to increase the effective participation of the majority of South Africans in the economy, the stability and prosperity of the economy in the future may be undermined to the detriment of all South Africans, irrespective of race;
B-BBEE Codes of Good Conduct
Dr. Rob Davies MP
the dti
“the Economic Empowerment of a Previously Prejudiced People is not a CODE, but rather an OBLIGATION on ALL,
especially those who benefitted from the system that created the inequity” Anonymous
“while poverty persists, there can be no true freedom” Nelson Mandela

5. B-BBEE Stakeholders Minister of Trade & Industry Presidential
Commission
Professional
Verification
Regulator
South African National Accreditation Systems
(SANAS)
Consulting Service Providers
Measured Entities
Presidential
B-BBEE Advisory Council
Association
for B-BBEE Professionals
Accredited Verification Agencies

6. Legislated Changes to the B-BBEE Codes
A number of changes, amendments and additions were made to the to the 2012 Bill and 2013 Act.
The most significant were:
7 Elements were reduced to 5 with
No bonus points for Ownership element
Skills Development made a Priority Element
Changes to Weightings Points and Compliance Targets
More Stringent Recognition Levels
B-BBEE Commission established
Eradication of “Loopholes”
Trumping Provision
Fronting – “knowing, knowingly or knows”
B-BBEE Verification Professional Regulator appointed
“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change”
Charles Darwin

7. B-BBEE Recognition Level
State of Transformation at SA Universities
University
Date of
B-BBEE Audit
*B-BBEE Score
B-BBEE Recognition Level
**ESD Score
Uni of the Witwatersrand
04 Aug 2017
57.75
Level 8
21.79
Uni of The Western Cape
25 July 2017
69.21
24.74
Uni of Pretoria
02 Oct 2017
65.80
Level 7
34.4
Nelson Mandela
Metro Uni
02 Aug 2016
64.8
19.94
North West Uni
30 May 2017
48.03
Non-compliant
31.15
Stellenbosch Uni
64.62
22.14
* Total B-BBEE Weighting = points ** Total ESD Weighting = points

8. B-BBEE Recognition Level
State of Transformation at SA Universities
University`
Date of
B-BBEE Audit
B-BBEE Score
B-BBEE Recognition Level
ESD Score
Uni of
Johannesburg
31 Aug 2016
70.66
Level 7
27.99
Uni of The Free States
01 June 2016
59.5
Level 8
19.83
Uni of KZN
11 May 2016
***79.24
Level 3
16.47
UNISA
11 Dec 2015
***69.5
Level 4 20
Rhodes Uni
04 March 2015
***72.97
25.31
Cape Peninsula University
30 June 2016
***65.65
20.23
* Total B-BBEE Weighting = points ** Total ESD Weighting = points
*** Based on Old Codes

9. Specialised Enterprise
B-BBEE Generic and Specialised Enterprise Scorecards
Elements
Generic
Compliance
Targets
Specialised Enterprise
Weighting
Bonus
Points
Old Codes
New Codes
Bonus Points
Ownership 25
25% + 1 vote na
Management
Control 19
(50% to 88%) 30 4 20
Skills
Development 5
6% of payroll
Enterprise &
Supplier 40
PP = 80%
SD = 2% (NPAT) *
ED = 1% (NPAT) * 35 50
Socio Economic
1% (NPAT) * 15
Sub Totals
109 9
100
104
Totals
118
* Net Profit after Tax OR Annual Revenue / Allocated Budget / Gross Receipts / Discretional Spend

10. B-BBEE recognition level
B-BBEE Recognition Levels
B-BBEE
Status
2007
Codes of Good Practice
2013 Amended
B-BBEE recognition level
Level One Contributor
≥100 points on the Generic Scorecard
135%
Level Two Contributor
≥85 but <100 on the Generic Scorecard
≥95 but <100 on the Generic Scorecard
125%
Level Three Contributor
≥75 but <85 on the Generic Scorecard
≥90 but <95 on the Generic Scorecard
110%
Level Four Contributor
≥65 but <75 on the Generic Scorecard
≥80 but <90 on the Generic Scorecard
100%
Level Five Contributor
≥55 but <65 on the Generic Scorecard
≥75 but <80 on the Generic Scorecard
80%
Level Six Contributor
≥45 but <55 on the Generic Scorecard
≥70 but <75 on the Generic Scorecard
60%
Level Seven Contributor
≥40 but <45 on the Generic Scorecard
≥55 but <70 on the Generic Scorecard
50%
Level Eight Contributor
≥30 but <40 on the Generic Scorecard
≥40 but <55 on the Generic Scorecard
10%
Non-Compliant
<30 on the Generic Scorecard
<40 on the Generic Scorecard 0%

11. Improving your B-BBEE Score
General
Appoint a Dedicated Transformation Officer
Define the Characteristics of a Transformation Officer
Make Transformation a Board Reporting and Discussion Matter
Regularly calculate your B-BBEE Score
Don’t be a naysayer
Stop making excuses
Management Control
Track Black Talent
Retain Black Graduating Academics
“Good timber does not grow with ease. The stronger the wind, the stronger the trees”
J Willard Marriot

12. “Hire character. Train Skill”
Improving your B-BBEE Score
Skills Development
Understand the Element. Develop Skills outside of your industry / sector
Plan you Skills Development Spend Allocation in line with The National EAP B-BBEE
Regular Competency Level reviews and Training Gap Analysis
Promote Employment of Persons with Disabilities
Familiarise yourself with SD Grants, Tax Breaks and Allowances
Enterprise and Supplier Development
Covered later
Socio-Economic Development
“Goodwill” begins at home
Involve yourself with Development Programmes in your Community
“Hire character. Train Skill”
Peter Schultz

13. Enterprise and Supplier Development
“Our success has really been based on partnerships from the very beginning”
Bill Gates

14. “People create growth, companies report it”
Enterprise and Supplier Development Overview
Objectives
Increase and strengthen local procurement
Support procurement from Black owned EME’s and QSE’s
Promote the use of Black Professional Service Providers
Encourages the development of EME’s and QSE – suppliers and non-suppliers
Recognises the graduation of developed enterprises into the supply chain
Recognises job-creation resulting from enterprise development
Enterprise and Supplier Development essentially comprises 3 sub-elements:
Preferential Procurement
Enterprise Development
Supplier Development
* 40% sub-minimum applies
* Imports provisions do not apply to the designated sectors and products for local production
“People create growth, companies report it”
Brain Joffe

15. “The secret of success is to do the common things uncommonly well”
Enterprise and Supplier Development Overview
Preferential Procurement
What is Preferential Procurement?
Measured Entity Spend (excluding taxations, salaries, wages, remunerations, procurement on behalf of a third party) that is directed at a specific type of supplier status.
Who should benefit from Preferential Procurement?
Empowering Suppliers, Exempted Micro-Enterprises or Qualifying Small Enterprises which are at least 51% Black Owned or at least 30% Black Women Owned, Designated Groups that are at least 51% Black Owned
“The secret of success is to do the common things uncommonly well”
John D Rockefeller

16. “Great opportunities come to those who make the most of small ones”
Enterprise and Supplier Development Overview
Enterprise Development
What is Enterprise Development?
Monetary or Non-Monetary contributions carried out with the objective of contributing to the development, sustainability, financial and operational independence of the Enterprise Development recipient.
Who should benefit from Enterprise Development Spend?
Exempted Micro-Enterprises or Qualifying Small Enterprises which are at least 51% Black Owned or at least 51% Black Women Owned
“Great opportunities come to those who make the most of small ones”
Anonymous

17. Enterprise and Supplier Development Overview
What is Supplier Development?
Monetary or Non-Monetary contributions carried out for the benefit of Value-Adding suppliers to the Measured Entity, with the objective of contributing to the development, sustainability, financial and operational independence of the Supplier Development recipient
Who should benefit from Supplier Development Spend? `
Exempted Micro-Enterprises or Qualifying Small Enterprises which are at least 51% Black Owned or at least 51% Black Women Owned
“A good leader inspires men to have confidence in him.
A great leader inspires men to have confidence in themselves”
Anonymous

18. Specialised Scorecard Weighting Points
ESD – Preferential Procurement Scorecard
Criteria
Generic Scorecard
Weighting Points
Specialised Scorecard Weighting Points
Compliance
Target
Preferential Procurement
Empowering Suppliers  5 5
 80%
Qualifying Small Enterprises    3 4
15%
Exempted Micro-Enterprises
At least 51% Black Owned 9 11
40%
At least 30% Black Women Owned
12%
Bonus Points
Designated Group Suppliers that are at least 51% Black owned. 2 2%

19. Specialised Scorecard Weighting Points
ESD – Enterprise and Supplier Scorecard
Criteria
Generic Scorecard
Weighting Points
Specialised Scorecard Weighting Points
Compliance Targets
Supplier Development
Annual value of all Supplier Development Contributions as a percentage of the target. 10 15
2% of NPAT or 0.2% of Annual Revenue / Allocated Budget/Gross Receipts / Discretional Spend
Enterprise Development
Annual value of Enterprise Development Contributions and Sector Specific Programmes as a percentage of the target. 5
1% of NPAT or 0.1% of Annual Revenue / Allocated Budget/Gross Receipts / Discretional Spend
Bonus Points
Bonus point for graduation of one or more Enterprise Development beneficiaries to graduate to the Supplier. 1  1
Bonus point for creating one or more jobs directly as a result of Supplier Development and Enterprise Development

20. Improving Your ESD Score
Preferential Procurement
audit supplier base - redirect / migrate spend
support EME’s, QSE’s, Black Owned, Black Women Owned, Empowered Entities
Encourage improved B-BBEE recognition levels from existing suppliers
procure from at least 51% Black Owned Designated Groups (bonus point)
Enterprise Development
develop an ED Strategy
implement ED Programme
graduate a ED beneficiary to supplier (bonus point)
Supplier Development
develop an SD Strategy
implement SD Programme
Create 1 or more jobs
“Opportunity is missed by most people because it is dressed in overalls and looks like work”
Thomas Edison

21. Enterprise and Supplier Development Strategy5.
Forecast Desired Outcomes 1.
Set out Preamble 2.
Determine Objectives 3.
Design ESD Programme Framework 4.
Implement ESD Programme

22. ESD – Strategy Guidelines
The monetary value for Enterprise & Supplier Development contribution is based against the Net Profit after Tax OR Annual Revenue / Allocated Budget / Gross Receipts / Discretional Spend
Recognition of ED/SD spend – projects that run over multiple years
Initiatives can only be recognised annually
Programmes / initiatives must be documented
Programmes/ initiatives must be sustainable
Contracts must be signed between the measured entity and the recipient
Clear and Concise Programme Plan detailing objectives, priority interventions and performance indicators
“An organizations ability to learn and translate that learning into action rapidly, is the ultimate competitive edge”
Jack Welch

23. JAZ Strategic Investments (Pty) Limited
11 Sunnyway, Kelvin, Sandton, South Africa
Ayoob Ballim
Chief Executive Officer
Janeez Hafizulla
Director of Operations