Thought Leadership

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Unpacking the Amended B-BBEE Codes

May 30 2018 By Steven Lekalakala

On the 29thof March 2018 Dr. Rob Davies, Minister of Trade and Industry, issued Government Gazette 41546 which deals with amendments to the B-BBEE Codes of Good Practice. The proposed changes to the Codes should be implemented in October this year.

Steven Lekalakala, Business Development Consultant and B-BBEE Expert at Progression, takes a closer look at the proposed changes to the Skills Development element of the scorecard.

Poverty and a lack of education go hand in hand. Inaccessibility to higher education and training remains one of the major barriers to overcoming poverty in South Africa. One needs to further educate oneself in order to get a better paying job and thus, escape the hardship that is poverty.

Thus, the importance of Skills Development can never be overemphasised. It is unfortunate that some view the Skills Development element of the B-BBEE scorecard, and perhaps the scorecard itself, as a purely legislative document, filled with strict requirements and specifications. 

However, interacting with the many learners whose lives have been significantly improved by initiatives driven by Skills Development shows the many benefits, possibilities and opportunities that accompany the B-BBEE Codes of Good Practice.  When companies embrace Skills Development and other elements of the B-BBEE scorecard as a way of true transformation, the results are exciting, the possibilities are wide and the opportunities are invaluable. I believe that the recent amendments to the Codes speak directly to this, creating opportunities for job creation, youth employment, access to higher education and true transformation.

The most noticeable change to the Skills Development element of the scorecard is the new focus on higher education. Previously, this element mainly focused on learnerships, internships and apprenticeships.  Out of the Skills Development Target, which remains set at 6%, 3.5% will be allocated to black people and 2.5% to black students in higher education. However, it must be noted that the codes clearly specify that black student bursaries cannot be counted as spend on black people. This will ensure that it is not only the youth that benefits, but  greater society as a whole. In addition, the new codes clearly outline that spend on employed and unemployed learners are separate from one another. 

An additional initiative that focuses on increasing opportunities for the youth is the Youth Employment Service (YES) initiative. The YES initiative, which was launched in March this year, is aimed at increasing employment opportunities among the youth of South Africa. Reaching the YES targets will assist companies in enhancing their B-BBEE score in that meeting YES targets combined with 2.5% absorption, businesses automatically move one level up or two levels up if businesses meet 100% YES targets and 5% absorption.

Regarding the Ownership element of the scorecard, businesses that are 51% black-owned are now automatically exempted from verifications and will receive an ownership certificate instead.

Details of the proposed changes to the scorecard for statement 300 are outlined below:

Current Scorecard Compliance Target 

2.1.1.1   Score for Skills Spend 6.00%

2.1.1.2    Bursaries for black Students at Higher Education institutions -

2.1.1.3    Score for Disabled Skills Spend 0.30%

2.1.1.4   Learners- Black 2.50%

2.1.1.5   Black Unemployed people participating in training 2.50%

2.1.1.6   Bonus Point - Absorption of Learners and black people with bursaries 100.00%

 

Current Scorecard Target Score 

2.1.1.1   Score for Skills Spend 8.00

2.1.1.2   Bursaries for black Students at Higher Education institutions -

2.1.1.3   Score for Disabled Skills Spend 4.00

2.1.1.4   Learners- Black 4.00

2.1.1.5   Black Unemployed people participating in training 4.00

2.1.1.6   Bonus Point - Absorption of Learners and black people with bursaries 5.00

 

Proposed Scorecard Compliance Target

2.1.1.1   Score for Skills Spend 3.50%

2.1.1.2   Bursaries for black Students at Higher Education institutions 2.50%

2.1.1.3   Score for Disabled Skills Spend 0.30%

2.1.1.4   Learners- Black 2.50%

2.1.1.5   Black Unemployed people participating in training 2.50%

2.1.1.6   Bonus Point - Absorption of Learners and black people with bursaries 100.00%

 

Proposed Scorecard Target Score 

2.1.1.1   Score for Skills Spend 6.00

2.1.1.2   Bursaries for black Students at Higher Education institutions 4.00

2.1.1.3   Score for Disabled Skills Spend 4.00

2.1.1.4   Learners- Black 3.00

2.1.1.5   Black Unemployed people participating in training 3.00

2.1.1.6   Bonus Point - Absorption of Learners and black people with bursaries 5.00

 

1. The Amendment details the calculation of scores for Skills development , for learnerships and for Unemployed People but is silent on the calculation of the bursaries score. It is assumed that the score will be done in the same way as the score for Skills Development.

2. The same skills development spend cannot be claimed under both 2.1.1.1 (Score for Skills Spend) and 2.1.1.2 (Bursaries for black Students at Higher Education Institutions)

3. The same people cannot be claimed under both 2.1.2.1 (learnerships) and 2.1.2.2 (Unemployed People trained). 

4. The limitation of skills development Categories F and G to 15% of the total value of Skills Development Expenditure is increased from 15% to 25%.

5. Non-core costs such as travel, accommodation, and catering have been expanded to include costs of training managers and Skills Development Facilitators. The limitation of 15% remains but is not applied in the case of Skills Development recognised in terms of the new Bursaries line (2.1.1.2).

6. Stipends linked to a bursary programme can be claimed in full.

7. Bursaries are defined as payments made to or on behalf of students registered with institutions established by or registered with the Department of Basic Education and the Department of Higher Education & Training. It includes primary, secondary and tertiary education. This contradicts the definition used for 2.1.1.2 above which deals with bursaries for higher education purposes.

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