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Association of B-BBEE Professionals

Association of B-BBEE Professionals. ABP Enterprise and Supplier Development (ESD) with Socio-Economic Development (SED) Webinar. Thursday 15 August 2019 11h00 - 13h00. Association of B-BBEE Professionals Webinar B-BBEE Codes Training Session

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Association of B-BBEE Professionals

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  1. Association of B-BBEE Professionals ABP Enterprise and Supplier Development (ESD) with Socio-Economic Development (SED) Webinar Thursday 15 August 2019 11h00 - 13h00

  2. Association of B-BBEE Professionals Webinar B-BBEE Codes Training Session Enterprise and Supplier Development (ESD) with Socio-Economic Development (SED) Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  3. Contributors Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  4. B-BBEE CODES OF GOOD PRACTICE Training

  5. INTRODUCTION The Association of B-BBEE Professionals (ABP) is a dedicated Professional Body for the BEE Verification Professionals; Consultants and Practitioners. We are pleased to bring you a Webinar (2 CPD) covering:  Who should attend? • Verification Professionals • Consulting Professionals • Practicing Professionals • Transformation Managers Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  6. EXCLUSIONS • No drafts to be discussed; e.g. • Verification Manual • Draft Sector Codes • Draft Clarification Notes Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  7. The Institutions within B-BBEE Legislation are as follows: • B-BBEE Policy Unit – The Minister of Trade and Industry • B-BBEE Commission • B-BBEE Advisory Council • Sector Codes Councils • South African National Accreditation System(SANAS) Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  8. Verification Principles • The fundamental principle is: substance takes precedence over legal form. • In interpreting the provisions of the Codes, any reasonable interpretation consistentwith the objectives of the Act and the B-BBEE Strategy must take precedence. • The basis of measuring is compliance status at the time of measurement. • Any misrepresentation or attempt to misrepresent any enterprise’s true B-BBEE Status may lead to thedisqualification of the entire scorecard of that enterprise and is an offence ito the new Act. • Any representation made by an Entity about its B-BBEE compliance must be supported by suitable evidence or documentation. • The use of the Verification Manual is prescribed and shall be used by Verification Agencies when performing a B-BBEE verification. • Any Verification Agent who issues a Verification Certificate without applying the Guidelines set out in the Verification Manual shall be guilty of unprofessional conduct ‘dti’ may recommend that he lose his Accreditation with SANAS and the new BEE Act explicitly makes this an offence. Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  9. CONTENTS • Background • Enterprise and Supplier Development (ESD) defined • The mechanics of ESD • Critical success factors • Success stories • Q & A

  10. Background • ESD – One of the elements of Broad-Based Black Economic Empowerment codes of good practice • Broad-Based Black Economic Empowerment (B-BBEE) • Government policy to advance economic transformation • In line with the constitution of the republic of South Africa: right to equality • To address legacy economic and opportunities disparities • Governed by B-BBEE Act 2003, as amended • Guided by Codes of Good Practice • Certain sector specific Codes of Good practice10 Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  11. Background • B-BBEE Codes of Good Practice • Contain BEE Scorecard • With 5 Elements • Ownership 25 • Management Control 15 • Skills Development 20 • Enterprise and supplier development 40 • Enterprise Development (5) • Supplier Development (10) • Preferential Procurement (25) Socio-economic development 5 TOTAL 105

  12. Background • B-BBEE Scorecard Continued • Priority Elements • Ownership – minimum of 40% of annual net value targets • Skills development – minimum of 40% of set element target • Enterprise and suppler development – minimum of 40% of target set out in the three sub ESD elements • Entities as defined in the B-BBEE Codes • Exempt Micro Enterprises (EME): Turnover up to R10m • Qualifying Small Enterprises (QSE) : Turnover between R10m and R50m • Large Enterprises: Turnover in excess of R50m Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  13. Background • B-BBEE Levels and Recognition • 135% Level one 100+ • 125% Level two 95-99 • 110% Level three 90-94 • 100% Level four 80-89 • 80% Level five 75-79 • 60% Level six 70-74 • 50% Level seven 40-54 • 0 % Non-compliance 0-39 Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  14. Enterprise and Supplier Development Definition • An element of the B-BBEE scorecard • Whose score is derived by measuring an entity’s • Preferential procurement; • Supplier Development; and • Enterprise Development • Intended to strengthen local procurement to build South Arica’s industrial base Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  15. Mechanics of ESD • General principles of measuring ESD • Preferential Procurement • Supplier Development • Enterprise Development • Definition of an empowering supplier • Definition of a measured entity • Definition of a beneficiary Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  16. Mechanics of ESD • Criteria for deriving an ESD score • Preferential Procurement Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  17. Mechanics of ESD Criteria for deriving an ESD score Supplier Development Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  18. Mechanics of ESD Enterprise Development Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  19. Mechanics of ESD • Sub-minimum and discounting principle • Measured entity to achieve a minimum of 40% of the set targets for • Preferential procurement • Supplier development; and • Enterprise Development • Non-compliance to the threshold targets will result in the overall achieved B-BBEE status level being discounted by one level down until the next verification period • Other key measurement principles • Supplier development beneficiary with a 3-year contract • Black owned EME or QSE that is not a SD beneficiary but with a minimum 3-year contract • First time supplier to the measured entity • Inclusions and exclusions from procurement spend • Enterprise and supplier development contributions • Monetary and non-monetary • Enterprise and supplier development benefit factor matrix Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  20. Critical Success Factors for ESD Implementation • Alignment of ESD and company strategies • Collaboration between procurement and enterprise development departments • Stringent beneficiary selection process • Structured monitoring and evaluation of ESD programme Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  21. ESD Success Stories Property of Association of B-BBEE Professionals (ABP), not for outside distribution or third party use without ABP’s permission

  22. Socio Economic Development

  23. Socio Economic Development • Socio Economic Development seeks to encourage initiatives that enhance the ability of black people who remain nonparticipants in the economic mainstream to be included in participating in the economy in a sustainable manner. • Revised Codes • Greater emphasis on contributions that facilitate sustainable participation in the mainstream economy

  24. Socio Economic Development • Grassroots development • Beneficiaries: • Black individuals • Grouping - charitable donations: • Where more than 75% of the beneficiary group are black, the full value of the contributions will be recognizable. • •   Where less than 75% of the beneficiary group are black, the • pro-rata recognition.

  25. Socio Economic Development • Target • 1 % of NPAT • 5 Points • The Benefit Factor matrix will determine the claimable percentage

  26. Socio Economic Development

  27. QUESTIONS AND ANSWERS

  28. We Thank You for attending the ABP Amended Codes Training Session on Enterprise and Supplier Development (ESD) with Socio-Economic Development (SED) Webinar Thursday, 15 August 2019, 11h00 - 13h00

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