Do companies really need a BEE Certificate?

[Idiosyncratic]

I'm curious, do corporations in SA really need a BEE certificate by law? Is there ever a point (in turns of turnover) where you have to be BEE compliant to operate?

 

[koogs]

You are not legally compelled to have a BEE certificate but it makes doing business easier especially if you apply for tenders with government or are a supplier of goods or services since most of your big customers will request a BEE certificate if they themselves have a BEE certifcate since they can then claim their spend with you towards their BEE scorecard.

The DTI uses turnover to classify companies into 3 different categories for BEE purposes. If your turnover is under R10million pa then you are classified as an Emerging Micro Enterprise, if above R10 million but under R50million then you are classifed as a Qualifying Small Enterprise and above R50million you are classified as a Generic Enterprise.

There are different BEE scorecards for these 3 categories. This is on a very high level as you then have to go into percentage of black ownership, no. of black staff, training of black staff, procurement from black owned companies, etc.

 

[deweyzeph]

Basically if your company turns over less than R10 million per year then you have nothing to worry about. Once you go over over R10 million is when the legalised extortion starts.

 

[Idiosyncratic]

Basically if your company turns over less than R10 million per year then you have nothing to worry about. Once you go over over R10 million is when the legalised extortion starts.

Right, hence my question - would a company really have to give in to all that? Could a company like PNP just go, "screw it, we're not renewing our BEE cert" and legally get away with it if they're not applying for tenders?

 

[deweyzeph]

Right, hence my question - would a company really have to give in to all that? Could a company like PNP just go, "screw it, we're not renewing our BEE cert" and legally get away with it if they're not applying for tenders?

The problem is that the evil geniuses who devised this extortion racket have rigged it so thoroughly that if you want to do business all along the supply chain you have to have your BEE extortion certificate ready or else nobody will do business with you for fear of themselves falling short of their BEE extortion requirements, and so on and so on. Not even the mafia could have come up with a better extortion racket.

 

[LazyLion]

I doubt that such a big company like PnP could get away with it for very long. It's easier for smaller companies who are in niche markets.
But yeah, we don't have one, and we just keep making excuses... Waste of time and money though.

 

[Arthur]

Basically if your company turns over less than R10 million per year then you have nothing to worry about.

True. <R10m turnover means you're an Exempt Micro Enterprise (EME).

But if you deal with medium or larger businesses who are not EMEs, they will want your BBBEE certificate because their own BBBEE status requires them to report status of their suppliers, ie you. Currently an EME can get away with an accountant's letter and an affidavit by owner/director/officer.

 

[Tokolotshe]

Basically if your company turns over less than R10 million per year then you have nothing to worry about. Once you go over over R10 million is when the legalised extortion starts.

Correct. Note turns over.

So, if you have a low profit margin on a easy selling item, your are not going to get rich (dropship?). However with higher profit margins trying to earn a living while delivering value, you get labelled.

Nice environment we move in.

 

[Idiosyncratic]

True. <R10m turnover means you're an Exempt Micro Enterprise (EME).

But if you deal with medium or larger businesses who are not EMEs, they will want your BBBEE certificate because their own BBBEE status requires them to report status of their suppliers, ie you. Currently an EME can get away with an accountant's letter and an affidavit by owner/director/officer.

That's the way I understood it, but I'm guessing even once over 10 bar you won't get into trouble for not having one? You'll just have issues with those who you're doing business with wanting to see something you don't have?

 

[Thor]

Unwritten SA law

 

[Greig Whitton]

That's the way I understood it, but I'm guessing even once over 10 bar you won't get into trouble for not having one? You'll just have issues with those who you're doing business with wanting to see something you don't have?

If by "trouble" you mean "legal trouble" then, no, you won't. However, if your clients expect you to have a valid B-BBEE certificate and you can't produce one, there is always a risk that they may switch to a supplier that does. Under the old Codes, this was a relatively negligible risk, however, the new Codes have upped the ante considerably. Many companies now have procurement policies that insist on supplier certification; some have even gone so far as to set a minimum acceptable B-BBEE score.

It's also worth pointing out that B-BBEE certification doesn't just have procurement implications. Without a valid B-BBEE certificate, it may be impossible to obtain certain licences and permits, or apply for some funding programs. There has been a concerted effort across multiple government agencies to make B-BBEE certification ubiquitous and I fully expect this to continue. Frankly, I'm surprised they haven't attempted a knockout blow, like making B-BBEE certification a tax compliance requirement.