Unravelling the mystery of B-BBEE Codes

Nadiya Hattia, Senior Consultant at The BEE Chamber. Image: Supplied.

Nadiya Hattia, Senior Consultant at The BEE Chamber. Image: Supplied.

Published Mar 17, 2024


By Nadiya Hattia

In the intricate world of Broad-Based Black Economic Empowerment (B-BBEE), aligning with the correct B-BBEE Codes of Good Practice (Codes) stand as a pivotal determinant for entities.

This alignment is not just about compliance, it is about positioning within the market, setting budgets for B-BBEE expenditure, meeting prescribed targets, and assessing attainability.

However, the journey to determining the most appropriate Codes can often resemble navigating through a labyrinth.

At the heart of this is determining the "Nature of Business" and its "Core Function."

These seemingly straightforward terms can - at times - lead to complexities. Imagine an entity selling entertainment tickets while also nurturing a research department, both contributing significantly to Revenue. The question then arises: under which Codes should this entity be evaluated?

The crux of the matter lies in identifying where the majority (Over 50% ) of Revenue comes from. Is it predominantly from ticket sales, suggesting alignment with the Tourism Sector? Or does research take precedence, potentially placing it under the General Codes?

However, it is not solely about revenue. The legislation encompassing B-BBEE Codes introduces a Scope of Application, adding layers to considering when determining this.

This aspect delves deeper into specific criteria aligning with an entity’s Core Functions.

Notably, the Codes have an impact on targeted expenditure across various Elements of the Scorecard, to name a few; Enterprise, Supplier, and Socio-Economic Development. While certain requirements, such as the 51% Black Ownership for Enterprise and/or Supplier Development beneficiaries, remain consistent across the General Codes, Sectors and Sub-sectors, nuances emerge within Sector-Specific Codes which manifest as follows:

  • Sector-specific initiatives
  • Contributions towards industry funds or organisations
  • Tailored programmes for Supplier or Socio-Economic Development
  • Distinct bonus point targets differing from the General Codes.

For instance, under specific Sector Codes, unique programmes are mandated, or industry contributions might be emphasised, altering the landscape of B-BBEE compliance within each independent Sector Code.

The true challenge lies not only in identifying the primary Revenue source but also in comprehending the intricate web of criteria encapsulated within each code.

A meticulous assessment becomes imperative to ensure alignment with the code that resonates most with an entity's operations.

The impact of this alignment cannot be overstated. It is a linchpin determining competitiveness, financial allocation, and the achievability of prescribed targets.

Failure to conduct a thorough investigation into an entity's ‘Nature of Business’ might lead to misalignment, potentially hindering progress within the B-BBEE framework.

Another area of determination could include reviewing an entity’s L number, SIC number, Sector Education and Training Authority (SETA) that they belong to as well as any industry associations or registration that they may have.

The journey to determine the right or most suitable Codes demand a comprehensive understanding of an entity's operations, not just from a Revenue perspective but also through the lens of Sector Codes' intricacies.

By dissecting the multifaceted layers of the legislation and aligning them with an entity's core functions, the path towards B-BBEE compliance becomes clearer, empowering entities to navigate this landscape with confidence and precision.

Nadiya Hattia is a senior consultant at The BEE Chamber.