The death of B-BBEE
The more I read of the new B-BBEE codes, the more I despair.
OK, so your company is black owned and your turnover is less then R50m. Great, you get to be Level 1 (Level 2 if only 51% black owned). Does that make you feel good? Why? There are hundreds of thousands of other companies out there with the same score as you! In other words, the market is being flooded with Level 1 and 2 companies. It’s a bit like the hyper-inflation that we saw in Zimbabwe. They just kept printing Zim dollars until there were so many of them that the Zim dollar became worthless.
That’s the black owned side of the equation. Now look at the companies that are not 51% black owned but whose turnover is greater than R10m (if it’s less they also get a free ride at Level 4). The new codes are so ridiculously difficult to comply with that it is unlikely that any of them will do better than Level 6! Are they going to try when their black owned counterparts are sitting comfortably at Level 1 and 2? I don’t think so, especially as they won’t even hit Level 6 unless they engage a B-BBEE consultant at significant cost.
We all know about goal setting don’t we? You set yourself realistic,achievablegoals, otherwise there’s no point and the B-BBEE goals are simply not achievable, so why bother to aim for them?
There should be a fundamental underlying all your B-BBEE decisions. They must be taken for good business reasons with the B-BBEE leg as secondary (in the same way that you don’t do anything just to save tax). So yes, you can chuck away 51% of your business and join the other hundreds of thousands who sit at Level 2 (it’s like storing Zim dollars under the mattress for a rainy day!), or you can ignore the whole farce of B-BBEE and structure your company’s marketing accordingly.
Me? I’m going the second route. Not because I don’t love my staff of entirely black women. I propose to continue training them. I will continue to mentor and advise black clients, students and anyone else who asks my advice and I will continue to buy from at least Level 4 companies. So not because of any of those things, but because despite all of that, our company will drop from Level 1 (which recognised them) to Level 4 simply because we are white owned.
And our B-BBEE auditing services? I’m ending those too. I truly can’t make sense of certain aspects of the new codes and will not be party to them, especially those relating to the National demographics of Indians, coloureds, blacks and asians which has a mathematical formula that quickly goes to infinity! So much for the standard of mathematics amongst those who drafted the codes.
We will still issue close to 100 EME certificates and QSE certificates each month where no audit is required.
Maybe you need to come and see me for a no charge meeting. I’ve been in business all of my life, first as an engineer with my own factory and then as a Chartered Accountant with my own practice. Here’s my diary – book a time that suits you.