To BEE or not to be

Our early exposure to BEE a few years ago was typical (I suppose) of a new company trying to make a name for itself. The process of becoming BEE compliant seemed like a daunting maze of paperwork, confusing and difficult to implement rules and regulations. We did however quickly realise that certain doors to success were locked by various Senior Procurement teams who safe-guarded their portals like St Peter. They would only allow through those chosen ones who had concluded a high-level equity deal. We boldly went on to search for work downstream where the gate-keepers were less vigilant or with international customers who can’t spell BEE.

It was after losing a couple of key prospects and coming out in second-place on some promising pitches that we realised we had to focus and implement the details of the new rules/codes of good practice no matter how difficult.

At first it was very frustrating trying to get our hands on the most up-to-date information as the codes seemed to be in a perpetual state of change. But after pinning down a couple of good advisers, a good book or two and attending two great morning conferences hosted at the JSE, we felt we had a better grip. The biggest change in the codes is that they are now “Broad-based”. I understand this as empowerment of a broader base of workers across South Africa and not only the wealthy few who keep cashing in on BEE equity deals.

The first piece of good news we discovered is that there are three size categories and the smaller your business, the easier it is to achieve compliance. If your Annual Turnover is less than R35 million, you are classified as a QSE (Qualifying Small Enterprise). Your business need only submit details for four of the seven elements, which include Ownership; Management; Employment Equity; Skills Development; Preferential Procurement; Enterprise Development; Socio-Economic Development. If your Annual Turnover is less then R5 million, you automatically qualify as a Level 5 Contributor - which basically gives you a set of keys to get past St Peter at the corporate pearly gates.

One of our observations was that the DTI has made a great effort to make the rules simple to understand measure and implement.

Conexus had always been committed to the broad principles of Empowerment. We were nevertheless blown away that we scored fairly well for the elements covering Procurement, Employment Equity, Skills development and Corporate Social Responsibility... it was stuff that we were doing already anyway!

One of the good things about being dependant on Telkom is that they have a great BEE profile so you score a number of points from your annual spend with them. Seriously, we found that we picked up points for doing things that are not out of the ordinary – for example taking the right steps towards employment equity, providing training and donating to needy charities.

It’s really not that daunting, it just takes patience and focus.

My tips are:
• Read the rules ...Go to http://www.dti.gov.za/bee/beecodes.htm.
• Get organised ...You’ll need to collect a lot of corporate paperwork like your audited financials; company profile; shareholders certificates; Directors ID’s; Certificate of Incorporation; Tax Clearance Certificates.
• There are software programmes that help you to calculate your score.
• It's not compulsory to have a Rating Agency audit your scorecard.
• If you think it makes the score more credible, go for it – it will cost around R5000.
• Start this year... Your score might not be great the first time around, but once you get to grips with the fundamentals, it helps to plan for next year.

Since receiving our certificate, we have had less difficulty closing sales and I’m convinced that our customer retention rates will be much higher this year by proactively getting on board with BEE. Good luck with your efforts.