Understanding the BBBEE Scorecard

Having a good BBBEE scorecard is becoming a necessity for optimising the productivity of your business. While it’s not “obligatory” to be BEE compliant, companies that have fulfilled compliancy requirements are offered opportunities and rewards that non-BEE compliant companies are not. Integra Scores offers a SANAS-accredited BEE verification service that will help you achieve the best possible BEE scorecard for your business.

BBBEE Score

To understand what a BBBEE score is, you first have to know how companies are classified. There are three types of business enterprises:

1. Exempted Micro Enterprises (EME)
2. Qualifying Small Enterprises (QSE)
3. Generic Enterprises

• Exempted Micro Enterprises are either small businesses with a turnover of under R5 million per annum, or enterprises in their first year of start up. Both of these are exempted from the seven BEE elements and are considered BEE compliant with a rating (score) of Level 4.

• Qualifying Small Enterprises are small to medium sized businesses with an annual turnover of between R5 million and R35 million. These businesses are measured against the QSE scorecard. To be BEE compliant they need to fulfil four out of the seven pillars (or elements) of BEE.

• Generic Enterprises are companies with an annual turnover of more than R35 million and are measured against the generic scorecard. Therefore, they have a BBBEE generic score. For full compliancy, generic enterprises have to fulfil all seven of the BEE elements.

The classification of your company will affect both your BBBEE scorecard rating and the way you run your business if you work in a sector where BEE plays a role in your workflow.

BEE Scorecard Rating

Scorecard ratings differ depending on whether your business is an EME, a QSE or a Generic Enterprise. Your business, if not an EME, will be rated against the seven elements of BEE. It’s important to note that Exempt Micro Enterprises still need to obtain a certificate of exemption to verify their BEE compliance.

The seven elements of BEE are:

(Direct empowerment)

1. Ownership
2. Management (Indirect empowerment)
3. Employment Equity
4. Skills Development
5. Preferential Procurement
6. Enterprise Development
7. Socio-Economic Development

Qualifying Small Enterprises are expected to take on four of the seven elements to achieve BEE compliancy. The company is at liberty to choose which four elements to fulfil.

Generic enterprises are expected to adopt all seven of the BEE pillars in order to become compliant.

Preferential Procurement

Preferential procurement is one of the seven pillars affecting your BEE scorecard rating.

Each of the pillars is worth a certain “weight” in its contribution to BEE compliance. The pillars are weighted as follows:

GENERIC QSE

• Ownership
• Management
• Employment Equity
• Skills Development
• Preferential Procurement
• Enterprise Development
• Socio-Economic Development

20%
10%
15%
15%
20%
15%
5%

25%
25%
25%
25%
25%
25%
25%

As a Generic company, preferential procurement weighs in at 20% of the total needed for BEE compliance and 25% if your company is a QSE. The system of preferential procurement means that BEE compliant companies will attract business. Their products or services will be favoured by enterprises needing to increase their own BEE scores as well as companies offering tenders.

Basically, in layman’s terms, this is how it works:

1. If you want to better your BEE score, you will buy products or services from a BEE verified company with as high a rating as possible.

2. If your company has a good BEE scorecard, companies will buy goods and services from you to better their own BEE score.

BBBEE can seem like a minefield of confusing information and obscure legalities. Simplify the situation for your company by giving Integra Scores the opportunity help you to maximise your BBBEE scorecard.