Frequently Asked Questions

What is BEE?

Black Economic Empowerment (BEE) is the process by which the government is seeking to ensure increased participation of black people in the economy of South Africa. BEE is a legislatively based program established in terms of the Broad-Based Black Economic Empowerment Act, 2003.

Who is considered to be "black"?

"Black people" are, according to the definition of the BEE Codes, African, Indian, and Coloured (including Chinese) people who are citizens of South Africa by: birth; or descent; or naturalization prior to the commencement date of the Interim Constitution (1993); or naturalization after the commencement date of the Interim Constitution, but were prevented from becoming naturalized by Apartheid.

What defines a “Black owned company”?

A black owned company is a juristic person in which black participants enjoy rights to more than 50% of the economic interest of the entity in which they are shareholders.

What exactly is the “Adjusted recognition for Gender (ARG) Factor”?

The ARG Factor is a formula in the Codes which seeks to ensure participation of black females in the BEE process, especially in the areas of Management Control, Employment Equity and Skills Development. Essentially, where the adjusted recognition for gender factor applies, 50% of targets must be comprised of black females in order to obtain full points.

What is an“EME"?

Exempt Micro Enterprises (EMEs) are entities with an annual turnover of less than R5 million. Read here for more…

What is a “QSE”?

Qualifying Small Enterprises (QSEs) are entities with an annual turnover of between R5 million and R35 million. These entities can select up to 4 of the 7 B-BBEE Elements to be measured on.

What is a“Generic enterprise”?

Generic Entitites are companies with an annual turnover of more than R35 million and are required to be measured against all 7 of the B-BBEE Elements.

What are the 7 "B-BBEE Elements"?

  • Ownership Equity: Measures the direct and indirect participation of black natural persons in the economic interest of the entity and also measures voting rights of black people based on the "Flow Through Principle"
  • Management Control: Measures the extent of involvement of black natural people at Board Level and in the Top Management structure of the entity. These people have strategic influence over the management of the entity and are involved in high level decision-making.
  • Employment Equity: Measures the extent to which black persons are involved in Junior (Skilled, Technically Qualified, Supervisors), Middle (Professionally Qualified & Experienced, Foremen) and Senior (Regional, Branch, Divisional) Management of the entity.
  • Skills Development: Measures the expenditure and number of participants in training programmes and recognised qualifications aimed at upskilling black employees of the organisation.
  • Preferential Procurement: Measures the value of purchases / expenditure with suppliers who are BEE-rated using the procurement recognition levels of these suppliers to weight their contribution toward your entity's compliance on this element of the scorecard.
  • Enterprise Development: Measures the value of assistance given to entities that have black ownership participation in excess of 25% in the form of grants, loans, funding and other qualifying contributions aimed at assisting or accelerating th development, sustainability and ultimate financial and operational independence of the beneficiary.
  • Socio-Economic Development: Measures monetary and/or non-monetary contributions actually initiated and implemented in favour of black beneficiaries with the specific objective of facilitating sustainable access to the economy for these beneficiaries.

What are “Procurement Recognition Levels”?

The following is a table of the applicable Procurement Recognition Levels:

B-BBEE Status Qualification B-BBEE Recognition Level
Level 1 Contributor ≥100 points 135%
Level 2 Contributor ≥85 but <100 points 125%
Level 3 Contributor ≥75 but <85 points 110%
Level 4 Contributor ≥65 but <75 points 100%
Level 5 Contributor ≥55 but <65 points 80%
Level 6 Contributor ≥45 but <55 points 60%
Level 7 Contributor ≥40 but <45 points 50%
Level 8 Contributor ≥30 but <40 points 10%
Non-Compliant Contributor <30 points 0%