2 minute read
How is Covid-19 impacting compliance with BEE Codes?
By: Deirdre Mitchell, Managing Director, Honeycomb BEE Ratings
The long-term impact and effects of COVID-19 will be prevalent for years to come in the recovery of economies and businesses globally. The impacts and effects of COVID-19 and the lockdown the country endured in 2020 will, in turn, uniquely affect South Africa’s transformation efforts of broad-based black economic empowerment (BEE) status of a business.
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While most entities thought there would be a reprieve in B-BBEE requirements due to the impact of the lockdown, this was not so as the B-BBEE Commission said that the B-BBEE Act would still be applicable during the lockdown period and all measured entities were required to comply with the requirements in order to receive a B-BBEE Certificate and scorecard.
If your organisation was B-BBEE compliant in 2020, you would have received some form of assistance from the government due to the pandemic. However, with this came some animosity as naivety around being B-BBEE compliant for small organisations was and is still unknown as most small organisations assume they need to be 100% Black-owned, which is not the case.
The instability of business operations due to lockdown regulations, will without a doubt have had an effect on the annual plans and extent of performance of some measured entities with regards to an organisation’s rating against the elements on the scorecard. Deirdre Mitchell, Managing Director, Honeycomb BEE Ratings
With this said, measured entities were advised to relook at their B-BBEE strategy roll-out plans for 2020 and, to the extent possible, continue to implement initiatives towards achieving their annual targets as organisations will be measured based on initiatives implemented during 2020’s Measurement Period.
For instance, B-BBEE can be used to offset the effects on communities and assist with awareness through the Socio-Economic element by embracing initiatives implemented to help people impacted by COVID.
In this manner, companies will certainly turn over the spends made on initiatives and ensure they are being handled in the most effective manner to see results rather than just throwing it at various entities set up to “handle” these initiatives. This new approach will see BEE being implemented carefully and directly for what it is intended for.
Going forward, we might see less money spent as companies are closing, but the strategies that work will result in positive outcomes for both the Measured Entity and the beneficiary entity/beneficiaries themselves.
Therefore, we encourage organisations to continue to evaluate their B-BBEE strategy and targets and the implementation thereof, based on the challenges identified last year. Organisations should consider where their B-BBEE spend may be best allocated, assess their B-BBEE ownership funding structures, address any Net Value deficiencies, and focus on other areas of B-BBEE where additional points may be scored.
Once again, it has been confirmed that even living through a worldwide pandemic, B-BBEE is here to stay and is a way of life and doing business in South Africa. We urge organisations to accept this legislation and start or continue their B-BBEE compliance journey. As individuals and business owners, we need to support the transformation of South Africa’s economy and people and sequentially reap the benefits of what B-BBEE can do to make you, your organisation, and our country a success.
