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Transformation News, BEE Consulting
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The Transport Sector has been left in a state of uncertainty over the last 8 years. All Sector Codes were required to align t...
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Transcend BEE Advisors explain the value in entities operating under the transport sector, to understand the differences between Transport Sector Codes and Generic B-BBEE Codes, as it is expected that any amendment to Transport Sector Codes will result in alignment with Generic Codes. If the Transport Sector Codes are repealed, it is likely that transport sector companies, will be measured under Generic Codes.
The Transport Sector Code is the only set of codes that has not yet been aligned to the revised Generic Codes of Good Practice (“Revised Codes”). A draft sector code was released in 2016, but despite various discussions and iterations of proposed amendments, revised sector codes have not yet been gazetted.Usually, sector codes that are not aligned with the Revised Codes over a period of time, have been repealed, after which entities operating in the relevant sector must use the Revised Codes for B-BBEE measurement.
There are notable differences between the Transport Sector Codes and the Revised Codes. If there is alignment with Revised Codes or if the current Transport sector codes are repealed, the B-BBEE rating of entities operating in the transport sector will be materially impacted. This would likely be caused by:
- Introduction of ‘priority elements’ whereby failure to meet 40% of the points of Ownership Net Value, Skills Development, or each sub-element of Enterprise and Supplier Development will result in the measured entity’s rating level automatically being discounted by one level;
- Change in B-BBEE status/level scoring framework, with more points being required to achieve a similar level. For example, 65 points are required to achieve a Level 4 B-BBEE status under Transport Sector Codes, whereas 80 points are required under the Revised Codes.
- For Management Control, Employment Equity and Skills Development, requirement for demographic representation of Black people according to the Economically Active Population.
- Increase in Skills Development targets to 6% of leviable amount, from 3% under current Transport Sector Codes.
- Preferential Procurement element allocating significant weighting and points to suppliers’ Black and Black women ownership rather than just B-BBEE level.
- Distinction between Enterprise Development (non-supplier) and Supplier Development initiatives.
- Inability for Enterprise Development spend to be claimed cumulatively over a number of years if targets were exceeded in prior years.
For insightful advice and support in building a transformation strategy that makes business sense, contact us for more information.
A director at Transcend Capital, Shaun specialises in BEE ownership advisory, transactions, and assisting multinationals and SA corporates with BEE ownership strategy.