BEE amended codes may be delayed until year-end - CNBC Africa

BEE amended codes may be delayed until year-end

Southern Africa

by admin 0

BEE amended codes delayed till year-end. PHOTO: Getty Images

“When the Department of Trade and Industry (dti) released the new codes in October, the government entity was required to give a 60 day period for public comment. Although this period has now been completed, the dti still needs to read the submissions, correct errors, make changes and submit the final codes for gazetting, all in time for implementation on 1 May 2015, which is almost impossible,” said Keith Levenstein, chief executive officer of the Black Economic Empowerment (BEE) advisory firm, EconoBEE.

(WATCH VIDEO: Reviewing the performance of BEE shares in 2014)

He said that nine industry sectors such as ICT, construction, tourism and agriculture representing more than half the economy will also be at risk because their individual industry codes have not yet been published.

“If these industry sector codes are not released in time, each sector will need to follow last October’s amended codes. However, if each specific sector code is issued in time, they are expected to be similar to October’s amended codes, meaning that businesses should start adapting the amended codes now to prepare for the implementation of the new sector codes.”

Based on October’s amended codes, businesses with a turnover of over ten million rand are at risk of becoming non-compliant when evaluated.

(WATCH VIDEO: Fear of BEE compliance for 9 S.African industry sectors)

“A company currently at a level 4 will almost certainly fall to level 6, and possibly even further. Management will need to do additional work to retain their current BEE status. Investment in training, for example, needs to be increased from three to six per cent of payroll,” continued Levenstein.

Businesses are also at risk of their suppliers becoming non-compliant due to their BEE-rating decline.