TODAYS WORLD OF BUSINESS
IMPACT TO SMES The Impact of new B-BBEE codes on SMEs
T he impact of new B-BBEE code on small businesses
With the economy expected to grow at less than 1 % for the year 2016 and an unemployment rate that is ranked among the top 20 globally, the South African economy find itself in desperate need for a boost.
According to the Department of Trade and Industry( DTI) small businesses represent 98 % of the total number of firms in the country and employ 55 % of the country’ s labour force, contributing approximately 24 % of the total wage-bill. It is also estimated that small businesses account for about 35 % of GDP overall.
It is therefore recognised among all spheres of our society( be it in Government, business and society as a whole) that if we as a country are going to turn around this situation, we will need to open up the South African economy and grow Small, Medium and Micro Enterprises( SMMEs).
While there is consensus in what needs to happen, doing it on the other hand is another matter altogether.
“ most SMMEs have not built the capability and capacity to easily participate corporate supply chains” In light of our past, we find that most of the South African small business operate in the informal market space and rarely crack the code to evolve into a formal business that can be recognised as a supplier for some of the large corporates.
In addition to this challenge, the exclusion of particular race groups from the main stream economy has also meant most SMMEs have not built the capability and capacity to easily participate corporate supply chains.
The Department of Trade and Industry has therefore developed new Broad- Based Black Economic Empowerment to seek to address some of these challenges.
Amongst other amendments made to the B-BBEE codes, are the amendments on Enterprise and Supplier Development.
According to the new codes, the supplier and enterprise development element consists of the following:
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Supplier development, which requires expenditure of 1 % of net profit after tax for assisting a black-owned( more than 51 % black shareholding) companies; and
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Enterprise development, which requires a further 1 % of net profit after tax to be spent on any black-owned exempted micro enterprise or qualifying