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