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 Law aimed at curbing fronting 

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• New BEE regulations

The codes will for the first time exempt a 100% black-owned small enterprises making a turnover of less than R10-million from a B-BBEE verification process.

The 100% black-owned enterprises will automatically qualify as Level 1 contributors, which will make it easier for them to secure government tenders.

There is also a sting in the new empowerment laws as companies linked to fronting will be penalised 10% of their revenue.

The revised codes, were unveiled by Trade and Industry Minister Rob Davies on Monday. A document of the codes is expected to be released today.

Trucking and construction entrepreneur Pakiso Gumbi said it was currently challenging for a 100% black-owned business like his to secure a Level 1 rating.

He said the B-BBEE verification was time-consuming, tedious and expensive.

"I had to spend a lot of money on verification and trying to prove to an agency that I was black," said Gumbi.

"And if my business used white suppliers, who provided cheaper goods and services, I would be penalised.

"I am happy that I will now secure an automatic Level 1 qualification, regardless of the suppliers I use."

Tim Tebeila, chairman of Sekoko Resources, said he was not in favour of the previous B-BBEEE codes because it was confusing.

"Sometimes verification agencies would tell us we are on Level 3, sometimes they would change us to being a Level 2 contributor. It was confusing," he said.

"Our company had to spend a hell lot of money on verifying and analysing whether Sekoko was really black-owned and had black management," Tebeila said.

Black Lite Consulting chief executive Ajay Lalu said companies that were tempted to abuse the system would take into consideration the 10% revenue fine they might have to fork out.

"Unlike in the past, there was no disincentive for abusing the B-BBEE system. Companies who are engaged in fronting will be hit hard," said Lalu.

He added that the revised codes would push established companies doing business with government to focus on using black and women-owned suppliers.

Comments

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Wed Jun 19 20:59:49 SAST 2013 ::

Oct 5, 2012

TheEntrepreneur

This is great news indeed. I aplaud those who made it possible, including the ANC-led government. I am glad that the government is also going to deal firmly with the much despised fronting. It won't be long, though, before MALFUNCTIONING Lekota and his cronnies in the doomed-to-fail COPE say this and affirmative action must be scrapped.
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Oct 5, 2012

cornelius

So if a 100% black owned firm does not need verification, how do you verify that it is indeed 100% black owned ?

I would have thought 18 yrs after democracy it was time to start relaxing these Affirmative Action laws ?
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Oct 5, 2012

Coldcurry

@cornelius
They might be needed to produce registration documents and IDs
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Oct 5, 2012

TheNewFreedomFighter

Since this ANC law seeks to categorise people into racial groups just as apartheid did, I suggest that what follows is how many white people may interpret this. (Man also refers to woman)
The more the black man fails the majority in SA the more the black man starts to act like the Apartheid regime by creating and then strengthening racist laws. If a black man can't compete in the market without a certificate to say he is black then quite frankly, black man, you confirm the white man's contention that you are inferior and need special privilidges to help yourself.

When a black man can build a business (or perform in a job) that can compete in the market without favour, that is when the black man will have achieved economic liberation. There are currently many black men out there who do this every day, but unfortunately there are many out there who need racial favouritism JUST LIKE THE AFRIKAANERS DID UNDER APARTHEID. Until then BBBEE accomplishes just what the ANC has accomplished with our now useles education system: They dropped the standard so much that the matric qualification is meaningless. So in the same way that we now have millions of qualified but uneducated youth we will in future have millions of racially privelidged but underperforming black businessmen. My point is well made in relation to Malema. He used his racial privelidge via his political privelidge to secure business that, according to all accounts, he and his employees failed to competently perform. Is that economic freedom or is it economic sabotage under the banner of economic freedom?

Just as I was affronted by laws that sought to subjugate blacks under whites, so too am I affronted by laws that subjugate whites under blacks. It' s just racist and I will do all I can to oppose it.
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Oct 5, 2012

Mamlambo

I don't really agree with this racial categories. If we in this country continue to do this, we will never be non-racial.

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Oct 5, 2012

MorenaWaPolelo

cornelius
So if a 100% black owned firm does not need verification, how do you verify that it is indeed 100% black owned ?

I would have thought 18 yrs after democracy it was time to start relaxing these Affirmative Action laws ?
++++++++++++++++++++++++++++++++
Unfortunatley they must stay, taking into account that they were abused by the people!!
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Oct 8, 2012

mnc3disi

As much as it has its disadvantages, i feel BEE is still necessary to encourage black entrepreneurship, although it will be taken advantage of... As far as blacks reaching the same level of competetiveness as whites, i feel it will take time. Yes it is racist, but a generational disadvantage in education still prevails in our country today, so easing the difficulty in growing REAL black owned businesses is welcomed...
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Oct 8, 2012

nickster2

BBBEE is just another crutch handed to the helpless.

Carry on.
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