DTI releases draft BEE codes of practice

JOY ORLEK IN A move designed to clarify private sector uncertainties, the Department of Trade and Industry last week published its codes of practice on broad based black economic empowerment, setting out the key elements of BEE and ways to measure it. The codes establish the overall framework for BEE and contain a detailed scorecard that includes clear targets, weightings and indicators that can be used to measure compliance. The new scorecard contains clear targets for ownership, management and enterprise development. It also recommends that companies should, amongst other things, aim to achieve BEE equity levels of 25.1%; black management of 40%; procurement from BEE compliant entities of 50%; employment equity of 50%. The inclusion of these clear targets is the result of requests by the private sector that government play a more active role in co-ordinating the various charter initiatives and ensure the harmonisation of the targets in the various charters. The latest move will also address some of the acrimony and uncertainty that has dominated various charter discussions, says a DTI spokesman. The scorecard gives greater emphasis to the participation of women in the empowerment process. “It is a guide that may, within certain limits, be adapted to suit specific circumstances, but serious deviations from the scorecard should be ba sed on a sound economic rationale,” the spokesman said. The codes of practice on measuring ownership and management spell out in detail how to measure these elements of the scorecard, including details of the various types of ownership such as economic interest and voting rights. It also sets out clear targets for women and other designated black groups defined in the BEE strategy, and allocates bonus points for the introduction of new entrants and overachieving on set BEE targets. For management, it is recommended that companies be rewarded on a higher scale for black participation in executive management. The DTI has stressed that these codes were still in draft form and in terms of the BEE Act, must allow for public comment and consultation for a period of 60 days. This represented phase one of the codes, the DTI said. The second phase will be released in due course and will include fronting, enterprise development, skills development, employment equity and preferential procurement. It will follow a similar process.