New B-BBEE codes will have 'dramatic' impact on transport industry

Dramatic changes to the broad-based black economic empowerment (B-BBEE) codes will have a major negative impact on the transport industry, according to Charmaine Venter, associate of BEExchange. These proposed changes to the BEE Codes of Good Practice have just been presented by the department of trade and industry (dti) for public comment. “Significant changes in the thresholds and points allocations for each element will result in most businesses dropping from their current BEE level or becoming noncompliant,” said Venter. “The detailed changes within each element are significant and will affect how points are earned.” Despite the proposed changes in thresholds and elements, there are rumours that the provision of early payments to enterprise development beneficiaries will probably fall away. “This means that procurement departments will now not be able to derive any benefit from paying smaller qualifying entities within days after receipt on invoice,” Venter added. “Of course, this will have a negative effect on the sustainability of small businesses as it will directly influence cash flow.” The effect of the cancellation of early payments to qualifying small businesses poses a huge risk to the transport industry, she told FTW. “As we know, one of the largest drivers of transformation in the transport industry is the owner-driver structures. Accordingly, owner-drivers are mostly assisted through early payments of their accounts. “Without this, the owner-driver structure will completely collapse.” She also noted that a further rumour was that large enterprises (a business with a turnover of more than R35 million) would not qualify as enterprise development beneficiaries any more. “In essence,” Venter said, “this makes sense to most industries, except for the transport industry. Many large road freight and even clearing and forwarding agents support the owner-driver structure through early payments. If the larger enterprise does not qualify as an enterprise development beneficiary moving forward, it means that they may not be able to sustain the early payments to ownerdrivers or subcontractors. “We will only know what the impact on industry will be as soon as the actual proposed amendments are gazetted – and we expect that later this month.” CAPTION Owner-driver structure under threat.