For a company in South Africa to get a BBBEE status, they have to complete certain tasks that will put them on the seven according to the BBBEE Act. Some people think that by hiring a black individual, they have met the BBBEE requirements and have a good status, but this is not the case at all.
To advance up these tiers, companies need to consider a variety of things. One of the most important parts that businesses must consider is the company’s ownership, and this is often verified via auditing. This is broken down into management and equity ownership and both must be considered to advance through the BBBEE tiers.
Indirect empowerment is also an issue that must be considered and this does not just translate to hiring black individuals. This can be broken down into a number of fields, namely employment equity, which does relate to the number of black and previously disadvantaged employees, skills development which speaks to the improvement of those from disadvantaged background, preferential procurement, which is the process of hiring someone who is both right for the job and from a previously disadvantaged background over someone from an advantaged background, enterprise development and socio-economic development, which have to do with development of the business and development of the country.
While a company does not have to get a BBBEE status, it makes sense to do so anyway as most companies wish to work with those who are compliant. As most companies who use external suppliers, or who are suppliers themselves, may have found, it simply is not good business practice to do business without this certification. However, getting the certification can be expensive which is why those smaller companies that register less than R5 million a year in income do not need to get a BBBEE status.
For the other companies though, a BBBEE status is extremely important as it shows not just the commitment to the laws of the country, but also the company’s commitment to the development of the country through the empowerment of previously disadvantaged individuals. Accounting services and tax companies can be used to help verify the BBBEE status of a company, as can a tax consultant.