BROAD-based black economic empowerment (BBBEE), like everything else in business, needs rules and guidelines. Acts of parliament are often not sufficiently detailed and may require additional rules and regulations to implement them.

These rules and regulations can be changed to reflect trends without having to change the governing legislation (the act).

BBBEE’s governing act is the Broad-based Black Economic Empowerment Act of 2003. The regulations or strategy governing the implementation and measurement of BBBEE are covered by either the trade and industry department’s generic codes of good practice or an industry-specific transformation charter. Both will only enjoy official recognition once they have been signed by the trade and industry minister and gazetted.

The act only provides guidelines as to how BBBEE should be constructed: the finer details and measurement have been left to the codes of good practice. The developer of these codes is not made clear in the act, but logic would suggest that seeing that the act is only binding on the state, a government body is to take responsibility for this. The trade and industry department is this government body. It published its final codes in December 2005 in draft form.

The act also recognised that certain industries might want to develop an industry-specific scorecard and provided the mechanism to do so provided that these transformation charters “advance the objectives of the BBBEE Act”. It follows that industry-specific transformation charters should not deviate from the guidelines laid down in the generic codes of good practice.

The generic codes have come a lot later than most of the charters. Many industries started negotiating their empowerment charters before the act was promulgated (the petroleum fuels charter is one example) and as such vary in different degrees from the December 2005 codes of good practice.

The Mining Charter was actually promulgated (gazetted) in May 2004, and its scorecard is substantially different to the latest trade and industry department codes. The remaining charters seem to be left with little alternative but to update themselves to better reflect the codes of good practice.

New and updated charters since December 2005 are often so similar to the department’s generic codes that one wonders why they bothered at all. In fact some charter drafters (for instance the cosmetics sector) have announced that they are not going ahead their own charter and are going to follow the department’s generic codes.

There is definitely a need for charters in the economy. The generic codes have been designed to accommodate all entities, but they cannot cater for industry-specific requirements. The charters make it easier for their members to comply because they are designed around that industry’s requirements.

When will these charters be finalised? The department’s codes should be gazetted by year-end but charters may take much longer.

Companies are more than happy to comply with regulations but they need clarity. They also do not wish to begin a comprehensive empowerment process using one scorecard, to discover that their new charter has set different targets.

I believe that a working knowledge of the generic codes is the BBBEE starting point. As mentioned earlier, charters that have been published since December 2005 are very similar to generic codes, suggesting that new charters will follow this model too. Also remember that you have a right to choose which scorecard applies to you — you may select the department’s scorecard over and above an industry charter.

Janisch is CEO of Caird Consulting, which focuses on BEE.