BY CREATIVELY applying the “softer side” of the black economic empowerment (BEE) scorecard, true empowerment can be achieved for a broad base of BEE beneficiaries as well as for the contributing companies, says Germien du Plessis, associate at integrated equity and debt specialist Bravura.

He says that due to the complexity of the codes of good practice, many companies don’t include all relevant points to obtain the correct BEE score.

The second phase of the codes discusses the elements of the scorecard other than BEE ownership and management, and sets out detailed requirements in respect of employment equity, skills development, preferential procurement, enterprise development and the residual element, which principally deals with corporate social investment.

Du Plessis says that when looking at the object of the codes, it is clear that government is encouraging BEE initiatives which advance empowerment.

“For reasons which are not clear, SA is placing an enormous focus on ownership transactions to the exclusion of initiatives from a socioeconomic upliftment perspective in respect of the elements of the BEE scorecard other than ownership.”

Bravura advises clients to aim for a total BEE score of at least 65 to 75 out of a 100, thereby constituting the company as a level four contributor to BEE. This means that clients can recognise 100% of the monies spent with that company for BEE preferential procurement purposes.

Du Plessis explains: “A sustainable ownership transaction — which can, if structured correctly, afford the company 23 bankable points — should be a key element to maintaining a BEE score. However, the maintenance of a level four score is not possible without due attention also being given to the various elements of the scorecard other than ownership.”

As with ownership, the other codes are complex regulatory documents which present a confusing picture to most organisations. Faced with the uncertainty over the correct application of these codes, management often feels overwhelmed and demoralised by the task at hand.

This is exacerbated by the fact that the complexity of the codes requires senior personnel to be involved in their implementation.

“Our experience is that many companies are engaged in initiatives which will contribute to the scorecard. Due to the complexity of the codes, they do not realise this and do not tally such points to obtain their correct BEE score.” says Du Plessis