BEE Partner, South Africa Economy Watch

BEE Qualifying Contributions

Sector-specific contributions

The benefit-factor matrix refers to sector-specific contributions, which are not addressed elsewhere in Statements 700 or 807. There is a definition referring to sector-specific programmes. Although it is not clear whether there is a link between the definition and the reference to sector-specific contributions above, it would appear logical to assume so.

The origin of sector-specific contributions is from previous draft statements. The objective is that sector codes will determine sector- specific socio-economic development contributions as guidance to industry from each sector. It is probable that, where a sector code does specify sector-specific socio-economic development contributions, they will be recognisable for measurement under this Statement. Until the sector codes are effective, measured entities should focus their investments on qualifying social developments relevant to their sector.

Approved socio-economic development contributions

The indicator refers to “approved socio-economic development contributions“, which is referred to throughout the benefit-factor matrix. It is a defined term and opens up a variety of contributions that do not appear to be relevant to BEE.

Approved socio-economic development contributions mean monetary or non-monetary contributions carried out for the benefit of any projects approved by an organ of state or sectors including, without limitation:

Projects focusing on environmental conservation, awareness, education or waste management projects targeting infrastructural development and enterprise creation; reconstruction in underdeveloped areas; rural communities or geographic areas identified in the government’s integrated sustainable rural development or urban renewal programmes.

The definition refers to projects approved by an organ of state. For any of the above contributions to be recognisable, they must first be approved by an organ of state as a socio-economic development contribution. The definition is essentially an opening for organs of state to receive socio-economic development contributions should there be a need for them to open up to such contributions.

BEE Score Measurement Formula

The socio-economic development scores are measured using the following formula:

A = B/C x D

A = the score for socio-economic development carried forward to the generic scorecard

B = the value of all qualifying contributions from the date of inception of measurement or the commencement date of this statement

C = the compliance target

D = the weighting points

Step 1 Calculate the value of all qualifying contributions from the inception date or commencement date.

Step 2 Assuming there is a net profit for the year or average net profit over the preceding five years, and the net margin exceeds a quarter of the industry average net margin, add the net profit after tax since the commencement date of the Codes or the inception date. Multiply the result by 1% to establish the target.

Step 3 Where there are net losses, average net losses or the entity’s net margin is less than a quarter of the industry’s average net margin, calculate 1% of NPAT at the last instance where the entity’s profit margin was greater than one quarter of the industry’s average, divide by the turnover at that date and multiply it by the turnover for the period under review.

Step 4 Divide the contribution, the result of Step 1, by the target, the result of Step 2 or 3, as appropriate, to establish the contribution as a percentage of the target.

Step 5 Multiply the measurable contribution percentage by the 25 weighting points.

Step 6 Carry the result of Step 5, rounded off to two decimal places,
forward to the socio-economic development scorecard.

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