BEE Partner, South Africa Economy Watch

The socio-economic development element is a request to business to play an active role in social upliftment. It is BEE‘S conduit for Black people living below the poverty line by providing a lifeline to people without any access to the mainstream economy. Socio-economic development may take a variety of forms, including rural development, contributions to traditionally non-economic activities such as the arts and medical facilities for the poor.

The objective of BEE in the social development element is the same as all the other elements — to provide beneficiaries with access to the mainstream economy. In the socio-economic development element, access to the mainstream economy is perhaps more liberally applied. For example, contributing to a tuberculosis hospice may not appear to provide access to the economy. However, if someone with TB does not have access to a hospice, another family member would have to stay at home to nurse the sick person. The contribution to the hospice indirectly provides the rest of the family an opportunity to work in the mainstream economy.

In contrast with the example above, there are also hollow contributions that will not receive points. An example would be building a bridge over a river for a community to gain access to a nearby village where they can conduct their economic affairs. If the bridge was built further away from the village than necessary, so that no one actually uses the bridge, then the contribution has no substance because it is not actually facilitating access to the economy.

Socio-economic development is not new nor is it a BEE-specific development. It is increasingly being adopted by business as an economic standard globally. It is more commonly known as corporate social investment (CSI). BEE chose to use a different term because the investment is specific to BEE beneficiaries. Generally, the underlying intention is to generate positive sentiment towards the brand and the contribution is exercised to induce return. Regardless of intention, entities are contributing to socio-economic development and the outcome is positive for both communities and companies.

South African organisations should approach the socio-economic development element of BEE in the same light. The measured entity can view and pay it as a tax or it can direct the money as an investment capable of generating an indirect return.

The QSE Socio-Economic Development Scorecard

The calculation of socio-economic development is the same as that used for enterprise development. The differences are the targeted beneficiaries, the nature of the contributions and the targeted amount.

The socio-economic development element shares the following similarities with enterprise development. The reason for including this comparison is to demonstrate that they are based on the same measurement system:

• The contributions are measured on a cumulative basis.
• The target is calculated on the same basis, but the final target is 1% as opposed to 2% of NPAT.
• The calculations and formulae are the same.
• Contributions are measured against a benefit-factor matrix.

The QSE socio-economic development scorecard differs from the generic scorecard equivalent in the number of points allocated to the indicator. The generic scorecard allocates five points to this indicator whereas the QSE scorecard allocates 25 points. If BEE contributions are seen as a straight tax by an entity, 25 points for a contribution of 1% of NPAT offer potentially “cheap” points.

Possibly related posts: (automatically generated)
Qualifying BEE Small Enterprises, Socio-Economic Development Standards Part 1

• BEE Business Development Qualifying Contributions part 1
• BEE Codes and Economic Sustainability Resend
• How about selling Assets to your Black Partner? Will it award for your BEE score?
• Do you know how to prepare for a BBBEE Rating?
• Chinese are declared to be Black, so are Chinese are Fully Black?
• BEE Business Development Qualifying Contributions part 2
• Qualifying BEE Small Enterprises, Socio-Economic Development Standards part 3
• Beneficiary Black Business Enterprise Development
• Black Economy, how to measure score for Company development
• BEE Benefit Matrix and BEE Score Measure Calculation continue...