Black Economic Empowerment Codes of Good Practice

The Broad-Based Black Economic Empowerment Codes of Good Practice aim to level the playing field for all operating in the South African economy by providing clear and comprehensive criteria for the measurement of broad-based BEE.

BEE Codes of Good Practice
The BEE Codes of Good Practice aim to ensure that black economic empowerment benefits not only the black elite but also women, workers, the youth, people with disabilities and the rural poor. (Image: Brand South Africa)

The codes  provide a standard framework for the measurement of broad-based BEE across all sectors of the economy. This means that no industry will be disadvantaged over another when presenting their BEE credentials.

New Codes of Good Practice became effective in 2015. This is a timeline of the codes:

  • Broad-Based Black Economic Act of 2003
  • BBBEE Codes of Good Practice 2007
  • Revised Codes gazetted 2013
  • Revised Codes effective 2015

Statement 003 of the BEE Act provides guidelines for the alignment of transformation charters to be gazetted as Codes of Good Practice. This will ensure that even when different gazetted charters are applied to different entities presenting their BEE credentials, neither of the entities will be unfairly disadvantaged over the other because of the application of a more stringent industry charter.

The intention of the Codes of Good Practice is therefore to level the playing field for all entities operating within the South African economy by providing clear and comprehensive criteria for the measurement of broad-based BEE.

The table below is a guide to the organisation and content of the codes:

Black Economic Empowerment Codes of Good Practice

Overview of the codes

The Black Economic Empowerment Codes of Good Practice ensure that the days of high-profile black businesspeople representing faceless members of “broad-based” groups in empowerment deals are over.

They aim to ensure that empowerment benefits not only the black elite but also women, workers, the youth, people with disabilities and the rural poor. They also strongly discourage fronting – schemes that claim to be broad-based but which are found to be wanting when their composition is unpacked.

Aim of the codes

The codes are issued in terms of Section 9 the Broad Based Black Economic Empowerment Act of 2003. They function to promote the objectives of the Act, which are to:

  • Transform South Africa’s economy to allow meaningful participation by black people.
  • Substantially change the racial profile of companies’ owners, managers and skilled professionals.
  • Increase the ownership and management of companies by black women, communities, workers, cooperatives and others, and help them access more economic opportunities.
  • Promote investment that leads to broad-based and meaningful participation in the economy by black people.
  • Help rural and local communities access economic opportunities.
  • Promote access to finance for black economic empowerment.

In terms of the Act, “black people” means African, coloured or Indian South African citizens, and those entitled to become citizens.

The Codes of Good Practice are binding on all organs of state and public entities. In terms of the BEE Act, the government must apply the codes when entering into decisions on:

  • procurement
  • licensing and concessions
  • public-private partnerships
  • the sale of state-owned assets or businesses

Private companies must apply the codes if they want to do business with any government enterprise or organ of state – that is, in order to tender for business, apply for licences or concessions, enter into public-private partnerships, or buy state-owned assets.

Companies are also encouraged to apply the codes in their interactions with one another, as preferential procurement effectively impinges on most private sector enterprises throughout the chain of supply, from first-tier suppliers to government downwards.

Content of the codes

The 10 codes deal with the different elements of BEE, how they are to be weighted, and how BEE compliance is to be regulated. They are as follows:

  • Code 000 – A framework for the measurement of BEE. This includes the generic BEE scorecard, which gives a general weighting to companies’ BEE status in terms of management, ownership, skills development and so on; guidelines for the development and gazetting of industry charters; and the approval, accreditation and regulation of BEE verification agencies.
  • Code 100 – Measuring the ownership element of the BEE scorecard, including the general BEE ownership scorecard.
  • Code 200 – Measuring the management and control element of the scorecard.
  • Code 300 – Measuring employment equity.
  • Code 400 – Measuring skills development.
  • Code 500 – Measuring preferential procurement.
  • Code 600 – Measuring enterprise development.
  • Code 700 – Measuring the residual element.
  • Code 800 – Industry sector charters.
  • Code 1000 – Measuring BEE in small enterprises.

Brand South Africa reporter
Reviewed: August 2017

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