Understanding BBBEE

Identifying Enterprise Development Beneficiaries

Enterprise Development beneficiaries are SMMEs from a broad range of firms, from traditional family businesses to survivalist self-employed individuals.

Code 600

According to the Department of Trade and Industry, the Enterprise Development Element of the Generic Scorecard aims to address certain key challenges facing Qualifying Small Enterprises and Exempted Micro Enterprises – and, more specifically, black-owned entities that struggle to take their businesses from survivalist and/or micro level to a level of sustainability and profitability.

Code 600 measures the average annual value of all Enterprise Development Contributions and sector specific programmes made by companies as a percentage of the target 3% of Net Profit after Tax.

This contribution can take the form of a combination of financial, management and other quantifiable support.

Specific challenges

The challenges which Code 600 seeks to address include: High failure rate amongst black-owned start-ups due to lack of access to financing and other business support. Many black entrepreneurs struggle to take their businesses from a survivalist or micro-level to the next phase owing to one or more of the following: lack of access to capital, lack of collateral, lack of education, training and experience. Statement 600 therefore attempts to address these challenges by providing recognition for, inter alia:

  • • Investments, loans, grants, guarantees, provision of seed capital
  • • Access to credit, interest free loans, and relaxed security requirements
  • • Time spent on training and mentoring of black entrepreneurs/ start-ups

Obtaining maximum benefit from Code 600

Code 600 creates a mechanism for established companies to contribute to the sustainable growth of the South African economy through the creation and support of small businesses. It also represents 15% of the BBBEE scorecard. Jupilog has identified four main challenges facing the development of small, medium and micro enterprises (SMMEs) in South Africa:

  • • lack of access to financial support
  • • lack of access to information
  • • lack of access and knowledge about the markets
  • • and operational and financial capacity limitations

Preferential Procurement (Code 500)

Enterprise Development initiatives can be dovetailed into preferential procurement – adding another potential 20% to the score of established businesses. Where applicable, Jupilog seeks to align Enterprise Development initiatives with Preferential Procurement practices. This assists the emerging businesses by providing a market from start-up. Contributors benefit through securing reliable suppliers aligned to the needs of their businesses, and by maximising their BBBEE points.

BBBEE scorecards

The table below highlights the important contribution of Enterprise Development to the overall scorecard.