NEW YORK, June 2, 2016 /PRNewswire/ -- Impact of the Amended Broad-Based Black Economic Empowerment (B-BBEE) Codes on the Chemicals Market in South Africa : New B-BBEE Rules will Incentivise New Supply Chain Models
Broad-Based Black Economic Empowerment (B-BBEE) is a specific government policy aimed at addressing the legacy of Apartheid by enhancing the participation of Black people in the South African economy. This transformational and legislative framework was first introduced in 2003 as the Broad-Based Black Economic Empowerment Act (No. 53 of 2003) and has since undergone various iterations. The study investigates the most recent amendments to understand what changes have been made to the B-BBEE framework and how these impact the chemicals industry in South Africa.
South Africa's Codes for assessing a company's contribution to Broad-Based Black Economic Empowerment (B-BBEE) have been revised. Although obtaining a B-BBEE rating is not compulsory in general, it is a requirement for doing any business with the government, including applying for many kinds of licences and authorisations.
- The new Codes place far stronger emphasis on the Ownership element—the mandatory portion of the pillars—and Enterprise and Supplier Development.
- Under the old Codes, South Africa's listed chemicals companies had an average B-BBEE recognition of (where 1 is the strongest possible, and 8 the weakest). Under the new Codes, Frost & Sullivan expects the average to drop to Level 6.
- This will have a greater impact on industries where a competitive B-BBEE score is important, than in those where the issue is compliance versus non-compliance.
- Frost & Sullivan expects to see the emergence of high-performing Enterprise and Supplier Development (ESD) capabilities within large companies. It is also possible that specialist ESD companies will emerge to which ESD activities might be subcontracted.
- Frost & Sullivan expects to see extensive changes in the Qualifying Small Enterprises (QSEs) market structure in the form of mergers and acquisitions, and a high demand for Black shareholders, as many of these companies will seek to maintain or improve their scores.
- Previously, QSEs were scored on out of elements. They now have to be scored against all the current elements (a total of ), which will make scoring of ownership inevitable
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