What is the Relevance of B-BBEE?

The strategy is broad-based, so it reflects the government’s approach, which is to “situate black economic empowerment within the context of a broader national empowerment strategy.” It is linked to various central Government policies that promote inclusion through capacity building within South African companies and their direct value chains, through sustainable economic growth and the development of black industrialists and through the concept of shared value creation.

The BEE Act and associated regulations are a legislative requirement for Government Departments and State -Owned Entities, and any companies doing business with these entities. All other participants in the economy are encouraged to participate, but in practice are compelled through a market driven process whereby economic and policy incentives drive participation.

It is not a legal requirement for entities operating in South Africa to transform and be B-BBEE Compliant. There is no legal recourse on an entity who chooses not to participate in the B-BBEE process.

However, if privately owned companies are intending to conduct business with any government enterprise or organ of state, they must apply the Codes to do so. This includes entering any tender process, applying for licenses to operate, entering private public partnerships or buy state owned assets.

Due to this market driven process, entities operating in South Africa who are engaged in the B-BBEE process will choose to enter business transactions with other companies who are engaged in BEE over those that are not.