Sector Codes of Good Practice

Content verified by Kajil Singh, Verification Analyst, EmpowerLogic

As the Generic Scorecards set a benchmark, industry specific Sector Codes of Good Practice (Sector Codes) were introduced to further measure identified industries. A Sector Code is industry specific, in essence a Transformation measurement in addition to the Generic Codes of Good Practice. However, they refer directly to the private sector and do not apply to any state organ or department. Sector Codes are voluntarily developed and agreed upon by industry leaders within a specific industry. They have set timelines and consequences relating to defined deliverables. Once a Sector Code is gazetted in terms of Section 12 of the B-BBEE Act, it is binding between and amongst all businesses operational within that specific industry. To date, there have been nine Sector Codes gazetted in terms of Section 12 of the B-BBEE Act within the Agricultural, Chartered Accountancy, Construction, Financial Sector, Information and Communication Technology (ICT), Forestry, Property, Tourism and Transport sectors. The General B-BBEE Codes of Good Practice are applied to all business sectors falling outside Sectors.

Chartered Accountancy

This sector is broken down as:

• Chartered Accountants;

• Registered Auditors;

• South African Institute of Chartered Accountants (SAICA);

• Training Outside Public Practice (TOPP);

• Accredited education institutions.

Effective Date: 10 May 2011

The Chartered Accountancy Profession Sector Code aims to address the shortfall of Black people, particularly Black women, entering the profession. The overall measurement of this Sector Code is to achieve 32.5% black ownership by 2016, in order for it to be representative of the country’s demographics.

Agriculture

Businesses providing primary production of agricultural products as

well as inputs and services to businesses engaged in:

• The production of agricultural products;

• The beneficiation of agricultural products, irrelevant of it being in a

primary or a semi-beneficiated form;

• The storage and distribution of agricultural products;

• Trading related to non-beneficiated agricultural products.

Effective Date: 28 December 2012

This Sector Code aims to increase the rate of land reform in South

Africa by setting specific measurements for equity and land ownership.

Land owners are motivated through the acquisition of bonus points for

transferring in excess of the 30% land ownership to Black people. It

includes recognition for long-term leases under enterprise development

and socio-economic development elements.

Further recognition is given to initiatives that result in Greenfield

ventures, job creation and beneficiation of primary products which

support industrialisation.

Financial

All businesses, trades or professionals falling within the Financial

Sector:

• Banking;

• Insurance;

• Re-insurance;

• Investment Schemes;

• Financial Services;

• Brokerage firms

Effective Date: 26 November 2012

The financial sector is one of the most prevalent sectors in the South

African economy. The application of this Sector Code was done on

the ‘once empowered, always empowered’ principle. The Minister,

in conjunction with the Financial Services Sector Charter Council,

will monitor the strength of Black shareholding every two years to

determine the actual level of transformation in the sector.

A unique feature of this Sector Code is the introduction of an extra

element, known as Access to Financial Services. The core aim of this

element is to facilitate access to finance to Black people and

Black-owned enterprises.

Construction

Whereby 50% of annual turnover is derived from Construction related

activities.

Construction - BEP

Criteria is a professional service provider with an annual turnover in

excess of R1.5 Million relating to, but not limited to:

• Consulting Engineering;

• Architecture;

• Quantity Surveying

Effective Date: 5 June 2009

Broken into two sections, this Sector Code measurement seeks to

regulate a targeted 30% Black ownership in the industry over a 10

year period. It endeavours to advance transformation through the

procurement of construction programmes and services.

Information & Communication Technology

Falling within this sector:

• Broadcasting;

• Electronics;

• Information Technology;

• Telecommunications sub-sectors.

Effective Date: 6 June 2012

The aim of the ICT Sector Code is to attain 30% Black ownership

across the sector.

The Sector Code has set targets of 5% Net Profit After Tax to be

allocated to enterprise development initiatives which are aimed

at growing and developing Black owned ICT businesses. It further

allocates 1.5% of Net Profit After Tax to be allocated to

Socio-Economic Development Initiatives. The core aim of these targets

is to uplift communities through education and health initiatives, which

will ultimately bridge the digital divide shortfall.

Integrated Transport

Bus and Coach

Any road Passenger Transport Services.

Road Freight

Freight Transport for Logistics:

• Courier;

• Trucking.

Public Sector

Dept of Transport, including:

• Transport Agencies;

• Any company who falls under Transport Education and Training

Authority (TETA).

Maritime

Shipping lines involved in the carriage of cargo, to include associated

services providers.

Forwarding and Clearing

Industry comprises of economic activities that relate to all imports and

exports.

Rail

Rail Industry Value Chain.

Aviation

Aviation Industry includes

• Civil Aviation;

• Airport Facilities;

• Aircraft Maintenance.

Effective Date: 21 August 2009

The Integrated Transport sector is one of South Africa’s largest

infrastructure and Gross Domestic Product (GDP) contributors. This

Sector Code falls into seven separate categories, comprising of eight

elements. Aligning with the government’s national transport action

plan, it aims to fast-track the implementation of efficient transportation,

freight and logistics sectors within the economy.

As per the Bus Commuter Service Sub-Sector Code, the core focus is

the achievement of 35% Black-ownership within a five year period.

This sector code will be evaluated at five year intervals.

Forestry

Enterprises servicing:

• Commercial Forestry;

• First level processing of wood products;

• Charcoal producers.

Effective Date: 12 June 2009

The Sector Code aims for 30% Black ownership within the sector,

however, more specifically within the sub-sectors. It aims to address

commercial primary growth, fibre production, contracting, sawmilling,

pole and charcoal.

This code gives bonus points for attaining the ownership target. In

addition, it encourages and supports entities in relation to preferential

procurement and job creation initiatives.

Property

Enterprises engaged in property ownership or providing services within

the property sector:

• Practitioners;

• Any enterprises engaging in property development.

Effective Date: 1 June 2012

This Sector Code introduces specific measurements in relation to

Economic Development. The core aim is for businesses and entities

within this sector to invest in properties in underdeveloped areas. Such

investments would improve infrastructure and increase the overall value

of properties within these areas.

Special consent is given for property listed companies and Property

Unit trusts to cap the mandated investment at 70%, which is higher

than the 40% in the Generic Codes

Tourism

Accommodation

• Hotels;

• Backpackers;

• Game Lodges.

Hospitality

• Restaurants;

• Conference Venues;

• Catering.

Travel

• Tour Operators;

• Travel Agents;

• Car Rental.

Effective Date: 22 May 2009

The Tourism Sector Code deviates from the Generic scorecard,

whereby an Exempt Micro Enterprise (EME) threshold shifts from

R5 million to R2.5 million. This decrease is to ensure that a significant

number of enterprises doing business within the industry are not

excluded from compliance.

NOTES

The Mining Charter is contained in the Mineral and Petroleum

Resources Development Act 28 of 2002.

The Petroleum and Liquid Fuels Charter is contained in the

Petroleum Products Amendment Act of 2003.