ARE YOU CONFIDENT THAT YOU ARE STILL B-BBEE COMPLIANT?
- BEE NEWS
- Mar 25
- 3 min read
LexisNexis | 24 March 2025
After more than 20 years, enthusiasm amongst business leaders for the Economic Empowerment Act may be waning, but 2025 is forecast to be the year that new questions are asked by government, with new consequences for those without answers.
Although the renowned political economist Moeletsi Mbeki has recently called on the new government of national unity (GNU) to repeal the controversial Black Economic Empowerment (B-BBEE) policy in favour of exploring alternatives to address the country’s unsustainable levels of black unemployment and inequality; enforcement of the act is forecast to become more stringent in 2025.
Tshediso Matona, Head of the Broad-based Black Economic Empowerment Commission, has indicated that he has plans to introduce additional incentives and potential fines to improve corporate participation in B-BBEE; proposals that are strongly supported by President Cyril Ramaphosa.
Critics have argued that B-BBEE has been ineffective in addressing the country’s woeful state of economic inclusion and has served, in some cases, as an enabler of corrupt practices that has ultimately created opportunity for a few, well-connected individuals.
Listed South African companies are required under section 13G of the B-BBEE Act to disclose their Black empowerment status in annual reports, but annually fewer are doing so.
In 2022, only 141 of about 400 listed companies officially submitted a report (that’s only 35% of the JSE). Poor participation is of concern to the government and their stated plan is to showcase the benefits of the regulation, but also to be far more severe when it comes to penalties for non-compliance.
In a statement given to Reuters in September 2024, Matona suggested that incentives could focus on increasing recognition for companies that invest in skills and enterprise development and the amendments would not be “too obsessed about ownership in existing businesses”.
Publicly “naming and shaming” companies that fail to submit their annual reports was also suggested as a possible remedy by Matona.
Amended Employment Equity Act
In November 2024, a Proclamation Notice 231 of 2024 was issued in relation to the Commencement of the Employment Equity Act, No. 4 of 2022.
‘Some of the amendments to be implemented from 2025 include the deletion of part of the definition of a ‘designated employer’, the amendment to the definition of ‘disabilities’, clarification on the consultation obligations with representative trade unions, the ability of the Minister to identify national economic sectors and set numerical targets for any such sectors, and the introduction of criteria to be met by an employer in order for a certificate of compliance to be issued by the Department of Employment & Labour.’
Skills development, job creation and inclusive procurement practices are all part of a clear policy shift that can be seen as going from being transactional to transformational.
How will this shift affect your business compliance with the Act?
With more at stake it is critical that businesses review the Employment Equity changes that will apply to them and their sector and set about the process of improving their B-BBEE scores while achieving overall compliance in 2025.
To simplify and fast-track a deeper understanding of the applicable changes, the latest practice area that has been added to LexisNexis Practical Guidance – a legal research and workflow tool, available to Lexis Library and Lexis+ subscribers, designed to provide practical, step-by-step guidance for legal professionals – offers an extensive range of Employment Equity Act related topics, that include important guidance related to: skills development, ownership, management control, enterprise and supplier development, socio-economic development and legislation.
Sector Codes
The guidance from LexisNexis is also conveniently offered under various Sector Codes, detailing in particular how an entity will be measured and verified on the basis of which Sector Code is applicable.
Sector Code guidance for entities that are in the transport, tourism, forestry, property, construction, defence, marketing, advertising, communications, IT, finance and agricultural industries is catered for.
A moment to sharpen the axe
With everything that has happened in the last two decades, many organisations may not be as up-to-date as they ought to be on the B-BBEE front. With the February audit season now upon us, now is the opportune time to refresh understanding of which parts of the act are applicable to your business and where your scores can be greatly improved to your advantage. With the right tools, the process can be made easier and less confusing.
Business will no doubt play a critical role in the ongoing transformation of South African society. Creating more growth and prosperity for everyone in the country is the pathway towards a nation that we all know can be created.
Now is the moment to participate actively in the transformation process by the renewing of a commitment to B-BBEE compliance.
‘Disclaimer - The views and opinions expressed in this article are those of the author(s) and not necessarily those of the BEE CHAMBER’.