GET YOUR SOCIO-ECONOMIC DEVELOPMENT RIGHT:

The Amended B-BBEE Codes define Socio-Economic Development Contributions as follows:


“Monetary or Non-monetary contribution implemented for communities, natural persons or groups of natural persons where at least 75% of the beneficiaries are Black people”


The Amended Codes state that the objective of Socio-Economic Development contributions is to facilitate sustainable access to the economy for the beneficiaries (facilitating income generating activities for the beneficiaries).


The full value of Socio-Economic Development contributions can be recognised if at least 75% of the value / contribution directly benefits black people.


If less than 75% of the value / contribution directly benefits black people, then the value of the contribution made multiplied by the percentage that directly benefited black people can be recognised.


The target to achieve maximum points for Socio-Economic Development is 1% of the measured entity’s Net Profit After Tax for the measurement period (financial year being verified), unless:

  1. the Measured Entity did not make a profit during the Measurement Period, or

  2. the net profit margin (NPAT/Revenue) of the Measured Entity for the Measurement Period, was less than a quarter of the industry norm during the Measurement Period

Where either of the factors in points 1 or 2 above is present then the average NPAT of the Measured Entity over the last five years will be the basis for determining the Targets unless:


  1. the Measured Entity did not make a profit on average over the last five years, or

  2. the average net profit margin of the Measured Entity over the last five years was less than a quarter of the industry norm for the net profit margin during the Measurement Period.

Where either of the factors in 1. to 2. are present concurrently with either of the factors in a. to b. then the Indicative NPAT of the Measured Entity for the Measurement Period, will be the basis for determining the Targets.


The Indicative NPAT is the Revenue of the Measured Entity for the Measurement Period, multiplied by a quarter of the industry norm net profit margin for the Measurement Period.


The industry norm net profit margin must be determined with reference to the quarterly statistics supplied by Stats SA or such other verifiable data that might be available for the industry the Measured Entity operates within.


For the purposes of B-BBEE Verification, the following list of requirements should be submitted:

  • Affidavit/signed declaration from beneficiary stating what % benefit passed onto black people

  • Beneficiary to provide Signed Acknowledgment Letter confirming the type and value of assistance received

  • Independent Third Persons Report confirming that the contribution complies with the definition in the Codes

  • Copies of invoices and / or Proof of Payments for Grants and Direct Cost Contributions

  • Timesheets signed off by the beneficiary for time spent by Measured Entities Employee assisting the beneficiaries

  • Pay-slips of contributing employees or proof of professional fees

Article By:

Brendan Aiken: Executive Consultant - Compliance Hub

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