How the 40% sub-minimum on priority elements can cost you a level, and how to plan around it.
Under the Amended Codes of Good Practice, three elements are priority elements: Ownership (measured on net value), Skills Development, and Enterprise and Supplier Development.
The sub-minimum: on each priority element you must achieve at least 40% of the available points. For Enterprise and Supplier Development, the sub-minimum applies to each of its categories. Generic entities must meet the sub-minimum on all three priority elements; QSEs on Ownership and either Skills Development or Enterprise and Supplier Development.
The penalty: miss a sub-minimum and your B-BBEE level is discounted by one level. A company that scored enough points for Level 4 can be certified at Level 5.
How to avoid it: measure early in your financial year, know exactly where each priority element stands, and direct spend where it closes the gap. Skills Development is often the element that catches companies out, because spend is not tracked against the target until the year is over.
The Level 4 to Level 5 example above is simplified. Your actual position depends on your scorecard, sector code and evidence.
This article is general information, not legal advice for your specific situation. Speak to a MetaCo consultant about your organisation.