BEE compliance (Part 9): The Socio-Economic Development element
Socio-Economic Development is the final element applicable to estate agents in terms of the Property Sector Code. In the past article in his series on B-BEE compliance, Adrian Frewen, associate with the Phatshoane Henney Group of attorneys explains in practical terms how property entities can score points on the B-BBEE scoreboard with this element.
For both Generic (annual turnover of more than R35 million) and QSE (annual turnover of more than R2.5 million and less than R35 million) entities a target of 1% of the entity’s net profit after tax is set for which 2 points are available for compliance with this element.
Any qualifying socio-economic development initiatives may be utilised in order to comply with the element, such as support for community education facilities, programmes which support secondary and tertiary education for black persons, consumer education training, support of conservation projects, community clean-up projects, urban agriculture and food security, support of development programmes for new talent and provision of more public culture centres, HIV and AIDS awareness, support of community clinics, etc.
Most estate agencies already support community and charitable projects, and it is suggested that they ensure that these initiatives be aligned with the requirement for this element.
In summation of this series of articles, it need be noted that all the elements of the Property Sector Code ideally need to be viewed holistically. Estate agencies struggling on the Management Control and Employment Equity elements should take advantage of the Skills Development element to train and upskill current and new potential employees, or utilise Enterprise and Supplier Development to align with their supply chain and create new black-owned suppliers for purposes of procurement enhancement.
Throughout this series we have received many enquiries relating to the compliance obstacles faced by sole proprietors or the so-called one (wo)man shows who, as a result of having no other employees will not be able to score any points on Management Control or Employment Equity, as well as Ownership in the case of white or foreign sole proprietors.
The majority of these sole proprietors will qualify as EME’s (annual turnover of less than R2,5 million) and as such will be recognised as automatic contributors to B-BBEE. Those few who are above the EME threshold, will have to ensure that they comply in full on all the remaining elements. If the maximum points are obtained on Skills Development (by sponsoring external persons), Enterprise and Supplier Development, and Socio-Economic Development, the entity will secure enough points for a Level 7, which shall then be discounted to a Level 8 due to non-compliance with a priority element (Ownership in this case). Regardless, this is still a compliant level and therefore confirmation that a compliant level is still possible even for sole proprietors without any employees.
This is the last article in the BEE compliance series that consisted of 9 articles. You can find all the articles on the Property Professional website under News – Legal