What is the purpose of the Enterprise and Supplier Development element?
2 June 2022
Premier Verification is a SANAS Accredited Verification Agency. We spoke to the Managing Director of Premier Verification, Bridget Ntombela and asked her questions about the Enterprise and Supplier Development element on the DTIC Generic B-BBEE Scorecard, this is what she had to say:
Q: What is the purpose of the Enterprise and Supplier development element on the DTIC Scorecard?
‘The aim of Enterprise and Supplier Development is to strengthen local procurement and to boost local supplier programmes. If companies are implementing true and transparent B-BBEE then this should result in the improvement of financial support to black owned entities. As a result, it’s one of the three priority elements on the B-BBEE scorecard. This means that the measured entity is required to achieve a 40% sub-minimum on the total points allocated for Preferential Procurement (with is 40% of 25 points), Supplier Development (which is 40% of 10 points) and Enterprise Development (which is 40% of 5 points). So, to avoid being discounted a level on the overall B-BBEE status, an entity will need to at least score 10 points for preferential procurement, 4 points for supplier development and 2 points for enterprise development.’
Q: What is the difference between Enterprise Development (referred to as ED) and Supplier Development (referred to as SD)?
‘Supplier Development is measured on a company’s current supplier database whereas Enterprise Development is measured on the companies that are not on the supplier database and that also include start-up businesses and or new entrants.
An SD beneficiary must be an existing supplier of the entity or become a supplier during the financial period that is being measured. It is important that this takes place before the support is provided as spend needs to be part of the procurement spend. With an ED beneficiary, the difference, is that beneficiary is not a supplier to the entity being measured.
When identifying an SD beneficiary, the measured entity should look to their supply chain to identify existing black owned EME’s and QSE’s that they can assist and develop. Regarding an ED beneficiary, the measured entity should identify entities that it can assist and develop to become part of their supply chain.’
Q: Who qualifies as Enterprise and Supplier Development beneficiary?
‘Beneficiaries that qualify must either be at least 51% black owned, while using the flow through principle; EME’s or QSEs depending on the turnover threshold per sector codes. Some sectors like Construction do not allow Generic entities to be claimed as an SD beneficiary.’
Q: How can bonus points be claimed?
‘A company can claim bonus points if there is development of a reliable chain with existing suppliers and provision for future suppliers and this allows a company to gain additional points when the ED beneficiary graduates into a supplier. Therefore, because of the support, the ESD beneficiary can create jobs.’
Q: What contributions can the measured entity make towards the ED and SD?
‘The Benefit Factor Matrix clearly defines what contribution type and amount is recognised for this element. Each category has a percentage or calculation that is allocated to the scorecard. It’s important here to remember that the same beneficiary company cannot be recognised for both SD and ED support at the same time. This is deemed as ‘double counting’ which is not in line with the B-BBEE Act. Also, no portion payable after the financial period that is being audited is claimable for ED and SD.’
* Refer to Enterprise and Supplier Development Benefit Factor Matrix below.
Q: What documentation is required as evidence to support contributions made for Enterprise and Supplier Development?
‘As we are a verification agency, our role is to verify the information that has been supplied by the company. We test the data and request evidence to support the date we are testing. We verify the information in line with the verification methodology, the Codes, the Verification Manual, SANAS and the DTIC.’ To support the contributions for ED and SD we would require an agreement between the company and the ED or SD beneficiary, proof of the contribution, B-BBEE status of company and documents from the beneficiary confirming the value and nature of assistance that is being received.’
Should you be interested in the services of Premier Verification, please visit their website www.premierverification.com or contact them on 010 591 0591 or firstname.lastname@example.orgemail@example.com
The above information is based on the 2019 amended DTIC codes scorecard which might differ from the sector scorecards.
Please refer to an extract below for the Enterprise and Supplier Development element** on the Generic ACOGP scorecard.
*Enterprise and Supplier Development Benefit Factor Matrix
|Qualifying Contribution Type||Contribution Amount||Benefit Factor|
|Grant and Related Contributions|
|Grant Contribution||Full Grant Amount||100%|
|Direct Cost Incurred in supporting Enterprise Development and Supplier Development||Verifiable Cost (including both monetary and non-monetary)||100%|
|Discounts in addition to normal business practices supporting Enterprise Development and Supplier Development||Discount Amount (in addition to normal business discount)||100%|
|Overhead Costs incurred in supporting Enterprise and Supplier Development (including people appointed in Enterprise Development and Supplier Development)||Verifiable Cost (including both monetary and non-monetary)||70%|
|Loans and Related Contributions|
|Interest-Free Loan with no security requirements supporting Enterprise Development and Supplier Development||Outstanding Loan Amount||70%|
|Standard Loan to Enterprise Development and Supplier Development beneficiaries||Outstanding Loan Amount||50%|
|Guarantees provided on behalf of a beneficiary entity||Guarantee Amount||3%|
|Lower Interest Rate||Outstanding Loan Amount||Prime Rate – Actual Rate|
|Equity Investments and Related Contributions|
|Minority Investment in Enterprise and Supplier Development beneficiaries||Investment Amount||100%|
|Enterprise and Supplier Development Investment with lower dividend to financier||Investment Amount||Dividend Rate of Ordinary Shareholders – Actual Dividend Rate of Contributor|
|Contributions made in the form of human resource capacity|
|Professional services rendered at no cost and supporting Enterprise and Supplier Development||Commercial hourly rate of professional||60%|
|Professional services rendered at discount and supporting Enterprise and Supplier Development||Value of discount based on commercial hourly rate of professional||60%|
|Time of employees of measured entity productively deployed in assisting beneficiaries||Monthly salary divided by 160||60%|
|Shorter payment periods for indicator 2.2 of this Statement (Supplier Development)||Percentage of invoiced amount multiplied by 15% (being an approximation of the cost of short-term funding)||Percentage being 15 days less the number of days from invoice to payment. The Maximum points that can be scored in 15% of 10 points|
**Code Series 400 – Enterprise and Supplier Development (Generic DTIC Scorecard)
|Criteria||Weighting points||Compliance targets|
|B-BBEE Procurement Spend from all Empowering Suppliers based on the B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend||5||80%|
|B-BBEE Procurement Spend from all Empowering Suppliers that are Qualifying Small Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend||3||15%|
|B-BBEE Procurement Spend from all Empowering Exempted MicroEnterprises based on the applicable BBBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend||4||15%|
|B-BBEE Procurement Spend from Empowering Suppliers that are at least 51% Black Owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage ofTotal Measured Procurement Spend||11||50%|
|B-BBEE Procurement Spend from Empowering Suppliers that are at least 30% Black Women Owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend||4||12%|
|B-BBEE Procurement Spend from Empowering Designated Group Suppliers that are at least 51% Black Owned||2||2%|
|Annual value of all Supplier Development Contributions made by the Measured Entity as a percentage of the target||10||2% of NPAT|
|Annual value of Enterprise Development Contributions and Sector Specific Programmes made by the Measured Entity as a percentage of the target||5||1% of NPAT|
|Bonus point for graduation of one or more Enterprise Development beneficiaries to the Supplier Development level||1|
|Bonus point for creating one or more jobs directly as a result of Supplier Development and Enterprise Development initiatives by the Measured Entity||1|