Broad-Based Black Economic Empowerment

Broad-Based Black Economic Empowerment (BBBEE or B-BBEE as written by the South African government) is a form of economic empowerment initiated by the South African government in response to criticism against narrow-based empowerment instituted in the country during 2003/2004. While narrow-based black economic empowerment led to the enrichment of a few previously disadvantaged individuals (Black African, Coloured or Indian), the goal of broad-based empowerment is to distribute wealth across as broad a spectrum of previously disadvantaged South African society as possible. In contrast, narrow-based empowerment measures only equity ownership and management representation.

The Broad-Based Black Economic Empowerment Act (Act 53 of 2003) essentially works on the understanding that years of systemic racism contribute to contemporary economic woes, and that government intervention can stem the results of past racist regimes. However, the Act is highly controversial in nature and some consider its racial preference statements as a direct contradiction to the UN's Universal Declaration of Human Rights.

A set of Codes of Good Practice was gazetted on 9 February 2007 in the government gazette 29617. An Interpretive Guide was added in June 2007.

The Codes of Good Practice contains sections about measuring ownership, management control, employment, skills development, preferential procurement, enterprise development, socio-economic development, and qualifying small enterprises.

Broad-based black economic empowerment is, as from 2015 measured under the amended Code of Good Practice which consists of the following 5 elements:

- Ownership: 25 points

- Management control: 19 points

- Skills Development - 25 points

- Enterprise and Supplier Development - 40 points

- Socio-economic development - 5 points

Prior to 2015, the Generic Code of Good Practice consisted of the following breakdown:

It is not mandatory to get a verification agency to audit a BEE Scorecard. It is however a requirement to have suitable documentation/evidence to score any points. SANAS (South African National Accreditation System) and IRBA (Independent Regulatory Body for Auditor) has been mandated with accrediting verification agencies. This accreditation has been put in place to ensure the consistency of the independent verification of BBBEE contributions.

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