We’ve been writing about the Property Practitioners Regulatory Authority (PPRA) and their irrational decision to only award or renew a Fidelity Fund Certificate (FFC) to a level 8 BEE contributor, over the last few weeks.
Last week we showed that a level 8 certificate could cost an estate agency whose turnover is R10m about R211,000 per year. But spending the money doesn’t mean that you will actually get a level 8 certificate. And it’s very clear that the PPRA, specifically Thato Ramaili have little or no understanding about the workings and pitfalls of BEE.
BEE Compliance is ridiculously complex and expensive.
The Property BEE code is unnecessarily complex, we’ve simplified it for this email. It states that if your turnover is in excess of R2.5m then you need to implement a full BEE scorecard to become compliant (unless of course your turnover is between R2.5m and R35m and you are at least 51% black owned – then you are automatically a level 2). But if you don’t have at least 10.1% black ownership (the target is 25.1%) then you will drop a level. This means that to get to a level 8 you in fact have to get to a level 7. A level 8 is 40 points and a 7 is 55 points, that’s a substantial difference in points. The table below is a summary of the scorecard.
|
ELEMENT |
POINTS |
COMMENT |
|
Ownership |
27 |
Target is 25.1%, but you would need a minimum of 10.1% to not drop a level. However 10.1% will give you about 12 points in total |
|
Management Control |
9 |
Requires black people at board level. The target is 50% |
|
Employment Equity |
11 |
Black representation at senior, middle and junior levels in the business. Target is 60% |
|
Skills Development |
17 |
Spend on the training of black people. We showed last week that this is R180,000 |
|
Enterprise and Supplier Development |
35 |
We look at the BEE scorecards of your suppliers and the money you’ve given to help black owned businesses become sustainable |
|
Socio-Economic Development |
2 |
Donations to black charities |
|
Economic Development |
4 |
The good news is that this is not applicable to Estate Agents |
|
TOTAL |
105 |
|
This is probably what a typical mid-size estate agency could look like
|
Element |
Sub element |
Likely points awarded |
|
Ownership |
0 |
|
|
Management Control |
0 |
|
|
Employment Equity |
3 |
|
|
Skills Development |
17 |
|
|
Enterprise and Supplier Development |
Procurement |
10 (out of 25 points) |
|
Enterprise Development |
5 (out of 5 points) |
|
|
Supplier Development |
5 (out of 5 points) |
|
|
Socio-Economic Development |
4 |
|
|
TOTAL |
44 points |
That’s 11 points short of the 55 points you need because there is no ownership.
Or you could use the Ownershield system to get to level 2 at about 2/5ths of the total cost we discussed last week.
Free Property BEE Seminar – 13 June 2024
Ownershield is hosting a free one hour on-line seminar at 10:00 on Thursday the 13th of June 2024 discussing compliance complexities and simpler, reversible solutions. Please email us to book and feel free to invite as many people as you like, if necessary we will arrange a second seminar. We can accommodate 100 people at a time.