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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

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Code Series 700: Measurement of the Socioeconomic Development Elements of Broad-Based Black Economic Empowerment

Statement 700: The General Principles for Measuring the Socioeconomic Development Element

3. Key Measurement Principles

 

3.1 General principles:
3.1.1 Measured Entities receive recognition for any Socio-Economic Development Contributions that are quantifiable as a monetary value using a Standard Valuation Method.
3.1.2 Socio-Economic Development Contributions of any Measured Entity are recognisable cumulatively;
3.1.2.1 from the commencement date of this statement, or an earlier date chosen by the Measured Entity (the Inception Date), until the date of measurement;
3.1.2.2 The inception date chosen by the Measured Entity must not be earlier than 5 years before the commencement date of this statement, but binds the Measured Entity for the duration of this statement;
3.1.2.3 No portion of the value of any Socio-Economic Development contribution that is payable to the beneficiary after the date of measurement can form part of any calculation under this statement.
3.2 Socio- Economic Development Contributions:
3.2.1 Socio-Economic Development Contributions consist of monetary or non-monetary contributions actually initiated and implemented in favour of beneficiaries by a Measured Entity with the specific objective of facilitating sustainable access to the economy for those beneficiaries.
3.2.2 The full value of Socio-Economic Development Contributions made to beneficiaries is recognisable if at least 75% of the value directly benefits black people.
3.2.3 If less than 75% of the full value of Socio-Economic Development Contributions directly benefits black people, the value of the contribution made multiplied by the percentage that benefits black people, is recognisable.
3.2.4 The following is a non-exhaustive list of Socio-Economic Development Contributions:
3.2.4.1 grant Contributions to beneficiaries of Socio-Economic Development Contributions:
3.2.4.2 guarantees given or security provided for beneficiaries:
3.2.4.3 direct costs incurred by a Measured Entity in assisting beneficiaries;
3.2.4.4 overhead costs of a Measured Entity directly attributable to Socio-Economic Development Contributions;
3.2.4.5 developmental capital advanced to beneficiary communities;
3.2.4.6 preferential terms granted by a Measured Entity for its supply of goods or services to beneficiary communities;
3.2.4.7 payments made by the Measured Entity to third parties to perform socio-economic development on the Measured Entity's behalf;
3.2.4.8 subject to paragraph 3.2.5.1, provision of training or mentoring to beneficiary communities which will assist them to increase their financial capacity; and
3.2.4.9 subject to paragraph 3.2.5.2, the maintenance by the Measured Entity of a socio-economic development unit which focuses only on support of beneficiaries and beneficiary communities.
3.2.5 providing training or mentoring to beneficiary communities by a Measured Entity. (Such contributions are measurable by quantifying the cost of time (excluding travel or commuting time) spent by staff or management of the Measured Entity in carrying out such initiatives. A clear justification must support any claim for time costs incurred, commensurate with the seniority and expertise of the trainer or mentor).
3.2.6 Maintaining a socio-economic development unit by the Measured Entity. (Only that portion of salaries and wages attributable to time spent by the staff in, and the other expenses related to, promoting and implementing socio-economic development constitute contributions.)
3.2.7 Payments made by the Measured Entity to third parties to perform socio-economic development on the Measured Entity's behalf.
3.2.8 A measured entity who as a result of sector legislation is subject to obligations aimed at enhancing the socio-economic development of black people, and/ or annual payments to a body tasked with socio-economic development may count that contribution as part of its compliance with the target.