B-BBEE for Small Firms: What the Level Actually Buys You

For a small firm, B-BBEE is often treated as a compliance burden that belongs to big corporate suppliers. The truth is the opposite: for a small firm, B-BBEE is one of the cheapest ways to win business. A level 7 certificate from a one-person company usually sends buyers to a competitor; a level 1 certificate from the same company opens doors. The difference is mostly paperwork, done right.

Where small firms stand

The generic codes divide businesses by turnover. For most sectors, an Exempt Micro Enterprise is a business with annual turnover of up to R10 million, and a Qualifying Small Enterprise sits between R10 million and R50 million.

• An EME is automatically a Level 4 contributor, without scoring points. No certificate is even required: a sworn affidavit, or confirmation of the revenue, is enough.
• An EME or QSE that is 51 percent black-owned is automatically a Level 2 contributor.
• An EME or QSE that is 100 percent black-owned is automatically a Level 1 contributor.

A Level 1 contributor scores the maximum recognition on a buyer's procurement scorecard. For a small firm, that multiplier is worth real money on a tender.

What small firms get wrong

Practical steps

How We Can Help

• Assuming B-BBEE is only for black-owned firms, so their own level does not matter. It does: every business that sells to a measured entity is scored on its own level.
• Assuming a certificate is needed when an affidavit is enough, and paying consultants for work a sworn statement covers.
• Losing the paperwork: if the ownership spread is not recorded and proven, the 51 percent or 100 percent recognition is simply not available, and the level falls back to Level 4.
• Confusing the generic codes with sector codes, such as the Legal Sector Code for law firms, which has its own measurement rules.
• Confirm your turnover band and your ownership spread on the record.
• Keep the ownership evidence in the company file: share registers, MOI, and the identity documents of the shareholders.
• Renew the sworn affidavit every year before the old one expires.
• When a buyer asks for your certificate, know which code applies to you and what level you genuinely hold.
• Do not buy a level. Misrepresentation of B-BBEE status is fraud, and it has ended more than one career in business.

OM Baloyi Inc guides firms through B-BBEE compliance, including the Legal Sector Code, ownership structures and the paperwork behind a genuine level. If your firm is being asked for its certificate, or your level is costing you work, speak to us.

OM Baloyi Inc | Attorneys, Conveyancers, Notaries, Properties, Tax, Mining 51 Bouvet Avenue, Bellairspark Ext 5, Northriding, 2162 T: 087 265 1059 | E: info@ombaloyi.co.za | www.ombaloyi.co.za