ESD Planning 101 and Focal Points For Entrepreneurs

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Let’s cut to the chase – if you are doing BBBEE you are doing so because you want another company to buy from you.  According to the new codes in order to do this you need to be an empowered supplier.  The first thing in your ESD planning process is therefore becoming an empowered supplier.  Being an empowered supplier requires you to choose three of the following four areas that you need to focus on if you are a large company with a turnover of more than 50 ZARM:

ESD Planning decisions to become an empowered supplier

ESD Planning decisions to become an empowered supplier

1) At least 25% of cost of sales excluding labour cost and depreciation must be procured from local producers or local supplier in SA, for service industry labour cost are included but capped to 15%.

2) Job creation – 50% of jobs created are for Black people provided that the number of Black employees since the immediate prior verified B-BBEE Measurement is maintained.

3) At least 25% transformation of raw material/beneficiation which include local manufacturing, production and/or assembly, and/or packaging.

4) Skills transfer – at least spend 12 days per annum of productivity deployed in assisting Black EMEs and QSEs beneficiaries to increase their operation or financial capacity.

This differs for a company with a turnover under 50 ZARM as they only have to address one of the four areas.  As such your ESD planning process start here and is directly related to your preferential procurement.  If you are therefore lacking in any of the above areas your ESD planning process should start by adressing these areas.  As point 2 and 4 are part of the developmental process your starting point for your ESD Planning would be point 1 and 3.  Due to the fact that imports will in future no longer be excluded from you Preferential Procurement spend, this area becomes critical, especially if a significant proportion of your procurement spend is made up of imports.

Figure this part out first before you decide what the most prominent ESD strategy is that you will be focusing on.

 

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