Whilst Black Ownership may not be necessary for all grants and incentives, it’s important to note that compliance to a minimum level is required for a successful application.
The intention from the DTI (and other incentive awarding departments and institutions) is to incentivise businesses wishing to raise tens of millions of rand, as grant funding, for their businesses to transform on a broader base (skills development, supplier and enterprise development and employment equity) and contribute to the upliftment of the South African people.
Whilst the intention is for B-BBEE to be a moral and ethical obligation from private sector to address a more inclusive and growing economy, most business don’t comply unless there’s a commercial benefit as well.
Ironically, we meet with many black businesses who have no commercial incentive to comply to B-BBEE as the cost of compliance is high whilst their business does not commercially necessitate a B-BBEE certificate.
We also meet many untransformed businesses who have not been appropriately informed of the intentions and potential to raise incentives as a reason to transform. Growth finance is often expensive, why wouldn’t a business want to reduce their cost of capital by bringing in the right transformation partners and apply for grants?
The below table outlines the requirements for applications and potential value to be gained:
The B-BBEE commissioner is also seriously looking at new entities that are being structured by project owners as a means to circumvent the investment into B-BBEE. With the commercial benefit of up to R50mil (or more) through incentives, we believe there is sufficient commercial reason to adhere to the B-BBEE codes and we advise all citizens and prospective clients to embrace transformation in its true sense.