By Keith Levenstein, CEO EconoBEE

The dti has finally issued the long-awaited QSE Amended Codes for public comment. The comment period closes on 14^th November 2014.

Initial Commentary: There are less points available for the QSE scorecard than for generics (100 compared to 118). Even though the QSE scorecard is slightly more lenient than the generic scorecard, QSEs will find it extremely difficult to get any reasonable score, due to the harsher points to level table. The competitive advantage that QSEs enjoyed over generics using the 2007 codes has disappeared.

The Draft Revised BEE Codes issued in 2012 stated that the QSE codes would also be amended, and they would be issued in due course. In October 2013, exactly a year ago the final Amended Generic Codes were issued. It was again stated that the QSE codes would be issued in due course. The amended QSE codes are due to come in affect in 1^st May 2015. Any QSE verification performed after 1^st May 2015 will use the Amended QSE scorecard.

QSEs are entities that have an annual turnover of between R10m and R50m and are not part of an industry that has a gazetted sector code. The QSE scorecard only affects businesses that are less than 51% black owned. QSE businesses that are 100% black owned are automatically level 1, and those that are more than 51% black owned are automatically level 2. All others have to follow this scorecard.

The QSE Scorecard

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Amended Codes Points to Levels Table

Salient Features of the QSE scorecard:

1)    QSEs follow all 5 elements – measured out of 100 points (compared to generics which have 118 points available).

2)    QSEs have to achieve at least 40% of the net value targets for ownership, else they drop a level. If there is no black ownership QSEs drop a   level.

3)    Even if a QSE achieves the net value targets for ownership, QSEs must achieve minimum targets on either of skills development or enterprise development otherwise they still drop a level.

4)    Ownership issues:
a.    Follows the generic methodology – points are earned for black people, black women, new entrants and designated groups: This is more onerous than the 2007 codes.

5)    Management issues:
a.    Points earned for all management positions, executive and not executive. Black women earn more points than as per the 2007 codes

6)    Skills Development:
a.    Skills spend targets have gone up to 3% of payroll from 2%. This is lower than generics whose targets are 6%. Spend targets on skills for black women is 1% for 5 points.

7)    Enterprise and Supplier Development:
a.    Far less points available than for generics (30 points compared to 44). More onerous than the 2007 codes. QSEs need to spend 15% of total procurement with 51% or more black owned businesses.

8)    Socio-Economic Development:
Far less points 5 points compared to 25 on the 2007 codes

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The QSE Scorecard
Element	Points
Ownership	25
Management control	15
Skills Development	25
Enterprise and Supplier Development	30
Socio-economic Development	5
Total	100

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