Understanding socio-economic development as BEE element

socio economic development
03 Nov 2017

Socio-Economic Development forms part of the government’s Black Economic Empowerment (BEE) policy. It is the 5th element of the BEE Scorecard for both Qualifying Small Enterprises (QSEs) and Generic Entities.

Socio-Economic Development contributions

Socio-Economic Development (SED) contributions are any monetary or non-monetary contribution implemented for individuals (natural individual or group of natural individuals) or communities, where at least 75% of the beneficiaries are classified as black people in terms of race.

QSEs and Generic Entities will be recognised with valuable points under the SED element for making these contributions towards the beneficiaries under the criteria.

In terms of the BEE Codes of Good Practice, the objective of SED contributions is the promotion of sustainable access for beneficiaries to the economy.

What counts as SED contributions?

SED contributions can be in the following forms:

  • Grant Contributions
  • Offering Discounts
  • Covering overheads or direct costs
  • Providing professional services at no cost
  • Providing professional services at a discount rate

It is important to note that these contributions must be made within the financial period on which the BEE rating of the entity will be conducted. If an enterprise has a financial period running from March 2017 – February 2018, the contributions must have taken place within this period.

To claim points under this element the beneficiary must provide the entity with a letter acknowledging receipt of the contribution, declaring that the beneficiaries are at least 75% black as defined by the Codes of Good Practice and that the full contribution was allocated to these black beneficiaries. All contributions need to be proved by providing the proof of payment and an Article 18A receipt.

Lastly, a competent third party must also provide confirmation of the percentage of black beneficiaries who benefited from the contribution. The third party confirmation can be provided by, for instance, the auditor of the organisation.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)

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