Few issues have been more hotly debated over the past decade than how to achieve black economic empowerment. Hardly anyone disputes the objective of more equitable distribution of the national wealth. How to achieve that, however, was the difficult part. Almost as difficult was how to measure or define empowerment - ownership, management, directors, stock market participation?

The promulgation of the Codes of Good Practice in late 2005, which became law in 2006, provides a great deal of clarity to the subject and becomes the overarching transformation guideline. Fundamentally, the code seeks to achieve a much more broad-based process of black economic empowerment and provides a scorecard by which progress can be measured.

The Broad-based Black Economic Empowerment Act gave form to government’s plan for achieving BEE objectives, including legislation, regulation, restructuring of state-owned assets, preferential procurement, institutional support and establishment of the BEE advisory council. The Codes of Good Practice provide the small, fine print.

Prior to the appearance of the code, several industry specific charters had been concluded which set goals for black participation and target dates for achieving them. With the exception of the mining charter, those charters will have to be revised to conform to the code and then be gazetted.

Importantly, foreign owned companies can be exempted from the requirement to sell off equity, although they will have to compensate for this through other means such as skills development, preferential procurement and corporate social responsibility programmes. The Codes are not legally binding. There are no fines or jail terms for non-performance but companies are expected to make every effort to comply with the spirit of the code and government will apply measures of compliance when granting licenses, concessions and tenders. Empowerment deals will have to show financial sustainability, among other requirements.

The scorecard to measure progress assigns a total of 100 points, as follows: Skills development - 20 Preferential procurement - 20 Ownership - 20 Employment equity - 10 Enterprise development - 10 Management control - 10 Other (including corporate social investment) - 10

Not everyone is happy with the new code. There will be costs involved with implementation and monitoring. But the Code of Good Practice is here to stay – at least, for ten years. So the bottom line is: whether your company is large or small, foreign or domestic, if you want to do business in South Africa, you need to become familiar with and satisfy BEE requirements.

Pick up a copy of SA at a Glance at your local bookstore.