Enterprise and Supplier Development

Key Principles:

Enterprise & Supplier Development (ESD) is a priority element and therefore a 40% sub minimum must be achieved to avoid the discounting principle. To avoid doubt, that is 10 points for Preferential Procurement, 4 points for Supplier Development and 2 points for Enterprise Development (excluding any bonus points).

Preferential Procurement:

• An Empowering Supplier within a context of B-BBEE is a B-BBEE compliant entity that complies with all the regulatory requirements of the country with respect to the Employment Equity Act, Skills Development Act and Skills Development Levies Act and should meet at least three, if it is a large enterprise or one, if it is a QSE of the following criteria: 

• At least 25% of cost of sales (excluding labour cost and depreciation) from local producers or suppliers, for service industry labour costs are included but capped to 15%
• 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.
• At least 25% of raw material has been transformed/beneficiated by the Measured Entity in South Africa including local manufacturing, production, and/or assembly and/or packaging.
• Skills transfer – at least 12 days per annum of productivity is spent in assisting at least 51% Black Owned EMEs and QSEs beneficiaries to increase their operational or financial capacity
• At least 85% of labour costs should be paid to South African employees by ICT Sector entities
• Has aggregated at least 30% of the total value of a contract implemented / executed and managed by a Black Owned ICT EMEs/QSEs.
• Has entered into a Joint Venture partnership with Black Owned ICT entities where two or more entities come together for the purpose of executing a contract awarded to a joint venture, provided that at least 40% of the total operating profit from the contract is allocated to the Black Owned ICT entities.
• EME’s and Start-Up Enterprises are automatically regarded as Empowering Suppliers.
• If a Measured Entity procures goods and services from a supplier that is a recipient of a Supplier Development contribution from a Measured Entity under ICT Code Series AICT400 has a minimum 3 year contract with the Measured Entity, the recognisable B-BBEE spend that can be attributed to that supplier is multiplied to the factor of 1.2
• A Black Owned QSE or EME which is not a Supplier Development beneficiary but has a minimum 3 year contract with the Measured Entity, the recognisable B-BBEE procurement spend that can be attributed to that supplier is multiplied by a factor of 1.2
• A first time Black Owned Entity Supplier to the Measured Entity, the recognisable B-BBEE procurement spend that can be attributed to that Supplier is multiplied by a factor of 1.2
• If imports are done due to brand and/or technical specifications, measured entities are encouraged to develop and implement Enterprise Development and Supplier Development plans for these imported goods and services

Supplier and Enterprise Development:

• Beneficiaries of Supplier Development and Enterprise Development are EMEs or QSEs which are at least 51% Black Owned or at least 51% Black Women Owned.
• The same contribution cannot count towards both Supplier Development and Enterprise Development.
• Only contributions done within the measurement period can be taken into account.
• Shorter payment terms only count towards Supplier Development and not Enterprise Development.
• Shorter payment periods cannot contribute to more than 15% of the Supplier Development points (1.5 points)