BBBEE Enterprise and Supplier Development

What is Enterprise and Supplier Development? 

Enterprise and Supplier Development (ESD) helps small businesses grow by offering financial support and mentorship. It’s a key part of B-BBEE, designed to empower black-owned businesses and encourage larger companies to include them in their supply chains, driving more inclusive economic growth.

Enterprise Development and Supplier Development are key components of the B-BBEE Scorecard, forming one of its three main focus areas. Their purpose is to bolster local procurement practices, improve programs for developing local suppliers, and increase financial support to black-owned businesses by rewarding corporations who contribute to smaller businesses and to the development of their suppliers.

For a measured entity (ME) to maintain its current B-BBEE level, it must achieve a minimum of 40% in each of the categories related to preferential procurement, supplier development, and enterprise development. Specifically, this translates to earning at least 10 points out of 25 for preferential procurement, 4 points out of 10 for supplier development, and 2 points out of 5 for enterprise development.

ESD aims to assist Black-owned start-up enterprises, enabling them to become financially stable and create a solid foundation for the future. With assistance from bigger corporations, small to medium sized enterprises (SMEs) can increase job creation and establish more opportunities for entrepreneurship. Ultimately, this will lessen poverty and bolster the economy at large and within communities. 

BEE Enterprise Development 

What is BEE Enterprise Development? 

Enterprise Development is geared towards promoting economic growth through developing SMEs. It doesn’t require the corporation to procure from the SME they are developing, but it would always be beneficial for corporates to consider bringing them in as possible future suppliers.

How to meet BEE Enterprise Development standards 

Enterprise Development in B-BBEE refers to any contribution to a Black-owned business. Enterprise Development contributions include grants, services, loans, credit facilities, and time. 

MEs can earn bonus points through Enterprise Development when ED beneficiaries are graduated to Supplier Development and when one or more jobs are created as a direct result of ED. In order to be eligible for points, MEs have to spend 1% of their Net Profit After Tax on ED.

BEE Supplier Development

What is BEE Supplier Development? 

Supplier Development when it comes to BEE is similar to Enterprise Development, but it differs in that the ME is required to foster growth of a small business that is already within their supply chain. In other words, the corporation is required to support the supplier by procuring goods or services from it as well as through other contributions to the business. 

How to Meet BEE Supplier Development Standards 

Just like Enterprise Development, Supplier Development contributions may be with non-financial assistance, financial assistance or both. MEs must contribute 2% of their net profit after tax to Supplier Development in order to qualify for all the Supplier Development points on their B-BBEE scorecard.

 Verifying Supplier and Enterprise Development

In order to get the B-BBEE benefits of ESD, an enterprise will need a reputable B-BBEE verification agency to do the following:

• • Verify the B-BBEE status of the beneficiary
  • Confirm that the beneficiary satisfies the B-BBEE definition of ‘black people’
  • Obtain an ED or SD agreement between the ME and the beneficiary
  • Get proof of contributions to the ED or SD beneficiary
  • Get a letter from the beneficiary confirming the nature and value of the assistance given by the ME

BBBEE Enterprise and Supplier Development are core practices of economic empowerment. With the financial assistance and mentorship received from corporations, start-ups and small businesses have an increased likelihood of success and consequently, an increased likelihood of job creation and financial stability that ripples through the South African economy. With thorough and accurate verification of ESD practices, corporations are rewarded for their contributions to smaller Black-owned businesses.