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Must I procure from my Supplier Development
BEE beneficiary?

January 2017

“About four years ago my company entered into an enterprise
development agreement with a new BEE company starting
up in our sector as part of our commitment towards BEE and
enterprise development. In terms of our agreement, we provide
them with support and even financial assistance and have
helped them find their feet in our industry. Although we work
closely with them, we don’t procure anything from them. Will
this initiative be recognised under the revised Enterprise and
Supplier Development element of the Amended BEE Codes?”

With the Amended BEE Codes of Good Practice (“Amended Codes”)
now in full force and effect, many companies, like you, find themselves
having to revisit their current Enterprise Development initiatives
undertaken under the previous BEE Codes of Good Practice in order to
obtain enterprise development points on their scorecard.
The main difference brought about by the Amended Codes is that
Enterprise Development, having had a target of 3% (and 2% for QSE’s)
of the Measured Entity’s net profit after tax, has now been divided
into two separate sub-elements, namely Supplier Development and
Enterprise Development. The previous target of 3% of the Measured
Entity’s net profit after tax has also been split to 2% (1% for QSE’s) and
1% respectively for each of the Supplier Development and Enterprise
Development sub-elements.
Whilst the general objective as well as the overall targets have
essentially remained unchanged, companies should take note of the
following before attempting to simply proceed with current initiatives.

A vital change brought about by the Amended Codes is the qualifying
criteria for beneficiaries of such initiatives. The Amended Codes
expressly require that 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. Therefore only entities
which are at least 51% black or 51% black women owned and have
an annual turnover of less than R50 million, will qualify as a beneficiary.

If your previous Enterprise Development beneficiary meets these
requirements, that beneficiary should also qualify as an Enterprise
Development beneficiary in terms of the Amended Codes. Whether

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