Turning Procurement into a B-BBEE Advantage
Preferential Procurement is a sub-element of the Enterprise and Supplier Development (ESD) element on the B-BBEE scorecard. As a priority element, businesses must achieve at least 40% of the available points in this sub-element to avoid a one-level discount on their overall B-BBEE rating.
Unlike elements such as Skills Development, Enterprise Development, Supplier Development, or Socio-Economic Development, Preferential Procurement does not necessarily require additional expenditure. Instead, it focuses on who a business chooses as its suppliers. By making strategic procurement decisions, organisations can significantly enhance their B-BBEE score without increasing overall spend.
Understanding Procurement Scoring
The primary driver of performance in this sub-element is supplier spend. Businesses can earn up to 27 points, with an additional 2 bonus points, through effective procurement practices.
Recognition levels:
- Level 1: 135% recognition
- Level 2: 125% recognition
- Level 3: 110% recognition
- Level 4: 100% recognition
- Level 5: 80% recognition
- Level 6: 60% recognition
- Level 7: 50% recognition
- Level 8: 10% recognition
- Non-Compliant: 0% recognition
Key Procurement Targets;
- 80% of procurement spend with B-BBEE-compliant suppliers
- 15% with Qualifying Small Enterprises (QSEs)
- 15% with Exempted Micro Enterprises (EMEs)
- 50% with 51% Black-owned enterprises
- 12% with 30% Black women-owned enterprises
- Bonus: 2% with 51% Black Designated Group-owned enterprises
From Compliance to Strategic Advantage
By aligning procurement strategies with these requirements, businesses can secure up to 29 points (including bonus points) on the B-BBEE scorecard. This represents a significant portion of the total score and provides a practical, cost-neutral opportunity to improve overall ratings.
More importantly, strategic procurement goes beyond compliance. It enables organisations to actively contribute to economic transformation by supporting and growing Black-owned businesses within their supply chains.
Conclusion
Preferential Procurement should not be viewed as a mere compliance exercise. When approached strategically, it becomes a powerful lever for both improving B-BBEE performance and driving meaningful transformation — all without requiring additional financial outlay.
Written by: Shaylin Mathieson
