On Thursday, 29 January 2026, the Minister of Trade, Industry and Competition published draft changes to the broad-based black economic empowerment (B-BBEE) Codes of Good Practice (Codes) regarding the proposed Transformation Fund and changes to the way that preferential procurement is measured to incentivise businesses to buy from suppliers that are wholly owned by Black people. Comments on the draft amendments must be submitted to the Department of Trade, Industry and Competition by 30 March 2026. The Minister will consider the comments received and any further changes before deciding on and publishing the final amendments.
The proposed amendments follow the Minister's introduction of the draft Transformation Fund concept document, which was originally published for comment in 2025. The intention is for the Fund to attract and leverage businesses' enterprise and supplier development contributions and multinationals' equity equivalent contributions under approved equity equivalent investment programmes (EEIPs).
As has been widely reported, the Fund is aimed at financing small and medium Black-controlled businesses. Under the BBBEE Codes currently, all businesses must make contributions (in cash or in kind) to small and medium Black controlled businesses, some of which must also be their suppliers, to score points for enterprise development and supplier development. Together, the spending targets are 3% of net profit after tax (NPAT). The draft amendments would allow businesses, instead, to make contributions to a centralised fund which the Fund will deploy to beneficiaries. This would mean that businesses would no longer have to identify their own enterprise and supplier development beneficiaries or go through third party intermediaries. While the 3% of NPAT spending target would remain unchanged, businesses could score more points by contributing to the Fund than by making individual contributions to Black-controlled SMMEs. The proposal is that the total points that businesses will be able to score for the Enterprise and Supplier Development element, if they contribute to the Fund, will increase from 46 to 53 points, including bonus points. Businesses that choose to continue with the current approach would also need to undertake a needs analysis and prepare an annual monitoring and evaluation report in support of their annual BBBEE verification. The draft amendments suggest that contributors to the Fund would have to do the same although it isn’t clear how this would work if the Fund rather than the measured businesses would be responsible for deploying contributions to qualifying recipients. Multinationals with South African operations that have approved EEIPs in place will also be able to contribute to the Fund instead of establishing their own individual programmes to deploy their equity equivalent contributions. This could incentivise more multinationals to set up EEIPs, as they will not have to administer their own complex beneficiary programmes.
The draft amendments to the Codes do not go into detail about the governance of the Fund but more details are available on the new Transformation Fund website.
The draft changes also propose significant changes to preferential procurement measurement. Under the current B-BBEE Codes, businesses are incentivised to buy from 51% Black Owned suppliers because spend on this category of suppliers carries the highest weighting. The Minister has now proposed introducing entirely new indicators to measure preferential procurement and to re-organise and reduce the points weightings for the existing indicators. The proposals include a new target for 15% of a business's total measured procurement spend (TMPS) to be with 100% Black-owned qualifying small enterprises (with annual revenues between ZAR10 million and ZAR50 million) and 15% with 100% Black-owned exempted micro-enterprises (with annual revenues below ZAR10 million). The proposals would reduce the points for buying from 51% Black Owned businesses to 3 (from 11 currently) and introduce new indicators for spend from 100% Black-Owned suppliers, targeting 25% of TMPS for 7 points, and for spend from 100% Black Women Owned suppliers, targeting 12% of TMPS for 3 points. The draft amendments currently don’t include any type of transitional period before the proposed thresholds would come into effect, if they are adopted.
Please contact a member of our BBBEE Advisory team if you need advice on the draft amendments or assistance with submitting comments on the proposed changes.
