This document provides information on preferential procurement in South Africa. It defines key terms like black-owned companies and qualifying small enterprises. It explains how preferential procurement worked under the 2007 BBBEE codes, allocating procurement spend toward empowerment level, QSE/EME procurement, black ownership, and black woman ownership. The 2013 codes updated these allocations and also defined requirements for suppliers to be considered "empowering," such as procuring a certain percentage locally or creating jobs for black people. The document aims to help companies understand preferential procurement and collect BBBEE certificates to analyze gaps in their preferential procurement results.

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Preferential Procurement
The Basics

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Some vocabulary that is required:
• A Black Owned company is any company that is more than 51% Black Owned
• A Black Woman Owned company is any company that is more than 30% Black Woman Owned
• A Qualifying Small Enterprise (QSE) is a company with a turnover of under 50 ZARM
• A Exempt Micro Enterprise (EME) is a company with a turnover of under 10 ZARM
EME QSE
A company with a yearly
turnover less than 5 ZARM
10 ZARM (2013 Codes)
A company with a yearly
turnover less than 25 ZARM
50 ZARM (2013 Codes)

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BBBEE Codes 2007 BBBEE Codes 2013 Empowerment Level Recognition for
Procurement
100+ 100+ 1 135%
85-100 95-100 2 125%
75-85 90-95 3 110%
65-75 80-90 4 100%
55-65 75-80 5 80%
45-55 70-75 6 60%
40-45 55-70 7 50%
30-40 40-55 8 10%
Level refers to Empowerment Level. According to the 2007 codes if a company has 65 – 75 points they are a
level 4 company. According to the new codes a company requires 80 – 90 points.
*Companies can be rated between Level 1 – 8 (Level 1 being best, Level 8 being worst)
**You can claim 100% of the procurement spend with a level 4 supplier.
Some vocabulary that is required: continued…

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Preferential Procurement – how did it work? (2007 Codes)
Empowerment Level Status
(12 points – 70% of spend)
QSE/EME
(3 Points – 15% of spend)
LEVEL LEVEL
Black Ownership
(3 Points – 12% of spend)
LEVEL
Black Woman Ownership
(2 Points – 8% of Spend)
LEVEL

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Preferential Procurement – how does it work now? (2013 Codes)
Empowerment Level Status
(12 5 points – 70% 80% of spend)
LEVEL
QSE
(3 Points – 15% of spend)
LEVEL
Black Ownership
(3 9 Points – 12% 40% of spend)
LEVEL
Black Woman Ownership
(2 4 Points – 8% 12% of Spend)
LEVEL
EME
(4 Points – 15% of spend)
LEVEL

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An Empowering Supplier within a context of B-BBEE is a B-BBEE compliant entity, which is a good
citizen South African entity, comply with all regulatory requirements of the country and should meet at
least three if it is a large enterprise or one if it is a QSE of the following criteria:
1) At least 25% of cost of sales excluding labour cost and depreciation must be procured from local producers or local
supplier in SA, for service industry labour cost are included but capped to 15%.
2) 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.
3) At least 25% transformation of raw material/beneficiation which include local manufacturing, production and/or
assembly, and/or packaging.
4) Skills transfer - at least spend 12 days per annum of productivity deployed in assisting Black EMEs and QSEs
beneficiaries to increase their operation or financial capacity.
What is an Empowering Supplier? – (2013 Codes)
Important: In order for any procurement to count towards your points, it needs to
be with an Empowering Supplier
Generic companies: Required to apply 3 of the above 4 categories
QSE’s : Required to apply 1 of the above 4 categories
EME’s : Exempt and are recognised as an empowered supplier

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Through our Preferential Procurement Analytics we collect all
your BBBEE certificates on your behalf and provide you with an
ongoing gap analysis of your Preferential Procurement Results