Since the advent and subsequent amplification of the recently implemented Broad-Based Black Economic Empowerment (B-BBEE) legislation and policies, it has become somewhat of a troublesome topic with some of us praising its potential while others seemingly wanting nothing to do with it. While it is easy to find validity that stems from both sides of the argument, we feel that this divide is caused by a lack of certainty as to how this legislation works, as well as how it will affect South Africa’s economy for the better. This article is here to help clear some things up, regarding BBBEE Enterprise and Supplier Development (ESD) in particular.

For those of us who may not already be aware of BBBEE Enterprise and Supplier Development, it refers to the basis for ESD programmes being implemented within large entities as per the BBBEE act and the Codes of Good Practice. The main purpose of this act and code is to help address the rampant and longstanding inequalities of the still-lingering effects of the apartheid policies while enhancing the participation of the local black community within the South African economy.

When asking the BBBEE Commission, it was said that the purpose of BBBEE Enterprise and Supplier Development is meant “to promote a conducive environment for [the] creation of sustainable partnerships between Corporate South Africa and black entrepreneurs to enable access and transformation of the value chains.” It should be noted, however, that BBBEE Enterprise and Supplier Development are two separate aspects of the same BEE element that work hand in hand with one another.

For instance, Enterprise Development (ED) refers to the strategy that is used to promote economic growth by developing Small and Medium-sized Enterprises (SMEs), placing a larger focus on the entrepreneurs themselves. This does not require any corporate bodies to attain anything from the SME that they are developing. However, it can be beneficial for corporate bodies to at least consider the possibility of bringing them in as possible suppliers in the future.

On the other side of the coin, we have Supplier Development (SD), which refers to the corporate body being required to support and sustain the growth of small businesses or suppliers in form of financial support or other forms of assistance. Additionally, it is required that the corporate body attains goods or services from the specific supplier that they are developing to qualify as Supplier Development, which is a major deviation from the previously mentioned ED where companies are supported that are outside the supply chain.

The end goal of BBBEE Enterprise and Supplier Development strategies is to provide SMEs with access and improvements to the following:

• Mentorships, networking opportunities and specialist support that is able to provide the capacity of the SME to deliver.
• Providing access to funding that allows for future investment into the SME
• Most importantly, allowing for the procurement of either goods or services from any participating SMEs provides sustainable revenue streams by the corporate body.

While this may seem like a substantial element of B-BBEE, it only lightly touches one of the five core elements that make up this policy, hence the confusion that many people seem to be struggling to resolve.