Draft Amendments to the Codes of Good Practice January 2026

Six sections of the Codes of Good Practice, which applies to the General sector, have been updated in the draft. This includes the measurements of General Large, Specialised, and QSE Measured Entities, The code Definitions, the Measurement Framework, and the Equity Equivalence programme.

The general updates are focused on Procurement focus changes and inclusion of the Transformation Fund.

It is important to note that this does not immediately disseminate to the various sector codes, but will impact those in other sectors, who supply companies in the General codes. Effectively, the heavy approach to moving towards 100% Black owned entities will change the landscape of purchasing.

Procurement measurements – Large Enterprises

Changes were made to Five of the category elements in Procurement for Generic enterprises (QSE, EME, Black Owned, Black Women Owned, and Black Designated Group Owned). In each case, the category was split between the original measurement and a new measurement focusing solely on 100% Black owned of said category. i.e. QSE is now split between QSE measurement and 100% Black owned QSE measurement.

Of the 29 points allocated to Procurement for measurement, 16 now only measure 100% Black owned companies in the various categories. This indicates a focus shift with the intention that the market gravitates towards 100% Black owned companies to reduce cost for implementation elsewhere, or have a large reduction in score and therefor levels.

The impact of this, is likely to reduce business to other types of organisations, and that there will likely be a general reduction in levels in the overall industry, with focus moving to Black ownership and away from levels.

Procurement measurements – Specialised Enterprises

The measurement scores for Specialised Entities have received the same adjustments as the Large enterprises with small variances in the particulars. 

Of the 32 points allocated to Procurement for measurement, 17 points are now allocated to 100% Black owned companies in the various categories. The indicated intention is similar to the Large Enterprises

Procurement measurements – QSE Enterprises

The QSE scorecard took a different approach, with only the Designated group points that were originally allocated to 51% Black Designated Group owned suppliers, now being 100% of the same. There is also what seems to be a mistake, indicating that Black owned for QSE requires 61% Black ownership. They added 2 further categories for EME and Black women owned enterprises that need to be 100% Black/Black women owned to be measured.

This means the original 21 points increased to 31 points, making it easier to score well on this scorecard.

Transformation Fund

All three of the adjusted measured scorecards (Large, QSE, and Specialised entities), have gained the option to implement towards the Transformation Fund instead of their normal Enterprise and Supplier Development initiatives. The detail of how this fund is intended to work from the client and verification side is not yet clarified, although the process for the Legal Sector Transformation Fund will likely be indicative.

In all three scorecards, the target is exactly the same if the Enterprise and Supplier Development targets were to be added together. For the Large and QSE measurement scorecards, there are also 5 additional points available for implementing towards the Transformation Fund.

The main limitations are that the wide variety of contributions available under Enterprise and Supplier Development falls away in lieu of pure grant transactions.

It is important to note that measuring under the Transformation Fund is mutually exclusive from the Enterprise and Supplier Development contributions.

This will likely reduce the benefit that smaller Black owned QSE/EME companies receives, if they had participated in Enterprise or Supplier Development initiatives.

Enterprise and Supplier Development

There are a few noteworthy changes to Enterprise and Supplier development initiatives. First and foremost is the significant increase in administration required. It requires that the Entity being measured gain significant internal documentation from their beneficiaries, including financials, staff lists, market access, and innovation measurement (unclear). These reports are to be submitted to the verification agency, but also to “B-BBEE Authorities”. As such managing the thoroughness of the report against the confidentiality of the beneficiary will be complex.

There have been some changes made to the Benefit Factor Matrix, specifying more thoroughly on the natures of Grants, Direct Costs, investments, and loans. This limits some possibilities towards what seem to be the intended implementation of these types of contributions.

Further, changes were made towards the original bonus points available in this element, namely: Job Creation and Graduation. The one is now replaced by the same measurement as the 1.2 multiplier bonus available for procurement measurement for 3-year contracts for QSE/EME entities, only increasing the Black owned target to 100%. 

The other is replaced by a complicatedly worded element that requires: That all first time suppliers sign a 3-year contract, and during that contract tenure must grow in Revenue and Job creation by at least 10% per year. It is not indicated if this is limited to any specific type of business.

Additional notes:

• This process will likely be delayed by a couple of months before implementation, allowing most entities at least 1 more certificate to be issued before these changes are enforced, if at all;
• There are several errors still in the document that hopefully will be fixed;
• The Transformation Fund will likely require significant more definition and legislation to be implemented;
• The limiting nature of the Transformation fund may reduce uptake;
• The Specialised scorecard did not align the Skills Development element with the 2019 codes;
• The Indicative Net Profit after Tax measurement seems to revert to the 5-year average calculation again;
• Startups are now required to provide BEE certificates for private tenders in excess of R 10m as well.

Conclusion

The procurement changes will cause overall reduction in procurement scores and may push companies to look into new businesses. Since setting up a business to be 100% Black owned is not an option for international or Non-Black businesses, it may leave some space in the market for such companies to step into. Or it may reduce the overall impact of procurement as a whole. 

The Needs Analysis requirements for Enterprise and Supplier Development will likely add a layer of complication to the process, which seems to be the intention of driving businesses towards the Transformation Fund.

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Codes of Good Practice