A B-BBEE level exists because customers and procurement processes use it. Understanding how a customer scores your level, and what it is worth to them, is what turns compliance into a commercial advantage rather than a cost.
This page covers what a level requires and then how it is used in procurement, because that is the reason most businesses need one.
Business Requirements at a Glance
What a recognition level generally involves.
- Establishing your annual total revenue and category
- A sworn affidavit or a verified scorecard, depending on the category
- Points across the scorecard elements, where a scorecard applies
- Meeting the sub-minimum requirements on priority elements
- Compliance with any sector code for your industry
- Verification by a SANAS-accredited agency, where verification applies
- A SARS tax compliance status PIN, required by most procurement processes
- A valid document, renewed before expiry
Registration and Legal Requirements
B-BBEE is governed by the Broad-Based Black Economic Empowerment Act 53 of 2003 and the Codes of Good Practice issued under it, together with sector codes where a sector code applies. The B-BBEE Commission oversees compliance and the Department of Trade, Industry and Competition administers the framework.
Confirm the current thresholds, scorecard weightings and requirements with the Department of Trade, Industry and Competition, the B-BBEE Commission or a SANAS-accredited verification agency. The Codes and sector codes are amended, and third-party summaries go out of date quickly.
Your level is worth something to your customer. Under the preferential procurement element, a customer’s spend with you is recognised at a percentage determined by your level. A better level means the customer gets more recognition for the same spend, which is a direct commercial reason for them to buy from you.
That is why customers ask. The question is not compliance theatre — it affects their own scorecard, and between two comparable suppliers the level frequently decides.
Small suppliers can be especially valuable. The Codes recognise procurement from Exempted Micro Enterprises and Qualifying Small Enterprises, and from black-owned and black-women-owned suppliers, at enhanced rates. A small black-owned supplier is often worth more to a customer’s scorecard than a large one with the same level.
Say so when approaching customers. A supplier that leads with a current affidavit or certificate and its ownership position is making the customer’s procurement decision easier, and that is a real advantage.
Fronting is a criminal offence. Misrepresenting ownership, control or participation to obtain or improve a B-BBEE status is prohibited under the B-BBEE Act, and it carries serious consequences for the entity, its directors and the person whose participation is misrepresented.
Documents and Ownership Information Required
What is generally required.
- CIPC registration documents and a current company profile
- A shareholders’ or members’ register with identity details
- Beneficial ownership information as filed with the CIPC
- Certified ID copies for directors, members and shareholders
- Annual financial statements or a signed turnover confirmation
- A SARS tax compliance status PIN
- Payroll records and employment equity data, where the scorecard requires them
- Records of skills development, procurement and enterprise development spend, where applicable
Tax, Licence and Compliance Requirements
Public sector procurement has its own framework. Preferential procurement in the public sector operates under the Preferential Procurement Policy Framework Act 5 of 2000 and its regulations, alongside the B-BBEE framework. The way specific goals are applied in a tender is set out in the tender documents. Read them and confirm the current position with the organ of state concerned.
Tenders check tax compliance and CIPC standing too. A valid B-BBEE document is one requirement among several, and a lapsed tax compliance status PIN or an unfiled CIPC annual return disqualifies just as effectively.
Keep the document current. An expired certificate or affidavit discovered at a submission costs the submission, and there is usually no opportunity to correct it afterwards.
Update after any ownership change. Using a document that no longer reflects the current position is a misrepresentation.
Improving the level takes a financial year. Skills development, enterprise development and procurement all measure over a period. If a customer relationship depends on a better level, start a year before you need it.
Report suspected fronting to the B-BBEE Commission, including where a customer or partner proposes an arrangement to you. Participating carries consequences even for the nominal beneficiary.
Process, Deadlines and Ongoing Obligations
Establish your category, obtain the appropriate document, and keep it current alongside your tax compliance status PIN and CIPC filings.
Lead with it commercially. Give customers the document proactively, state your ownership position, and make it easy for their procurement people to score you.
Read tender documents carefully for how specific goals and B-BBEE status are applied, and confirm anything unclear with the organ of state before submitting.
Free support is available. The Small Enterprise Development Agency assists small businesses with compliance and with tendering at no cost.
- Establish your category and obtain the appropriate document
- Understand how a customer scores procurement from you
- Lead with your document and ownership position when approaching customers
- Note that small black-owned suppliers can be worth more to a scorecard
- Read tender documents for how specific goals are applied
- Keep the tax compliance status PIN and CIPC filings current
- Renew the document before it expires
- Update it after any ownership change
- Start improving a level a financial year before you need it
- Report any fronting proposal to the B-BBEE Commission
Frequently Asked Questions
Why do customers ask for my level?
Because their spend with you is recognised on their own scorecard at a rate determined by your level. Between two comparable suppliers, the level frequently decides.
Are small suppliers at a disadvantage?
Often the opposite. Procurement from Exempted Micro Enterprises, Qualifying Small Enterprises and black-owned suppliers is recognised at enhanced rates, which makes small suppliers valuable.
What else do tenders check?
Tax compliance and CIPC standing, among others. A lapsed tax compliance status PIN or an unfiled annual return disqualifies as effectively as a missing B-BBEE document.
How long does it take to improve a level?
A financial year at least. Skills development, enterprise development and procurement all measure over a period, so start well before you need the better level.
Recognition levels, procurement recognition rates, public procurement rules and validity periods are set in the B-BBEE Act, the Codes of Good Practice and the Preferential Procurement Policy Framework Act and are amended. Confirm current requirements with the relevant authorities.