Supplier Development in South Africa

Updated: Oct 20

The law of the land requires all companies with a specific turnover who wish to do business with the Government to demonstrate that they have a certain BBBEEE status. A significant part of that score/status is the ability to show that you spend your money with small black owned businesses through Enterprise and Supplier Development programmes. The government recognizes that many SME’s are not ready to do business with larger organizations and it is mandated that the company choose candidates and then develop them to a point where they can bid for the company’s business and win – preferably on merit.

We can certainly argue that the law has been corrupted in certain cases or that it is a ‘bad law’. We would offer an alternative perspective: Your company cannot survive in this country without diversifying your supplier base: the pool of skill amongst existing business may be too small and if your current supplier goes out of business there may not be a suitable alternative to whom you can turn. Further, as the pool shrinks, we can expect the price of that skill/product/service to increase. It is good business practice to protect yourself by diversifying and enlarging your supplier base.


Another reason why you need to spend some time and money on developing your supplier base is because (frankly) it is the right thing to do.


So how do you do this?


Step 1: look internally: are there folks currently within your business who could profitably provide a service to the company as a sub-contractor – perhaps even at a lower cost than you currently pay?


Step 2: look to your community (family, friends or neighbours): Are there small companies in your area that can provide a product/service that you need or regularly purchase.


Step 3: recruit them and offer to help them get to the point that they can reliably provide that product or service at a cost to you that is either the same as or below what you currently pay.


Step 4: Find a B-BBEE implementation partner that can help you deliver on your Enterprise/Supplier Development project.

An implementation partner worth its salt will want much more than just your cheque –

  • Your (enthusiastic)commitment to the process

  • Your time:

  • Discovery – your needs and desired outcomes

  • Regular feedback on your choices of potential suppliers

  • Your feedback: they will provide ongoing reports and want feedback on the project to see if you have had an Return on Investment (ROI)

We have tried to demonstrate that there are several good reasons to go on this journey – beyond the obvious: it is the law – and we trust that this has given you some ideas as to how to go about supplier development. We would love to have your thoughts on the above.


It is impossible, within the scope of a short article, to discuss all the complexities and detail that you will need to consider. Please feel free to contact us for more details or with specific questions you need answered. CALL US TODAY ON +27 65 938 1717 or email: info@aifbusdev.org or Visit our website: https://bit.ly/3dFGqER


Article written by Jean Barnard

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