MAJOR B-BBEE SHAKE-UP: New Transformation Fund Option and Stricter Black Ownership Targets Proposed
top of page
Search

MAJOR B-BBEE SHAKE-UP: New Transformation Fund Option and Stricter Black Ownership Targets Proposed

  • Writer: John Botha
    John Botha
  • 17 hours ago
  • 3 min read

Minister Parks Tau announces sweeping changes to B-BBEE Codes - 60 days to comment

Johannesburg, 29 January 2026


The Department of Trade, Industry and Competition has gazetted significant proposed amendments to South Africa's B-BBEE framework that could fundamentally reshape how companies approach transformation compliance.


The Game-Changer: A New Transformation Fund Alternative

The most radical proposal introduces a Transformation Fund option allowing companies to contribute 3% of Net Profit After Tax annually for a maximum of 20 points – replacing traditional Enterprise and Supplier Development (ESD) programmes. This represents a major strategic choice for measured entities:

  • Traditional route: Continue with separate 1% Enterprise Development (5 points) and 2% Supplier Development (10 points) contributions

  • New alternative: Single 3% NPAT contribution to the Transformation Fund (20 points)


"This creates an unprecedented flexibility in B-BBEE compliance strategy but requires careful financial modelling to determine which route maximises both points and business impact," notes the analysis.


Dramatic Shift Toward 100% Black Ownership

The proposed amendments introduce aggressive new targets favouring 100% black-owned enterprises:

  • New 25% target for procurement from 100% black-owned enterprises (7 points) – the highest-weighted procurement criterion

  • New 15% targets for 100% black-owned QSEs and EMEs (2 points each)

  • New 12% target for 100% black women-owned enterprises (3 points)

  • Bonus points increased from 2% to 10% procurement from 100% black designated group suppliers


The existing 50% procurement target from "at least 51% black-owned" suppliers has been split into:

  • 25% from enterprises 51-99% black-owned (3 points)

  • 25% from 100% black-owned enterprises (7 points)


Enhanced Accountability and Monitoring

The amendments mandate stricter compliance requirements:

  • Comprehensive needs analysis for all ESD contributions

  • Performance metrics including outputs and outcomes

  • Annual Monitoring and Evaluation reports (must be verified)

  • Revised ESD Recognition Matrix


Bonus points restructured to reward:

  • 3-year minimum contracts with 100% black-owned QSE/EME suppliers (2 points, up from 1)

  • 10% annual turnover and job growth for first-time suppliers over 3 years (2 points, up from 1)


Critical Technical Issues Flagged

Industry experts have identified potential drafting problems:

  1. Missing "or" in Priority Element definition – unclear whether companies can choose between traditional ESD or Transformation Fund, or must do both

  2. Unchanged EME/QSE thresholds since 2013 – no inflation adjustment despite 13 years

  3. Scorecard discrepancies between Statement 400 and Statement 000


What This Means for Business

Immediate actions required:

  • Model the financial impact of 3% NPAT vs traditional ESD spend

  • Audit current supplier base for 100% black ownership levels

  • Review procurement strategies to meet new segmented targets

  • Assess existing ESD programmes against new M&E requirements

  • Prepare detailed needs analysis and performance frameworks


Strategic considerations:

  • Maximum points increased from 46 to 48 points (traditional route) or 49 points (Transformation Fund)

  • Companies heavily invested in existing ESD programmes may prefer traditional route

  • Cash-rich, high-margin entities may favour Transformation Fund simplicity

  • Supply chains must be reconfigured toward 100% ownership tiers


Have Your Say

Comments must be submitted by 29 March 2026 to:


About Global Business Solutions

GBS is South Africa's leading labour law and transformation consulting firm, specialising in B-BBEE compliance, employment equity, and strategic HR advisory services.

For expert analysis and compliance support, contact Global Business Solutions.



The Annual Employment Conference #AEC2026 brings together South Africa’s leading labour, HR, and employment-relations experts for a deep dive into the most urgent challenges facing employers in a changing world of work.

2026's conference promises to unpack the economic, technological, and legislative forces reshaping the workplace, offering practical insights on navigating organisational change, managing workforce risks, strengthening compliance, and preparing for the next wave of policy reform. Delegates will gain forward-looking guidance from top practitioners, case-based analysis of emerging employment trends, and strategic tools to build resilient, future-ready workplaces. Register now: https://www.globalbusiness.co.za/gbs-event-details/annual-employment-conference-2026


GBS #AEC2026 promotional banner

View our upcoming events: Upcoming Events and Qualifications, like AI Compass Capacitation Programme 2026, B-BBEE Session 1: Blueprint for Bold Transformation, Annual Employment Conference 2026 (#AEC2026), Higher Occupational Certificate: HRM Administrator NQF5, Advanced Occupational Certificate: HRM Officer (NQF 6), and Advanced Occupational Certificate: HRM Officer (NQF 6).

*All workshops are offered as customised in-house training that can be presented virtually or on-site.


"Global Business Solutions (GBS)—Your Partner in Strategic HR Compliance"

bottom of page