CDE CALLS ON DTIC TO CONSIDER OPPOSITION TO ITS RECKLESS B-BBEE AMENDMENTS
- BEE NEWS
- Apr 1
- 5 min read
Refiloe Benjamin | 30 March 2026
The Centre for Development and Enterprise (CDE) calls on the Department of Trade, Industry and Competition (DTIC) to consider the weight of opposition to its proposed amendments to the B-BBEE Codes of Good Practice.
CDE is one of many organisations that have submitted a formal response to the Department calling for the immediate withdrawal of the proposed amendments on the grounds that that they are reckless and will undermine the stated goals of broad-based black economic empowerment (B-BBEE).
“CDE believes the proposed changes are reckless. They amount to a massive bet on the idea of a Transformation Fund, a proposal whose details have not even been made public. They will destabilise the structure of existing empowerment policies, impose significant new costs on businesses that have already adapted to current rules, and reduce investment by increasing policy uncertainty,” said Ann Bernstein, executive director of CDE.
“The proposed changes will narrow the beneficiaries of B-BBEE in ways that may undermine important gains in economic integration,” added Bernstein.
CDE regards the achievement of the goals of B-BBEE as vital to the country’s future. We understand these goals to be an economy in which everyone can succeed irrespective of their race or gender, and in which legacies of historical discrimination are actively undone. However, we believe that these proposed amendments undermine these legitimate goals.
What the Department of Trade, Industry and Competition is proposing
The DTIC is proposing two significant amendments to the B-BBEE Codes, both affecting the Enterprise and Supplier Development (ESD) element, which is the primary mechanism through which empowerment policy is transmitted through the economy.
These changes would:
• Substantially reduce the points available to companies that procure from suppliers who are not 100% black-owned. For example, the value of doing business with a 51% black-owned firm would fall from 11 points (out of 27) to 3 points (out of 29); and
• Introduce a Transformation Fund as an alternative mechanism for securing ESD points, allowing companies to secure ESD points by contributing 3% of net profit after tax.
A policy that will narrow, not broaden, transformation
CDE’s analysis indicates that the proposed procurement changes will shift incentives away from firms with majority black ownership towards those that are wholly black-owned. This would significantly alter the structure of existing supply chains.
An influential analysis by Tusker, a major B-BBEE ratings firm, showed that of the nearly 54,000 businesses that have applied for B-BBEE certificates on their database, only about 10,000 are 100% black-owned, and around 90% of these are small firms. This raises serious questions about whether there are sufficient firms of this kind, across a wide enough range of sectors, for companies to meet preferential procurement targets under the revised system.
The likely result is that many firms will be unable to achieve high B-BBEE contributor status through procurement alone.
“The fact that thousands of firms have moved towards a more racially balanced shareholder mix has undeniably improved racial integration across the business sector, with enormous benefits for society and for political stability,” said Bernstein.
“They did this because the existing Codes reward procurement from firms that are largely or majority black-owned. But this important social benefit will be impaired by the new proposal which rewards only 100% black-owned firms. This is likely to increase racial polarisation amongst business stakeholders, rather than integration and partnership,” she added.
The proposed change to the preferential procurement rules will make it more difficult to accrue ESD points through companies’ supply chains. It seems as if this is intended to “encourage” companies to contribute to the Transformation Fund.
A Transformation Fund with no clear framework
CDE previously submitted comments on the DTIC’s Transformation Fund concept document in May 2025.
Our concerns — which remain unaddressed — include:
• The absence of clear objectives, governance structures, and success metrics;
• Uncertainty about how the Fund would be operationalised;
• Implausible funding targets, including the aim of raising R100 billion over five years; and
• The risk — now materialised in the new proposals — that redirecting existing ESD spending will harm black-owned firms already integrated into supply chains.
There is no formal, publicly available statement of what the Transformation Fund will do, what its targets will be, how it will operationalise its mandate, how it will be governed, how it will define success, etc.
“It is literally impossible to assess the merits of these proposals,” Bernstein said. “The public is being asked to comment on amendments to the Codes that depend critically on their assessment of the pros and cons of a Fund whose parameters, mandate, governance and institutional architecture have not been disclosed. This is frankly outrageous,” added Bernstein.
Serious legal and constitutional concerns
CDE is also concerned by reports that the DTIC has entered into a MoU with African Export-Import Bank (Afreximbank) to access up to US$3 billion in external financing linked to the proposed Transformation Fund, even though the Fund does not yet exist as a legally constituted entity.
In CDE’s view, no binding commitments can be lawfully entered into before the Fund is properly established and any borrowing it might do is authorised within the fiscal framework. Any commitments that may have already been made could raise serious concerns in relation to the Public Finance Management Act and constitutional requirements governing public expenditure and borrowing.
Officials who enter into unauthorised commitments may expose themselves to adverse audit findings, disciplinary action, and potential personal liability.
CDE’s call: Withdraw and establish an independent public review of B-BBEE policies
When CDE made its submission in response to the first Transformation Fund concept document in May 2025, we issued a call for a comprehensive, independent review of South Africa’s transformation policies to assess their effectiveness and costs.
This review should be led by an independent panel, including economists, legal experts, business leaders, civil society representatives and especially black-owned enterprises affected by current mechanisms. It should evaluate which aspects of B-BBEE have succeeded and which have failed, and at what cost, using 20 years of available data. The goal should be to build a new consensus promoting inclusive growth, accountability, and tangible benefits for black and in particular disadvantaged South Africans.
This call has not been heeded, and we strongly believe the GNU should commit to a public, expert-led review of the impact and costs of B-BBEE policies that have been pursued for the past 20 years.
Instead, the DTIC has proposed this set of amendments to the B-BBEE codes that would narrow the beneficiaries of preferential procurement spending to an exceptionally small group of companies in which 100% of the shares are owned by black people, while strongly nudging ESD spending into a Transformation Fund whose parameters, mandate, governance and institutional architecture have not been publicly disclosed.
“This is recklessness piled on recklessness,” said Bernstein.
“The current proposals should be shelved until a proper review of B-BBEE has been conducted and its findings subjected to informed public debate. Approaching so serious a matter as economic transformation in this gung-ho style reflects badly on the DTIC and on government as a whole,” she added.
Issued by Refiloe Benjamin on behalf of CDE, 30 March 2026
‘Disclaimer - The views and opinions expressed in this article are those of the author(s) and not necessarily those of the BEE CHAMBER’.