Draft B-BBEE Changes 2026 – Transformation Fund and Procurement Scorecard Amendments Explained.

The Transformation Fund was expected, the Procurement changes were not

On 29 January 2026 the Department of Trade, Industry and Competition (the DTIC) released a package of draft B-BBEE statements for public comment. While many in the market anticipated the formal introduction of a Transformation Fund, the extent of the proposed changes, particularly to the Preferential Procurement and Enterprise & Supplier Development (ESD) scorecards, has taken many businesses by surprise.

These draft amendments signal a material shift in how transformation is measured, funded and verified going forward.

How we got here: A brief history of the proposed R100bn Transformation Fund

For several years, government has expressed concern that Enterprise and Supplier Development initiatives, while well-intentioned, have often delivered inconsistent and fragmented outcomes. Common challenges include:

• Short-term support with limited long-term sustainability.
• Weak monitoring of beneficiary impact.
• ESD spend that complied technically but failed to drive meaningful economic inclusion.

Against this backdrop, the idea of a centralised Transformation Fund gained traction—one designed to pool resources, drive measurable outcomes and support scalable, high-impact transformation initiatives.

A few key risks have been raised publicly. A common thread is that a large, centralised fund could be politically influenced or misused, especially if governance, oversight and transparency aren’t watertight. Another major critique is that redirecting ESD flows into a mega-fund could unintentionally damage existing supplier-development models that are embedded in supply chains.

It is important that Measured Entities (ME’s) avoid hasty strategy changes until they understand the governance model, qualifying rules, evidence requirements and how the Fund interacts with existing ESD that already delivers real supplier growth.

The Transformation Fund: What the Draft proposes

The draft Statements introduce the Transformation Fund as an alternative to traditional Enterprise and Supplier Development contributions.

Key features include:

• Contributions target of 3% of NPAT for 20 points.
• Grant contributions only: Loans, guarantees and reduced interest rates do not apply to the Transformation Fund.
• Higher scoring efficiency: On paper a ME can earn more points via the Fund than through its existing ESD strategy for the same level of contributions. It is however of the utmost importance that ME’s discuss this with their BBBEE Advisors, as this may not be the best solution. Grants will have to be made annually and existing ESD initiatives may add more value.

Importantly, both Transformation Fund contributions and traditional ESD initiatives will now be subject to far stricter impact requirements.

ME’s must be able to demonstrate:

• A formal need analysis.
• Performance metrics with clear outputs and outcomes (such as turnover growth, job creation, market access, profitability and innovation).
• An annual Monitoring and Evaluation report submitted to the Verification Agency.

This represents a clear shift from “spend-based compliance” to “impact-based compliance.”

The real disruptor: Procurement Scorecard changes

While the Transformation Fund has attracted most of the headlines, the most disruptive proposed changes sit with the Preferential Procurement scorecard.

The draft introduces:

• Significantly increased emphasis on procurement from:
  • 100% Black Owned Exempted Micro Enterprises (EME’s)
  • 100% Black Owned Qualifying Small Enterprises (QSE’s)
  • 51% to 99% Black Owned Suppliers
  • 100% Black-Women-Owned Suppliers
• A major shift in bonus point recognition where bonus points move from 51% Black-owned Designated Group suppliers to 100% Black-owned Designated Group suppliers. Targets for these bonus points increase substantially.

For many ME’s this will require a fundamental reassessment of current procurement strategies and careful consideration of commercial risk, pricing and supply continuity.

This is not a cosmetic adjustment; it has the potential to materially affect B-BBEE outcomes if procurement strategies are not re-engineered in time.

What does this mean for QSE’s?

QSE’s are not exempt from these shifts.

Under the proposed changes Preferential Procurement weighting increases, placing greater pressure on spend patterns. New targets are introduced that do not form part of the current Procurement scorecard, including:

• 15% of Total Measured Procurement Spend (TMPS) to be procured from 100% Black Owned EME’s.
• 15% of TMPS to be procured from 61% to 99% Black-owned suppliers (noting a possible drafting inconsistency that may be clarified during the comment process). It will most probably change to 51% to 99% Black-owned suppliers.

Supplier and Enterprise Development remain, but QSE’s may opt to replace this with contributions to the Transformation Fund. The rules will be the same as for Generic Companies.

For QSE’s the key question becomes: What combination of procurement strategy, ESD initiatives and/or Fund contribution delivers both compliance and sustainable business value?

When will the New Proposed Changes come into effect?

Although these statements are still in Draft form, they provide a strong indication of policy redirection. The deadline for Public Comment is 60 days and will end on 30 March 2026. It will either be Gazetted or reviewed and therefore an implementation date is unclear at this stage.

How can we help?

At Elevate Advisory Partners, we help clients move beyond box-ticking compliance by:

• Re-assessment of procurement targets to ensure they align with the current supplier base.
• Translating draft legislation into practical, commercial strategies.
• Modelling different scorecard scenarios before decisions are locked in.
• Reviewing whether current initiatives will meet future evidence and impact requirements.
• Designing defensible ESD and procurement strategies aligned to business realities.
• Ensuring initiatives are verification-ready with the right evidence from day one.

If you would like to understand how these proposed changes could affect your B-BBEE scorecard, procurement strategy or transformation planning, contact our team at info@elevateadvisory.co.za or complete the contact form and we will get back to you as soon as possible.