B-BEE 101: How Levels Work & Procurement Recognition
A plain-English guide to understand where your B-BEE level comes from, how procurement recognition is calculated, and what different-sized businesses need to do.
1) The three size bands (and what each must do)
EME (Exempt Micro Enterprise)
Typical turnover: up to R10 million (sector codes may differ).
Compliance method: Affidavit, not a full verification.
Deemed levels (ownership-based):
- 100% black-owned: Level 1
- ≥51% black-owned: Level 2
- Other ownership: usually Level 4 (affidavit confirms).
QSE (Qualifying Small Enterprise)
Typical turnover: R10–R50 million (sector codes may differ).
Compliance method: Scorecard (+ verification), unless black-owned (then deemed levels apply):
- 100% black-owned: Level 1
- ≥51% black-owned: Level 2
- Other ownership: measured on the QSE scorecard.
Generic (Large Enterprise)
Turnover: > R50 million.
Compliance method: Full scorecard + verification with a SANAS-accredited verification agency.
ℹ️ Exact thresholds and special rules can vary under sector codes (e.g., Construction, ICT, Finance). We’ll apply the correct code for your industry.
2) What makes up your score (elements)
Your scorecard totals points across five elements (sector codes may weight them differently):
- Ownership – effective black ownership (and specific categories such as women, youth, designated groups).
- Management Control – representation of black people at board, executive, senior, middle, junior levels.
- Skills Development – spend on accredited training, learnerships, internships (with emphasis on priority groups).
- Enterprise & Supplier Development (ESD) – Preferential Procurement (buying from compliant suppliers), Supplier Development, and Enterprise Development (supporting black-owned SMMEs).
- Socio-Economic Development (SED) – qualifying contributions to beneficiaries.
Priority elements & sub-minimums (why some scores “drop a level”)
Priority elements (typically Ownership, Skills, and ESD). If you miss the sub-minimum on a priority element, your final level can be discounted (usually by one level per the Codes; QSEs have specific rules: Ownership is mandatory plus one of the other two). This is why planning and tracking through the year matters.
3) Levels and procurement recognition
Your B-BEE level converts into a recognition percentage. Customers multiply their spend with you by this percentage to count it toward their own scorecard.
| Level | Recognition % |
|---|---|
| 1 | 135% |
| 2 | 125% |
| 3 | 110% |
| 4 | 100% |
| 5 | 80% |
| 6 | 60% |
| 7 | 50% |
| 8 | 10% |
| Non-compliant | 0% |
Quick example: If your company is Level 2 and your customer buys R1,000,000 from you: R1,000,000 × 125% = R1,250,000 recognised toward their procurement points.
4) Affidavit vs Verification
Affidavit (EME and some black-owned QSEs)
- A sworn statement confirming turnover band and black ownership %.
- Uses the correct industry template (generic or sector-specific).
- Valid for 12 months (or until circumstances change).
Verification (QSE & Generic not covered by deemed levels)
- Independent assessment by a SANAS-accredited verification agency.
- Checks evidence for each element (policies, payroll, training records, supplier certificates/affidavits, ESD/SED agreements and proof, etc.).
- Results in a B-BEE certificate showing your points and level.
SpecCon prepares and supports your verification-readiness (modelling, evidence file, mock audit). Verification itself is conducted independently by SANAS-accredited agencies.
5) Sector codes: why they matter
Some industries have their own sector codes with different targets, weightings, or definitions (e.g., Construction, Financial Services, ICT, Tourism, Property, Transport). We’ll confirm which code applies to you and flag any sector-specific quirks.
6) Getting (and keeping) the level you need
- Plan early. Map your current points and the sub-minimums.
- Focus spend. Align Skills, ESD/SED, and procurement to close gaps efficiently.
- Clean your supplier base. Prioritise Level 1–4 and ≥51% black-owned suppliers where possible; collect valid affidavits/certificates.
- Build the evidence file as you go. Keep signed agreements, invoices, proof of payment, attendance registers, learner statements of results, supplier certificates, etc.
- Run a mock audit. Catch gaps before verification.
7) Common pitfalls (and quick wins)
- Pitfall: Missing a priority element sub-minimum → level drop.
Win: Track sub-minimums quarterly; adjust spend before year-end. - Pitfall: Supplier certificates expired at verification.
Win: Monthly/quarterly supplier clean-ups and reminders. - Pitfall: Skills spend that isn’t accredited or poorly evidenced.
Win: Use accredited programmes (incl. learnerships) with full documentation. - Pitfall: Last-minute ESD/SED with weak proof.
Win: Pre-approved SD/ESD agreements, milestone evidence, and clear beneficiary eligibility.
8) Quick glossary
- Recognition: The % your customers can claim on their procurement for buying from you.
- Deemed level: Automatic level for black-owned EME/QSE (affidavit-based).
- Priority element: Element with a sub-minimum you must reach to avoid a level discount.
- Sub-minimum: Minimum % of the target you must achieve on a priority element.
- Sector code: Industry-specific version of the Codes of Good Practice.