South Africa’s proposed “3-for-3” scheme, which would allow unlisted companies to pay three percent of their gross revenue in exchange for automatic Level-3 BEE status, may seem straightforward. But it’s a shortcut that risks undoing years of hard work toward genuine enterprise and supplier development (ESD).
Paying a fixed share of gross revenue ignores the reality of profit margins. Many businesses, especially those operating in low-margin industries, could find themselves pushed into financial distress. More importantly, the proposal suggests that transformation can be bought rather than built. That runs against the very principle of ESD, which aims to grow real capability, resilience, and competitiveness in black-owned enterprises.
The idea that companies could redirect their existing ESD commitments into a central fund might simplify compliance, but it removes direct accountability. When businesses engage directly with emerging suppliers—through mentorship, joint ventures, shared infrastructure, and access to procurement—they transfer skills and build value chains that last. A pooled fund administered by the state, however well-intentioned, risks diluting that impact. Centralised systems in South Africa already face credibility challenges, and concerns about efficiency, transparency, and governance are legitimate.
Real transformation happens through active partnership, not detached payments. ESD should focus on capital investment, capacity building, and measurable growth. That means funding equipment, technology platforms, logistics support, and facilities that enable black-owned SMEs to compete on quality and scale. It also means structured mentorship and targeted training that link smaller suppliers directly into corporate supply chains.
Accountability is key. Companies and government alike need transparent metrics to show where money goes, who benefits, and what results follow. Public reporting on supplier development outcomes would build trust and demonstrate progress far more effectively than a tax-style contribution.
Rather than centralising funds, policy should encourage co-investment models where private companies take an active role in design, oversight, and delivery. This creates ownership, drives innovation, and keeps transformation outcomes connected to business reality.
If the three-percent model proceeds, its success will depend entirely on how funds are administered and whether supplier development remains at its core. Without strong governance, measurable impact, and private-sector partnership, it risks becoming another compliance exercise. South Africa doesn’t need a system that monetises BEE credentials. It needs one that builds real businesses, develops people, and strengthens supply chains that endure.
