Enterprise and Supplier Development: Corporate Linkage Programme

Theme: market_linkages

Description

The Enterprise and Supplier Development (ESD) element of BBBEE scorecards requires corporations rated above Level 5 to invest 3% of net profit after tax in developing black-owned suppliers and enterprises. Estimated annual ESD investment of R8–12 billion from complying corporations represents a major but poorly managed private sector development finance flow: much ESD spend is directed toward single-year grants, soft-skills training, or preferential procurement clauses that expire with the scorecard cycle, rather than toward multi-year supplier relationship development. The Corporate Linkage Programme reform proposes: restructuring ESD codes to require multi-year supplier development contracts (minimum 3 years), integration of ESD suppliers with the SEDA Supplier Development Hubs and IDC's SME Finance programme, mandatory ESD supplier registration on the Central Supplier Database to create a bankable track record, and a DTI-administered ESD impact measurement framework (currently ESD is self-reported with minimal verification). The PC on Trade BRRRs identify ESD as the BBBEE element with the largest gap between scorecard compliance and developmental impact.

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