Trends in Supplier Diversity Practices in Corporations
In recent years, many large South African corporations have embraced supplier diversity as a strategic procurement practice. Supplier diversity – the proactive sourcing of goods and services from previously underutilized suppliers – is gaining traction locally, although it remains less mature than in some countries.
Corporate-led initiatives, often in partnership with organizations like the South African Supplier Diversity Council (SASDC), are reforming procurement processes to include more Black-owned and women-owned suppliers. SASDC’s corporate members, for example, commit to policies that open opportunities for Black suppliers and even report the Rand value of purchases from these suppliers within the Council.
Trends in Supplier Diversity Practices in Corporations
In recent years, many large South African corporations have embraced supplier diversity as a strategic procurement practice. Supplier diversity – the proactive sourcing of goods and services from previously underutilized suppliers – is gaining traction locally, although it remains less mature than in some countries. Corporate-led initiatives, often in partnership with organizations like the South African Supplier Diversity Council (SASDC), are reforming procurement processes to include more Black-owned and women-owned suppliers. SASDC’s corporate members, for example, commit to policies that open opportunities for Black suppliers and even report the Rand value of purchases from these suppliers within the Council. This reflects a broader trend: companies are moving beyond token compliance and actively integrating diverse suppliers into their value chains.
South African firms are increasingly recognizing the business case for supplier diversity. According to SASDC, inclusive procurement can yield competitive advantages such as greater supply chain flexibility, innovation from new vendor perspectives, improved brand image, and even market access via B-BBEE compliance. In practice, this means engaging small and agile Black-owned businesses that can respond quickly to market changes. It also aligns procurement with the demographics of the society in which companies operate. While supplier diversity was initially driven by B-BBEE compliance mandates, leading firms are now viewing it as a long-term business imperative that contributes to resilience and growth. Notably, South Africa joined the ranks of countries with formal supplier diversity networks (modelled after the US NMSDC) only in the last decade, but momentum is building. The SASDC itself has built a network of 1,100+ certified Black-owned suppliers ready to serve corporate supply chains, indicating a growing pipeline of diverse vendors.
Adoption of B-BBEE-Aligned Procurement Strategies
The Broad-Based Black Economic Empowerment (B-BBEE) framework has been a key driver in reshaping private sector procurement. Large companies routinely align their purchasing strategies with B-BBEE scorecard requirements – particularly the Enterprise and Supplier Development (ESD) element, which incentivizes spending on Black-owned and women-owned businesses. This alignment is evident in corporate B-BBEE performance data. For instance, the 2023 Sanlam Transformation Gauge (an annual review of 14,000+ companies’ B-BBEE scores) found that overall ESD scores averaged only about 75% of the target – indicating moderate success, with room for improvement. Many firms easily earn points for enterprise and supplier development contributions (e.g. mentorship, financing), but struggle with the preferential procurement targets because in certain categories there are “not always enough black suppliers to procure from” according to Empowerdex MD Lerato Ratsoma. In other words, companies are seeking qualified Black suppliers to meet their procurement goals, but supply gaps in some industries have made it challenging to hit 100% of targets.
Even so, incremental progress is being recorded. The Sanlam Gauge noted a slight uptick in overall transformation scores and a rise in black ownership stakes. Preferential procurement remains one of the most impactful levers for transformation, and firms that have aggressively pursued it show notable outcomes. For example, MTN (a major telecom) reports that it spent R33.4 billion on Black-owned SMMEs in 2024, helping it maintain a Level 1 B-BBEE status. MTN deliberately diversified its supply chain to achieve this, increasing spend on ≥51% Black-owned vendors from R7.1 billion in 2019 to R9.3 billion in 2024. Such B-BBEE-aligned procurement strategies are now common across sectors like finance, retail, mining, and ICT, as companies compete not only on price and quality but also on their empowerment credentials.
The B-BBEE Commission monitors these trends through annual reports on national transformation. In recent reports, the Commission has pointed out stagnation in some areas (for instance, Black ownership on the JSE has hovered around 30%), but has praised improvements in others like preferential procurement and enterprise development. The Commission continues to urge both government and corporates to ramp up inclusive procurement, explicitly calling for increased spend on businesses that are at least 30% Black-women-owned to address the chronic underrepresentation of Black women in value chains. This policy pressure has translated into updated regulations and targets. Notably, the Department of Trade, Industry and Competition (DTIC) introduced sub-targets for procurement from Black women–owned firms in the B-BBEE Codes, and the National Treasury has worked to align public procurement rules with these empowerment objectives.
Impact of Black- and Women-Owned Businesses in Supply Chains
The growing inclusion of Black-owned and women-owned businesses in corporate supply chains is delivering measurable economic and social impacts. These diverse suppliers are making inroads into industries from manufacturing and FMCG to professional services. A recent example is Shoprite Holdings, Africa’s largest retailer, which announced it spent a record R18.3 billion with Black women-owned suppliers in the past financial year – its highest ever spend in that category. This accounted for roughly 8.4% of Shoprite’s total procurement, a share that is rising year-on-year as the retailer broadens its supplier base (yet still below the demographics of Black women in the population).
In the telecom sector, MTN’s spend on ≥30% Black women-owned vendors rose from R10.4 billion in 2019 to R18.9 billion in 2024, reflecting deliberate efforts to direct more opportunities to women entrepreneurs. These numbers illustrate a positive trajectory: leading corporations are now channelling tens of billions of Rand to Black suppliers annually, up significantly from a decade ago.
The strategic value of this inclusion is evident. By tapping into Black-owned SMMEs, companies gain access to innovative products and agile services that can enhance competitiveness. Many of these suppliers are small businesses with niche capabilities or local market insights that larger incumbents lack. In fact, small and medium enterprises (SMEs) in South Africa represent over 98% of all businesses, employ roughly 50–60% of the workforce, and contribute about 40% of GDP. A substantial portion of these SMEs are Black- or women-owned, especially in emerging sectors. Integrating them into corporate supply chains thus not only meets B-BBEE targets but also stimulates entrepreneurship and job creation on a broader scale – outcomes aligned with national development goals.
SASDC’s experience over the past decade reinforces this: connecting its certified Black suppliers to corporate members has helped those suppliers grow and in turn support community employment and wealth creation. There are numerous success stories where a small Black-owned supplier, once given access to a large corporate contract, has expanded production, hired more staff, and even begun exporting. This multiplier effect is a key rationale behind supplier diversity initiatives.
Moreover, fostering diversity in the supply chain can improve resilience. The COVID-19 pandemic highlighted the risk of over-reliance on a narrow set of suppliers. Companies with more diverse supplier pools (including agile small businesses) were often better able to adapt to disruptions. Inclusion also enhances a company’s brand and stakeholder relations – as communities and investors increasingly expect tangible commitment to socio-economic transformation. A strong empowerment spend can thus bolster a firm’s reputation, securing goodwill from regulators and the public. It even opens doors to business: in South Africa, a good B-BBEE level is often needed to win contracts (public or private).
Many multinationals and local giants now explicitly consider supplier diversity as part of their ESG (Environmental, Social, Governance) and sustainability agendas, linking it to long-term value.
For women-owned businesses, the impact of inclusion is similarly significant, though it starts from a low base. Globally, less than 1% of corporate and public procurement spend goes to women-owned businesses, a statistic echoed in South Africa. This gender gap has prompted initiatives like WEConnect International, which connects women entrepreneurs to multinational procurement opportunities.
In October 2024, Johannesburg hosted the WEConnect Africa Conference, where over 200 women-owned businesses engaged with corporates on scaling into supply chains. Such efforts underscore that while women-owned suppliers remain underrepresented, progress is being made through targeted development programs and commitments by large buyers to increase sourcing from them. The South African government set a goal that at least 40% of public procurement be awarded to women-owned enterprises, and although implementation has been uneven, it signals the direction of change.
Within the private sector, corporates like Sasol have partnered with SASDC on initiatives (e.g. Project Embrace in 2025) to empower Black women entrepreneurs in “green economy” supply chains. These partnerships provide training, incubate women-led suppliers in high-growth sectors, and then link them to procurement opportunities – thereby translating inclusion goals into concrete business relationships.
Measurable Outcomes and Ongoing Transformation Goals
Thanks to these trends, the participation of Black- and women-owned businesses in corporate procurement has markedly increased over the past decade. Measurable outcomes include a higher percentage of spend directed to diverse suppliers, a growing number of empowered suppliers in vendor databases, and progress toward the transformation targets set out by policymakers.
It is illustrative to compare current figures to early transformation goals: back in 2001, the BEE Commission had envisioned that by the early 2010s, 30% of private sector procurement spend would be going to Black-owned companies. While that ambitious target has not been universally met, some industries are closing in on it. For example, in sectors like banking, collective industry reports show procurement with ≥51% Black-owned businesses now in the 20–25% range on average (with several banks exceeding their B-BBEE targets).
In mining, the 2018 Mining Charter requires that 80% of procurement spend on services be allocated to Black-owned companies – a strong push that is driving miners to foster new Black industrial suppliers in everything from engineering to catering. These benchmarks indicate that transformation goals are increasingly concrete and embedded in sectoral strategies.
At the firm level, many leading companies have announced hitting meaningful milestones: from MTN’s Level 1 B-BBEE status achieved through holistic procurement transformation, to Shoprite’s record spend on women suppliers, to MTN’s R18.9 billion spend on Black women-owned vendors in a year. Such figures were almost unheard of a decade ago.
Additionally, the number of Black-owned SMEs thriving as Tier-1 or Tier-2 suppliers to big corporates has grown. The SASDC notes that its member corporates have cumulatively spent tens of billions of Rands on certified Black suppliers over the years, directly contributing to black business growth. This aligns with national objectives like the National Development Plan 2030, which emphasizes strengthening SMMEs and broadening ownership as keys to reducing inequality and unemployment.
Despite these gains, challenges remain on the journey to an inclusive procurement landscape. One challenge is the depth of transformation: B-BBEE scorecards may improve, yet the B-BBEE Commission and independent surveys caution that real on-the-ground impact can lag. A 2023 verification agency survey revealed a sentiment that “transformation is not as advanced as the scorecards suggest,” pointing to issues like fronting, reliance on a small pool of suppliers, and resistance in some management circles.
There have been cases where procurement targets were met through superficial means (e.g. intermediary distributors qualifying as Black-owned, without building genuine Black manufacturing capacity). The government and regulators are aware of these practices – fronting is illegal and prosecuted – and they underscore the need for continual oversight and support for supplier development.
Another challenge is that Black women-owned businesses still comprise a minority of suppliers in many value chains. While top companies are raising their spend on such businesses, overall representation of women (especially Black women) in procurement is disproportionately low, mirroring their low representation in executive leadership (only 12% of directors on JSE boards were Black women as of a few years ago). This means focused efforts (like set-asides, capacity-building programs, and easier access to finance for women entrepreneurs) must continue to ensure gender-inclusive growth.
On the policy front, major reforms and initiatives are reinforcing the push for diversity in procurement. In 2024, the Public Procurement Act was signed into law, creating a unified framework for public sector purchasing that explicitly includes preferential procurement to advance transformation and broaden economic participation. This new Act, administered by National Treasury, will govern how government entities procure goods and services, and it is expected to influence private companies indirectly (since many private firms supply the state or align with public policy trends).
The Act’s emphasis on fairness, transparency, and empowerment reflects a national consensus that procurement must drive equity alongside efficiency. Furthermore, institutions like the B-BBEE Commission and the B-BBEE Advisory Council are continually reviewing progress and proposing adjustments – for example, recommending more robust use of set-asides and pre-qualification criteria to guarantee opportunities for Black-owned (and specifically Black women-owned) suppliers in corporate procurement pipelines. Such measures could accelerate the inclusion of underrepresented groups in sectors where they have historically had minimal market share.
In summary, diversity and inclusion have significantly influenced South Africa’s private sector procurement landscape over the past decade. Large corporates are increasingly integrating Black-owned and women-owned businesses into their supply chains, driven by both regulatory frameworks (B-BBEE scorecards) and the clear business benefits of a diversified supplier base. We see concrete trends: procurement spend on diverse suppliers is rising, supplier development programs are commonplace, and many companies now view inclusive procurement as a source of innovation and long-term competitiveness rather than just a compliance exercise.
The strategic value is evident in stronger supply chains and new market opportunities. However, the transformation journey is ongoing – achieving equitable representation in all tiers of supply chains will require sustained commitment, capacity-building, and perhaps more creative interventions (like partnerships and funding solutions for emerging suppliers).
The results thus far – from billions in contracts awarded to Black businesses, to new jobs and capabilities created – affirm that embracing diversity in procurement is not only a moral imperative but also an economic catalyst for South Africa’s future.