National Treasury Proposes Sweeping Procurement Regulations Mandating Higher BEE Compliance

Draft regulations from the National Treasury require 40% of procurement spend to go to black-owned firms. Explore South Africa's new Public Procurement Act.

By: AXL Media

Published: Apr 20, 2026, 6:32 AM EDT

Source: Information for this report was sourced from Daily Investor

New Legislative Framework for State Procurement

The South African National Treasury has initiated a public consultation period for the draft General Public Procurement Regulations, a move intended to operationalize the Public Procurement Act assented to in July 2024. These regulations represent a comprehensive attempt to standardize and tighten the rules governing how the state buys goods and services. Given the complexity and potential economic impact of the 40% procurement threshold, officials have extended the traditional window for public comment to ensure a thorough review from industry stakeholders.

Specific Targets for Black Economic Empowerment

A central pillar of the draft regulations is a stringent new requirement for government contractors regarding their own supply chains. Companies seeking public tenders must demonstrate that at least 40% of their prior procurement expenditure was directed toward businesses with a minimum of 51% black ownership and management. This mandate underscores a reinforced commitment to Broad-Based Black Economic Empowerment (BEE) as a non-negotiable criterion for participating in the state’s multi-billion rand procurement economy.

Introduction of the Transformation Fund Alternative

Parallel to the new regulations, Trade Minister Parks Tau is developing a Transformation Fund that could offer an alternative path for corporate compliance. Under this proposed model, companies would have the option to contribute 3% of their net income to the fund in exchange for earning double the BEE points currently available for enterprise and supplier development. Financial analysts have described this potential setup as an "empowerment tax" that would allow firms to satisfy transformation requirements through direct funding rather than navigating traditional, complex scorecards.