South Africa: Upstream linkages—Fighting inequality by promoting local procurement

South Africa utilizes a combination of mandated procurement percentages and Social and Labour Plans (SLPs) to promote ownership by historically disadvantaged South Africans (HDSAs) in the mining sector. The system employs a scorecard approach under the Broad Based Black Economic Empowerment (B-BBEE) Act, where mining companies are incentivized to procure from high-scoring B-BBEE suppliers to maintain their own scores and avoid fines or the revocation of licenses. Proposed targets for 2019 suggest increasing B-BBEE procurement to 60% for capital goods, 70% for consumable goods, and 80% for services. On the supply side, the Small Enterprise Development Agency (Seda) provides non-financial support, including mentorship and training, though the document notes a lack of connection to finance and targeted investment. The case study concludes that while the scorecard approach offers flexibility, the focus on community development in SLPs and a lack of supply-side investment may hinder the development of larger-scale industrial capacity.

• South Africa defines "local" procurement based on ownership by historically disadvantaged South Africans (HDSAs) as determined by the Broad Based Black Economic Empowerment (B-BBEE) Act, rather than by geography or value addition.
• The Mining Charter uses a scorecard system to incentivize B-BBEE procurement; mining companies that procure from low-score suppliers see their own scores reduced, which can lead to fines or the revocation of mining and exploration licenses by the Department of Mineral Resources.
• Proposed B-BBEE procurement targets for 2019 include 60% for capital goods, 70% for consumable goods, and 80% for services, an increase from 2014 requirements of 40%, 50%, and 70% respectively.
• Mining companies must publish a Social and Labour Plan (SLP) for each site, which requires consultation with local communities and must be approved by the Minister of Mineral Resources for a license to be issued.
• The Small Enterprise Development Agency (Seda), established in 2004, provides non-financial support such as mentorship, coaching, and technology transfer to promote entrepreneurship and develop small and medium-sized enterprises.

APA

Nickerson, E., & Geipel, J. (2018). South Africa: Upstream linkages—Fighting inequality by promoting local procurement. International Institute for Sustainable Development. https://www.iisd.org/sites/default/files/publications/case-study-south-africa-upstream-linkages.pdf

Chicago

Nickerson, Emily, and Jeff Geipel. South Africa: Upstream linkages—Fighting inequality by promoting local procurement. International Institute for Sustainable Development, 2018. https://www.iisd.org/sites/default/files/publications/case-study-south-africa-upstream-linkages.pdf.

Wikipedia

{{cite report |last1=Nickerson |first1=Emily |last2=Geipel |first2=Jeff |title=South Africa: Upstream linkages—Fighting inequality by promoting local procurement |publisher=International Institute for Sustainable Development |date=2018 |url=https://www.iisd.org/sites/default/files/publications/case-study-south-africa-upstream-linkages.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{nickerson2018south, author = {Nickerson, Emily and Geipel, Jeff}, title = {{South Africa: Upstream linkages—Fighting inequality by promoting local procurement}}, institution = {International Institute for Sustainable Development}, year = {2018}, url = {https://www.iisd.org/sites/default/files/publications/case-study-south-africa-upstream-linkages.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }