ESD can be a powerful engine for women-owned businesses

Jennifer Barkhuizen

South Africa is rewriting the rules of economic empowerment. The draft amendments to the B-BBEE codes, gazetted earlier this year, sharpen the focus on directing more procurement toward black-owned and, specifically, black-women-owned businesses. It is a meaningful shift, and for women entrepreneurs it could prove one of the most important in a decade. It also makes an old question newly urgent: when we say a business is women-owned, how confident are we that it is true?

Consider a case that came before the B-BBEE Commission. A woman employed as a receptionist discovered that she had been recorded as a shareholder in the company she worked for, holding a third of it on paper. She had bought nothing, decided nothing and received nothing. Her name had been placed on the ownership structure to improve the company’s empowerment credentials. It is an extreme example, but the practice it represents is far from rare, and it goes to the heart of whether this next chapter of reform will work.

Enterprise and Supplier Development is one of the most practical instruments we have for growing women-owned businesses. At its best it does three things at once. It provides access to capital that commercial lenders will not extend to an early-stage firm. It offers the mentorship, skills and systems that help a small business mature. And, most valuably, it creates a place in a corporate supply chain, which means recurring revenue rather than a once-off grant. Because the codes attach particular weight to black women’s ownership, a woman-owned supplier is not a compliance favour to a large company. She is a genuinely valuable partner, and that is real commercial leverage. 

This is also why the integrity of the system matters so much. Fronting accounts for approximately 84% of the complaints investigated by the B-BBEE Commission, making it one of the most common forms of abuse. In many cases a business is presented as black-owned or women-owned on paper, while the individuals named exercise no meaningful control and see no real benefit. The receptionist made a shareholder without her knowledge is an extreme example, but the underlying practice is widespread. The consequences extend well beyond compliance. Every fronted women-owned business that secures a contract, tender or supplier opportunity does so at the expense of a genuine entrepreneur. The woman who has invested her time, resources and expertise into building a sustainable business loses out to a façade designed to manipulate a scorecard. In the process, transformation is undermined, trust is eroded, and opportunities intended to empower women are diverted to those exploiting the system rather than contributing to meaningful change.

The temptation is to treat verification as an administrative hurdle, more friction for women who already face enough of it. I would argue the opposite. For the woman who is exactly who she says she is, rigorous verification is not an obstacle. It is what gives her claim meaning. It is what separates her from those trading on a borrowed identity, and it is what allows a corporate to back her with confidence. A women-owned designation that is never tested is a designation easily counterfeited, and the people who lose most when it is counterfeited are the very women the system exists to support. 

For women building real businesses, there is an opportunity in this. Credibility is not a box to be ticked at the end of a procurement process. It is an asset to be built deliberately from the start. The founder who can demonstrate clearly and quickly that she owns and runs her business, that her credentials are sound and her affairs are in order, is the founder who turns ESD access into a lasting supply relationship. In a market where trust has been abused often enough to make buyers cautious, being verifiably and demonstrably real is a competitive advantage.

There is a responsibility on the other side of the table too. As the new procurement targets take effect, the pressure to place spend with women-owned suppliers will rise, and with it the temptation to onboard quickly and verify later, or not at all. That would bea costly mistake. Rushed, unverified onboarding is precisely the gap that fronting exploits, and it quietly defeats the purpose of the reform. Doing the diligence properly is how a company ensures its transformation spend reaches the women it was intended for, rather than the intermediaries positioned to intercept it. 

The reforms now under way could mark a genuine turning point for women-owned businesses in this country. Whether they do will depend not only on how many doors we open, but on how carefully we make sure the right women walk through them. If we treat verification not as a barrier placed in front of women entrepreneurs, but as the protection built around them, Enterprise and Supplier Development can become exactly what it was designed to be: not a box to tick, but a real engine of growth for the women who have earned their place in the economy.

* Jennifer Barkhuizen is head of communications at Mettus and has spent more than 15 years in data, analytics and information services, with particular expertise in hiring risk, credential fraud and the South African labour market.

** The views expressed do not necessarily reflect the views of IOL or Independent Media.

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