# STATE OF SOCIAL PROCUREMENTCountry Profile: South Africa Empowering communities through procurement mandates and supplier development programs. **140,000** social enterprises in South Africa as of 2018 **78%** of social enterprises already sell to companies **46%** of social enterprises have participated in supplier development programs ## Overview Social entrepreneurship is a promising response to South Africa's development challenges, such as a 33% unemployment rate and the world's greatest income inequality worldwide. Supplier development programs play an outsized role in the country, allowing social enterprises to mature towards corporate-readiness. 46% of surveyed social enterprises had already participated in at least one such program. ## Environment and context South Africa is a developing country that faces a complex set of structural social and economic challenges. Thirty years since the end of apartheid, poverty levels have reduced but remain high, with the country exhibiting the greatest income inequality worldwide, an unemployment rate of 33% and severe electricity shortages that disrupt entrepreneurial activity.The Social & Solidarity Economy is a promising response to these issues, with an estimated 140,000 social enterprises and cooperatives in South Africa as of 2018. They typically assume a non-profit structure, with many operating a for-profit arm in combination, as there is no specific legal form for social enterprises. Given the absence of a dedicated legal form, it is anticipated that there are many hidden social enterprises that do not identify with the concept, lack familiarity with social impact jargon, or operate offline at a grassroots level. A 2021 study of social enterprises in South Africa found that most are early-stage, pre-revenue or post-revenue but unprofitable, with unpredictable or seasonal cash flows. The businesses usually get a third party—such as the government or another party interested in the impact—to pay for their services on behalf of the end user, or they sell directly to the consumer. Most social enterprises address social issues more so than environmental issues; most often in the areas of health and well-being, poverty and hunger, and quality education. 52% of South African social enterprises are led by women and 63.3% of social enterprises are black-owned. ### Current State of Social Procurement Social procurement is fast becoming a key topic in supply chain sustainability for companies in South Africa, continuing a tradition of leveraging supply chains for positive change. Preferential procurement can be traced back to South Africa's post-apartheid transition, marked by the implementation of transformative policies to uplift previously disadvantaged groups.The Broad-Based Black Economic Empowerment (BEE) legislative and policy framework laid the foundation for preferential procurement strategies to be embedded across South Africa’s listed companies, companies looking to contract with the public sector, or companies that require government-run licensing to operate. These initiatives aim to rectify historical injustices created by apartheid and foster the economic inclusivity of black people by providing preferential procurement opportunities to black-owned businesses.Under the BEE framework, preferential procurement is promoted through Enterprise Supplier Development programs (ESD). Through those programs, corporations support small and medium enterprises or black-owned businesses, by the procurement of their goods and services. Social enterprises in countries facing complex structural social and economic challenges, such as South Africa, play a crucial role in advancing economic development and social justice, where governments cannot meet all needs. A market study on social procurement in South Africa, spanning 37 select social enterprises found that these social enterprises mainly supply large companies, including globally recognised brands such as Deloitte, Heineken, DHL, Woolworths and Pernod Ricard.78% of these enterprises already sell to corporate clients46% have participated in an Enterprise Supplier Development program60% feature the highest possible BEE scoreThe main challenges reported across enterprises is access to the contacts within companies, as well as the lack of long-term contractual agreements and commitment from corporate clients. More details are available in the "Corporate Guide to Social Procurement in South Africa". ### Outlook Social procurement presents a significant opportunity to advance the objectives of South Africa's BEE system by integrating social enterprises into corporate supply chains. With their strong alignment to BEE goals, social enterprises are well-suited to participate in supplier development programs, which can enhance their corporate readiness and commercial viability through support mechanisms like preferential payment terms. Companies such as Food Lover’s Market, SAP, and Virgin Active have demonstrated the potential of social procurement to drive both business and social impact. To scale these efforts, a shared value approach should be promoted to foster sustainable partnerships. However, the lack of empirical evidence on social procurement in the private sector underscores the need for greater knowledge sharing and capacity building. ## Key programs and initiatives Regional programs and initiatives offer opportunities for companies to get engaged in social procurement in this country. ## Frequently Asked Questions *Common questions and answers* ## Regional case study: Food Lover's Market Seeds of Change Program The Seeds of Change Supplier Development Partnership is Food Lover’s Market’s pioneering social procurement initiative, integrating impactful enterprises into its retail supply chain. Food Lover’s Market recognizes that social enterprises play an important and growing role in addressing South Africa’s social and environmental challenges and that retail is a key avenue for impact through social procurement.Supported by the Social Enterprise Academy, 30 applicants are invited to a 2-day online bootcamp to engage with buyers and experts in marketing, pitching, food safety, and more. The top 10 finalists are then flown to Cape Town for a week’s program of touring Food Lover’s Market facilities and speaking to business leaders. This culminates in a final pitch to Food Lover’s Market executives and key partners. Winners receive support tailored to their needs, such as mentorship, market access, and product listings at Food Lover’s Market. Since its inception in 2021, 120 entrepreneurs have participated in the bootcamp, with 41 finalists. Of these, 14 enterprises have been listed with Food Lover’s Market. Eight more are set to join from the 2024 cohort. Three are awaiting certification. ### National Partners This country profile has been prepared by Yunus Social Innovation and Accendio. *Partner organizations and sponsors* Last update was made on 15 January 2025.