Understanding B-BBEE Level 1 Requirements for Emerging ICT Enterprises

By The Innovator Trust on 04 Aug 26

B-BBEE Level 1 requirements for ICT enterprises depend on the business’s annual revenue, black ownership and the rules that apply under South Africa’s Amended B-BBEE ICT Sector Code.

For many emerging ICT businesses, the most important distinction is whether the enterprise qualifies as an Exempted Micro Enterprise (EME), a Qualifying Small Enterprise (QSE) or a larger measured entity. A 100% black-owned EME or QSE can generally qualify for Level 1 recognition through the relevant ownership-based rules. Other businesses must be measured against the applicable scorecard.

Level 1 status may support supplier-readiness efforts because it carries a 135% B-BBEE procurement recognition level. It does not guarantee work, funding or inclusion in a supply chain. Businesses must still meet a customer’s commercial, technical, operational and compliance requirements.

What Does B-BBEE Level 1 Mean?

Level 1 is the highest B-BBEE contributor status. It has a procurement recognition level of 135%.

In practical terms, where the applicable procurement rules allow it, a customer’s qualifying spend with a Level 1 supplier may receive recognition at 135% of the amount spent. This can make a Level 1 supplier more attractive to businesses working towards their preferential procurement and supplier-development objectives.

However, B-BBEE status is only one part of supplier readiness. Corporations and procurement teams will also assess:

  • Price and value

  • Technical capability

  • Quality of service

  • Delivery capacity

  • Financial stability

  • Cybersecurity and data-protection practices

  • Relevant certifications

  • Customer references

  • Governance and risk controls

Which B-BBEE Rules Apply to an ICT Enterprise?

Businesses operating in the ICT sector are generally measured under the Amended B-BBEE ICT Sector Code.

The Code applies to entities operating in areas such as information technology, telecommunications, broadcasting, electronics, software and related ICT products and services. Because some technology businesses work across several sectors, a business should confirm which code applies to its principal activities before preparing an affidavit or beginning verification.

The ICT Sector Code measures five elements:

  • Ownership

  • Management Control

  • Skills Development

  • Enterprise and Supplier Development

  • Socio-Economic Development

How Can an Emerging ICT Enterprise Qualify for Level 1?

Exempted Micro Enterprises

An Exempted Micro Enterprise, or EME, is generally an enterprise with annual revenue of R10 million or less.

Under the ownership-based recognition rules, a 100% black-owned EME generally qualifies as a Level 1 contributor with 135% procurement recognition. An EME that is at least 51% black-owned generally qualifies as a Level 2 contributor.

A qualifying EME will ordinarily need valid prescribed evidence, commonly a correctly completed sworn affidavit, confirming its annual revenue and ownership position.

Qualifying Small Enterprises

A Qualifying Small Enterprise, or QSE, generally has annual revenue above R10 million and not more than R50 million.

A 100% black-owned QSE generally qualifies as a Level 1 contributor. A QSE that is at least 51% black-owned generally qualifies as a Level 2 contributor.

The business should keep reliable records supporting its turnover, ownership and company structure. This includes current company-registration records, a shareholder register and financial information that matches the declaration being made.

Larger or Measured ICT Enterprises

An ICT enterprise with annual revenue above R50 million is generally measured under the ICT Sector Code scorecard.

An EME or QSE that does not qualify for ownership-based recognition may also need scorecard measurement. To achieve Level 1 through the ICT scorecard, a measured entity needs at least 120 points, including available bonus points, and must meet the applicable priority-element subminimums.

What Are the Priority Elements Under the ICT Sector Code?

The ICT Sector Code identifies three priority elements:

  • Ownership

  • Skills Development

  • Enterprise and Supplier Development

Measured entities must meet the applicable subminimum requirements for these elements. If they do not, their B-BBEE status may be discounted by one level.

This is why a business should not make ownership changes or commit money to B-BBEE initiatives without getting appropriately qualified legal, financial or verification advice.

What Evidence Does a Level 1 ICT Enterprise Need?

The required evidence depends on how the business qualifies.

A 100% black-owned EME or QSE should generally maintain:

  • A valid sworn affidavit or other prescribed evidence

  • CIPC registration documents

  • An accurate shareholder register

  • Records supporting beneficial ownership

  • Current financial statements or management accounts

  • Evidence supporting annual revenue

  • Documents relating to ownership changes

  • Tax and banking records that align with the registered business

A business undergoing full scorecard measurement will need more extensive evidence. This may include payroll data, training records, procurement information, and evidence of enterprise, supplier and socio-economic development contributions.

An affidavit should never contain ownership or revenue information that cannot be substantiated. The ICT Sector Code places emphasis on the substance of B-BBEE compliance, not merely its legal form.

Is a B-BBEE Certificate Always Required?

No. Not every enterprise requires a formal B-BBEE verification certificate.

Eligible EMEs and QSEs can generally use the prescribed ownership and turnover evidence, which commonly includes a sworn affidavit. Enterprises that must be measured against the scorecard should use an appropriately accredited B-BBEE verification agency.

Corporate procurement teams may still ask for supporting documents during vendor onboarding or due diligence.

How Can Level 1 Status Support Market Access?

Level 1 status can strengthen an ICT business’s position when applying for supplier databases, enterprise and supplier development programmes, subcontracting opportunities or private-sector procurement processes.

It may be relevant to opportunities involving:

  • Corporate supplier databases

  • ICT enterprise and supplier development programmes

  • Technology implementation partnerships

  • Managed services agreements

  • Digital-transformation projects

  • Subcontracting arrangements

  • Public and private procurement processes

But supplier readiness requires more than a strong B-BBEE level. Businesses also need a clear value proposition, suitable policies, reliable service delivery, financial controls and the capacity to fulfil work.

Innovator Trust supports ICT entrepreneurs and SMMEs through practical business-development support, mentorship and growth-focused initiatives.

Practical Steps for Emerging ICT Enterprises

  1. Confirm the correct sector code

Establish whether your principal business activities fall within the ICT Sector Code. Not every technology-enabled company is automatically measured under it.

 

  1. Calculate annual revenue accurately

Use reliable financial information to identify whether the business is an EME, QSE or larger enterprise. The thresholds apply to annual revenue, not profit.

 

  1. Verify the ownership structure

Check that shareholder agreements, shareholder registers, CIPC records and beneficial-ownership records are accurate and consistent.

 

  1. Prepare the correct evidence

Use the prescribed affidavit or verification route for your business category. Avoid downloading templates from unverified sources or relying on outdated guidance.

 

  1. Build broader supplier readiness

Prepare a company profile, service catalogue, capability statement, customer references and relevant compliance documents. These materials help procurement teams understand what your business can deliver.

 

  1. Review your status annually

B-BBEE evidence is time-sensitive. Review turnover, ownership and supporting documentation before your existing affidavit or certificate expires.

 

Innovator Trust programmes can help emerging businesses strengthen their commercial capability, networks and readiness for growth.

Common B-BBEE Mistakes ICT SMMEs Should Avoid

Common mistakes include:

  • Treating Level 1 status as permanent

  • Using the wrong sector code

  • Confusing annual revenue with profit

  • Submitting an affidavit with outdated ownership information

  • Assuming a strong B-BBEE level guarantees work

  • Failing to record changes in shareholding

  • Using documents from an unauthorised provider

  • Focusing on compliance while overlooking delivery capacity

  • Entering ownership arrangements that do not reflect genuine participation, control or economic benefit

B-BBEE fronting is prohibited. Ownership must be genuine, properly documented and supported by the rights, participation and economic benefits attached to the shares.

Businesses can also explore Innovator Trust success stories to see how ICT-focused entrepreneurs have developed and grown.

 

 

FAQs

What are the B-BBEE Level 1 requirements for ICT enterprises?

A 100% black-owned ICT EME or QSE generally qualifies for Level 1 recognition under the ICT Sector Code. Other measured ICT enterprises need at least 120 points on the applicable scorecard and must meet the relevant priority-element subminimums.

What is the turnover threshold for an ICT EME?

An EME generally has annual revenue of R10 million or less. A QSE generally has annual revenue above R10 million and not more than R50 million.

Does a 51% black-owned ICT company qualify for Level 1?

Not automatically. A qualifying EME or QSE that is at least 51% but less than 100% black-owned generally receives Level 2 recognition. Level 1 ownership-based recognition generally requires 100% black ownership.

Does a Level 1 ICT SMME need a B-BBEE certificate?

A qualifying EME or QSE can generally use prescribed evidence such as a valid sworn affidavit. Businesses measured against the scorecard require verification by an appropriately accredited agency.

How long is B-BBEE evidence valid?

B-BBEE certificates are generally valid for 12 months from their issue date. Affidavits are also commonly renewed every 12 months, provided the information remains accurate.

Does Level 1 status guarantee corporate contracts?

No. Level 1 status can improve a supplier’s procurement recognition, but customers will still assess price, quality, capability, risk, compliance and delivery capacity.



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