Cape Town - Amid the backlash over the government’s policy tweak which saw the rescission of Broad-Based Black Economic Empowerment (B-BBEE) as a requirement for businesses looking to trade with state-owned entities, President Cyril Ramaphosa has denied that the government is abandoning affirmative action.
Finance Minister Enoch Godongwana recently promulgated new regulations that repealed the requirement for private businesses to hold B-BBEE points in order to do business with state companies.
A 2017 Constitutional Court order declared the previous regulations illegal and ordered the finance minister to replace the rules in 12 months. A public participation process followed.
The SA Youth Economic Council (Sayec) and other organisations criticised the move, while mostly white businesses welcomed the changes.
Citing the Bill of Rights, Ramaphosa wrote in his weekly newsletter that a transformed economy had been the government’s focus since 1994, adding that economic transformation could not be left to the markets and would need interventions to achieve a transformed economy.
“(The Bill of Rights) says that when public bodies contract for goods and services, they must do so in a manner that is fair, equitable, transparent, competitive and cost-effective,” Ramaphosa said.
“It also says the State must implement a preferential procurement policy that advances people who have been disadvantaged by unfair discrimination. In South Africa, this refers to black people, women and persons with disabilities.
“It is in this context that the new Preferential Procurement Regulations published by the National Treasury last week need to be understood.”
He said the government was still “wholly committed to transformation and empowerment as envisioned in the Constitution”.
He said detractors missed the point of the new regulations, with some commentary even claiming government is abandoning B-BBEE.
“This claim is far from the truth. The new regulations fulfil an order of Concourt last year declaring that the preferential procurement regulations from 2017 are illegal, and requiring that the minister of finance replace them within 12 months.”
He said the tweaked regulations now comply with Section 217 of the Constitution, which allows SOEs to develop their own preferential procurement policies for contractors.
He said the new regulations had no implications for the B-BBEE Act and were an interim measure, while Treasury prepared the Public Procurement Bill, which was expected to “maximise both value-for-money and preferential procurement objectives to enable the delivery of services and transformation”.
“This B-BBEE Act remains in force as one of the most transformative pieces of legislation to come out of democratic South Africa,” Ramaphosa said.
“What has changed is that organs of state will be able to set and apply specific ‘goals’ when evaluating a tender under a preferential procurement policy.”
He said the new procurement policy framework “is not a victory for sound business practices” as one group described it.
“What is unsound, unsustainable and, above all, immoral, is an economy that benefits the few at the expense of the many,” Ramaphosa said.
Sayec president Kanakana Nudzanani said: “We acknowledge the response, but his government must not only adopt these policies to score political points and there must be a deliberate attempt from their side to incorporate black businesses in order for the economy to (reflect) the demographics of SA.”
soyiso.maliti@inl.co.za