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Highlights from the B-BBEE Commission Annual Conference

14 MARCH 2018 - 22:54 / Reabetsoe Nengwenani - BEE Chamber: Technical Specialist

Improving State Procurement for Real Empowerment

The B-BBBEE Commission held its annual conference at the Midrand Gallagher Estate on the 15th March 2018. This year’s theme for the conference centered around the state of public enterprise’s procurement and whether this procurement contributed to the empowerment of Black people.

The commission acknowledged that the B-BBEE Act and the Codes of Good of Practice provide a platform to promote the procurement from Black owned enterprises by private corporates and organs of state.

Organs of state

However Ms. Busi Ngwenya, Acting Executive Manager Compliance Division at the B-BBEE Commission, announced that organs of state lacked the understanding of their responsibility to adhere to the Act and to ensure that all due diligence is maintained and adhered to ensure compliance to the Act.

This was evident in the 8 out 195 B-BBEE compliance reports received by the Commission from the various Organs of state only in 2017. This lead the Commission to enquire if Organs of State really drive transformation or has it become a compliance requirement for only private corporates operating in South Africa?

In response to the Commission the panel discussion provided the following the insights:

  • Dr. Rob Davies clarified that all Organs of State must comply and implement the requirements set in the B-BBEE Codes, however he noted that the reason for the slow compliance by the Organs of State was the debate on whether Organs of State are required to use independent verification agencies? He urged that this needs to be urgently resolved by the relevant stakeholders.

  • The B-BBEE Act was amended in 2013 mainly because Government wanted to clearly define the Fronting practices and the penalties applicable to those found guilty of Fronting. This too was also enforceable to any Organ of State if found guilty of Fronting. Dr. Rob Davies urged the BEE Commission to tighten up its policing on Fronting practices that are found to be circumventing the Act and Codes of Good Practice by the Organs of State and private corporates, as these practices hinder Government’s objectives on promoting productive black economic empowerment.

  • It was also urged that verification agencies should see themselves as enablers of real empowerment, where there is no longer the accepting of tokenism and fraudulent actions.

Black-owned enterprises

As much as the B-BBEE Act and the Codes of Good Practice exist to meet Government’s transformation objectives for the country, has government created enabling environment for facilitating real opportunities for black-owned enterprises?

  • The B-BBEE advisory council noted the following initiatives where required to promote the above objectives:

  • There is need for South Africa to move develop a 4th industrial revolution that would drive economic growth and most importantly B-BBEE objectives need to be at the forefront of that revolution.

  • There is a need for equity finance specifically to enable black owned start ups to obtain the necessary capital it requires to flourish.

  • Government has also provided various incentives such as the Black Industrialist Programme that aim to encourage investment in South Africa by the local companies and multinationals, this would also encourage the procurement from black owned enterprises and ultimately contribute towards job creation and a productive economy.

  • Mr Willie Mathebula, Acting Chief Procurement Officer at the National Treasury, acknowledged that the Preferential Procurement Policy Framework Act 2017 (PPPFA) needed to be aligned to the B-BBEE Act and as a result the PPPFA would be repealed in its entirety and a new public procurement bill will presented in due course.

  • The purpose of this repeal by Government is to create an enabling environment for the promotion of procurement from Black owned enterprises. This would be achieved by introducing pre-qualification criteria’s for procuring from Black owned entities only. There would also be a requirement to address anti-competitive behaviour that currently exists in the procurement field and the removal of this so-called ‘ever-green’ contracts that create barriers to entry for black suppliers.

The conference highlighted the importance of Government to create an enabling environment for the promotion of procurement from Black owned enterprises. However both the organs of state and private corporations have the responsibility to contribute towards transforming the country and ultimately building a productive economy.

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This article was written by Reabetsoe Nengwenani - BEE Chamber: Technical Specialist

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