IOL - BUSINESS REPORT / 31 MARCH 2022 - 16.55 / EUSTACE MASHIMBYE
In an environment fraught with controversy but which has until recently been regulated to make the process as fair and transparent as possible, public procurement has now descended into a free for all that is threatening gains that have previously been made in the protection of local businesses and local jobs.
A series of court rulings by the Supreme Court of Appeal and now the Constitutional Court in a case brought by Afribusiness NPC against National Treasury has left uncertainty and confusion for public entities who need to procure all manner of items for their operational needs.
Finance Minister Enoch Godongwana. File Image: IOL
The crux of the case lies with B-BBEE regulations and the permissibility of pre disqualification of any bidder for a government tender that does not fulfil the minimum 51 percent black ownership criteria. But ironically, black economic empowerment is not the only casualty in this mess. Localisation is too.
On 25 February, in response to a Concourt ruling which further muddied the legal waters, National Treasury issued a directive to all government agencies that any tender issued before 16 February 2022 should proceed in accordance with existing PPPFA and that any tender issued after that date should be held in abeyance, and no further tenders should be issued until clarification was received from the apex court on the validity - and suspension - of the terms of the PPPFA. Subsequently, on 3 March, National Treasury issued a further advisory that public sector procurement could resume, with entities free to use their own procurement criteria and advising them that they could apply to Treasury for exemption of any of the specific clauses of the current regulations, including from local content requirements. To add insult to injury, new regulations have been drafted and are currently out for public comment, and all local content provisions that used to be included in the PPPFA have been omitted, with the Treasury presumably trying to avoid another legal wrangle as a result of this.
As Proudly South African, we are asking how serious are we are as a country about job creation if some of us question a programme of public sector local procurement that is going to sustain jobs and create much needed new job opportunities. Who is benefiting from the current status quo if a possibility exists of a legal challenge against the inclusion in the regulations of mandatory local procurement? Certainly not the masses who are losing their jobs as a result of the influx of imported products supplied to the state.
How can National Treasury be serious about job creation when their clearly cautious proposal for new public sector procurement legislation flies in the face of the work of the dtic and of Master Plans that have been drafted in a number of sectors, with the inputs of government, organised labour and private sector stakeholders – all of which are designed to protect local jobs? Dumping local content as one of the selection criteria for awarding a tender will set the buy local movement back immeasurably. The Economic Recovery and Reconstruction Plan that has been drawn up in partnership with the government includes local procurement as one of the key drivers of that recovery and cannot be ignored.
This cautious stance by National Treasury is jeopardising the success of the plan by disregarding those 28 items that have been designated for compulsory local procurement and all other localisation considerations that apply. Already, Transnet, whose procurement record is one that many might question, has issued a memo stating that “Transnet will no longer be using preference during this period of exemption, that negotiations will continue to be applied for market-related pricing and any other opportunity where Transnet can achieve cost savings and that tenders will not be issued with local content requirements for designated sectors.” This is just one policy that has been widely shared. What about the rest of the entities?
This opens the door for cheap imports, which will ring the death knell for local businesses.
The injustice of the proposed amendments to the PPPFA (2000) cannot be permitted, and we urge all local businesses to take a stand and make objections to the proposals that are currently on the table. Buy local to create jobs! We all have to rally behind efforts aimed at turning the economy around and remember that for the masses in this country, economic emancipation still remains a dream.
Like Mama Letta Mbulu said in her hit song, we are “Not yet uhuru”, as millions of us are still not free from poverty.
Eustace Mashimbye is the CEO of Proudly South African
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER