Some criticism of the Broad-Based Economic Empowerment Bill would be accommodated, but the law’s “basic architecture” would remain intact, a senior government official said last week.
Lionel October, Deputy Director General in the Department of Trade and Industry (DTI), was reacting to the heavy fire attracted by the Bill in Parliament last week from the Congress of South African Trade Unions (Cosatu), the South African Chamber of Business (Sacob) and the black business lobby, including the Black Business Council (BBC).
Cosatu’s Elroy Paulus complained to Parliament’s trade and industry committee that the current Bill would serve a small, black business elite. Paulus called for a revamping of its procurement criteria to give greater weight to “employment creation, observance of labour standards and support for co-operatives”.
At present the core elements of the procurement “scorecard” are 60% for black ownership and control, plus support for black enterprise, 30% for human resources development and employment equity and 10% for sector-determined initiatives.
Cosatu said the government, elected largely by the poor, held in trust stra-tegic economic assets for the delivery of affordable services to the majority.
In response October said the Bill’s broad-based character would be highlighted by “codes of good practice” issued by his department, describing these as “somewhere between guidelines and regulations”.
The department would also issue guidelines to all state departments responsible for issuing licences to business.
On compliance with the legislation — the BBC argued for tougher enforcement mechanisms, including reporting obligations — October said the department wanted to strike a balance between “having some punch” and over-regulating.
It is understood that, as with the Employment Equity Act, the government has no plans to criminalise non-observance. Instead, regulatory pressure will be exerted through such instruments as procurement and licensing.
A key concern of the black business lobby and MPs at last week’s parliamentary hearings was that the Bill did not cover the financing of black empowerment.
October said amendments might embody “broad principles” on financing. However, the detail would be incorporated in the financial services empowerment charter that Minister of Trade and Industry Alec Erwin will gazette.
Responding to Sacob’s complaint that small, white businesses were suffering as their larger customers anticipated the law and applied its empowerment criteria, October said the government did not expect the scorecard to be rigidly applied.
However, it was “inevitable” that some small, white firms would be dislodged as major companies shifted their supply chains. Sacob should help manage this, he said.