​State owned entities must implement B-BBEE

“This is part of broadening ... and deconcentrating the economy and brings ... black industrialists ... into the supply chain” — Rob Davies

“This is part of broadening ... and deconcentrating the economy and brings ... black industrialists ... into the supply chain” — Rob Davies

Minister of Trade and Industry Rob Davies called on state-owned entities to play a more robust role in implementing the Broad-Based Black Economic Empowerment (B-BBEE) Act.

“A public entity is not exempt to implement the act, everyone in the public space must implement the BBBEE legislation”, he said speaking at the broad-based black economic commission’s annual conference on Thursday.

Previously in the 2003 version of the Act, it said that all organs of state must implement the act, as far as possible. But the new amendments make it mandatory for all organs of state to implement the new act, he added.

This comes on the back of a compliance report submitted by the Broad-based Black Economic commission, revealed that out of 195 compliance reports submitted to the commission, only nine came from public entities and both government departments and sector education and training authorities (Setas) failed to submit.

These compliance reports assess the levels at which empowerment legislation is being implemented in government. The department of trade and industry (dti) as result is in discussion with various stakeholder to have public entities’ empowerment participation evaluated.

Minister Davies said that the state should play a more prudent role in changing the patterns of ownership in South Africa, and this includes ensuring that the empowerment legislation and regulation is used as a tool for black economic empowerment and radical economic transformation.

“We need to understand that in order for us to achieve what is intended by the act, government, private sector and civil society must play their role,” said Zodwa Ntuli B-BBEE Commissioner.

Adding to Davies’ lament on the increase in cases of fronting, Ntuli said that government is also inconsistent in implementing the empowerment act in that it continues award tender contracts to companies that are not in fact transformed.

“A number of manufacturers that are not transformed enter into a partnership with a black company and gets them to bid for a government tender but they do not manufacture or package the product and all the money goes for the other company…that black person has been used”, said Ntuli giving one of many examples of how fronting can work.

“Some of the cases that we saw in state capture and corruption had involved fronting and the commission has been looking at that and we now need to move from investigations to actual consequences,” she said.

READ MORE: DA to come after Gupta-linked companies with fraudulent BBBEE certificates

Davies told the Mail & Guardian recent amendments to the B-BBEE Act have classified fronting as an offence and tasked the commission with monitoring the instance of fronting. Consequences for fronting include penalties, fines and exclusion in participating in government tenders.

He also said that one of the measures the department of trade and industry and the commission identified in order to address fronting, was through supplier development where large companies contract to small companies for a service.

“This is part of broadening ... and deconcentrating the economy and brings… black industrialists ... into the supply chain”.

READ MORE: BEE commission to probe Gupta-linked firms for allegedly faking certificates

The commission, as the implementing agency of the act, has powers to evaluate transactions and the performance of public entities.

Government is currently assessing how empowerment incentives can ensure that beneficiaries contribute to the productive capability of the country, add to employment and help drive broad-based economic empowerment.

Mlungisi Manci, a member of the president’s broad-based black economic empowerment advisory council, said that government should seek to leverage on the original intentions of the act.

The act was aimed at empowering black people, workers, women, youth, people with disabilities and those living in rural areas.

He acknowledged that there has been notable progress in the empowerment legislation,as well as recent changes to the Preferential Procurement Bill by the national treasury, there “still were weaknesses in the system”, he said.

​Thulebona Mhlanga

​Thulebona Mhlanga

Thulebona Mhlanga is financial trainee journalist  at the Mail & Guardian, currently enrolled for a masters in politics at the University of Johannesburg. In addition to her fervent interest in business writing, reading and educating others around issues of financial literacy, she volunteers her time to projects assisting women and promoting social justice.  Read more from ​Thulebona Mhlanga

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