New law to boost BEE business

Johannesburg - The dire fact that R500 billion worth of state procurement has failed to change South Africa’s skewed ownership and control of the economy means that the law governing this would be repealed, President Jacob Zuma announced on Tuesday.

“The buying power of the state is a powerful economic transformation tool. It can and must be used to advance black economic empowerment,” Zuma said at a Black Business Council dinner at the Hilton Hotel in Sandton.

“Political freedom has been achieved, but economic freedom remains a work in progress,” Zuma said.

“In the past five years, as part of the advancing broad-based black economic empowerment (BBBEE) procurement, government amended the Preferential Procurement Policy Framework Act (PPPFA) regulations to provide for BBBEE preference points,” he added.

The PPPFA was enacted in 2000 and the regulations promulgated in 2001. The regulations were amended in 2011 and new regulations came into effect in December 2011.

“We thought this would work and make an impact. However, you pointed out that it does not work.

“We agree that the preference points system prescribed in the PPPFA is rigid and is not responsive to government objectives,” Zuma said.

“It is the intention of government to ultimately repeal the PPPFA and its associated regulations, and introduce a more flexible preferential procurement framework that is responsive to government objectives.

“The Preferential Procurement Policy Framework Act will be repealed by the Public Procurement Act.

“The Public Procurement Bill is now going through the different government stakeholder engagement processes before it is tabled in Parliament. This is targeted for early 2017,” Zuma said.

READ: MTN unveils new R10bn BEE scheme

Turning to fronting, Zuma said that the newly established BBBEE Commission had to date received 118 complaints, specifically pertaining to fronting.

Tebogo Makube, industrial procurement director at the department of trade and industry, said on Monday at the Black Business Council’s annual conference that government purchasing power through public procurement contributes between 15% and 25% to GDP.

At the conference, Malebo Mabitje-Thompson, a department of trade and industry official, said that R1.4 billion had been invested in 22 black industrialist projects in various sectors, supporting more than 1 000 direct jobs.

A total of 246 applications had been received for black industrialist investment, she said.