Major new court case around BEE and the coronavirus in South Africa
A Pretoria High Court ruling will likely have serious implications for the government’s coronavirus financial relief and the use of Black Economic Empowerment (BEE) as qualifying criteria.
The case, which was brought by the Democratic Alliance on Friday (19 June), is focused on the criteria that the government uses when coronavirus funds are distributed to certain designated targets.
The DA argued that BBBEE status or criteria such as race, gender and disability cannot be used as a basis for deciding who will be the recipients of distributions from government’s relief funds.
While the court dismissed parts of the DA’s application, it did highlight the ‘vague’ way that the government had formulated these BEE criteria.
“It is for the minister to make sure that the criteria to be employed for the disbursement of public funds are not left to a simple laundry list of hygiene and procedural characteristics buttressed by one vague statement that ‘priority would be given’ to women, the youth and the disabled,” the court said.
“Such a broad phrase without any guidance as to what weight is to be given to these criteria simply cannot pass muster in our constitutional democracy.
“The ostensible criteria fall foul of basic principles of the rule of law that such the requirement that the exercise of a public power must be certain, even, if as obviously is the case in these circumstances, discretion to allocate funds is permissible.”
Government was ordered to redraft its regulations to consider the role of race, gender, youth and disability in the formulation of the criteria. These updated criteria should then be used as a guide for the disbursement of funds.
While the judgement noted that that the declaration of unlawfulness will not impact funds which have already been distributed, the ruling will have an impact on how future coronavirus relief is distributed.
You can read the full ruling here.
BEE should be enhanced
While some critics have called on the government to revisit BEE laws as the country deals with the coronavirus pandemic, president Cyril Ramaphosa has said that South Africa’s Black Economic Empowerment regulations should instead be ‘enhanced’ as part of a push to build a more inclusive economy in the wake of the coronavirus crisis.
In a virtual parliament on Thursday (18 June), the president noted that while the coronavirus provides an opportunity to restructure parts of the economy, other measures need to remain and place and be strengthened – including BEE.
“The Broad-Based Black Economic Empowerment policy thrust of this government, if anything, needs to be enhanced,” he said.
“We need to ensure that (black South Africans) who were – under apartheid and colonial rule – excluded from playing an important role in the economy of their own country, be given their rightful position of playing an important role in the economy of their country. This is something that has to be done without any fail.”
Ramaphosa added that South African cannot continue to have an economy that excludes the majority of the people and believe that it can still grow the economy.
“Our economy is damaged because it is not utilising all of its resources. It’s like we have a vehicle with 12 cylinders but we have forever and a day been operating on four cylinders.”
Ramaphosa said that the only way this can be fixed is by bringing black South Africans into the mainstream of the economy.
“Because they were deliberately excluded through laws, through policies, conventions and practices, we’ve got to ensure that we implement the provisions of our Constitution.
“The Constitution says that in order for us to obtain equality we have got to have legislative measures that will enable us to do precisely that. So BEE is here to stay.”
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