New law proposes scrapping BEE in South Africa – and replacing it with a new model

 ·16 Mar 2022

The opposition Democratic Alliance says it will table the Preferential Procurement Policy Framework Amendment Act, or ‘Social Impact Bill’, as a private members’ bill for public comment.

The bill proposes scrapping the current Broad-Based Black Economic Empowerment (BBBEE) Act and making several key amendments to the Preferential Procurement Policy Framework Act (PPPFA).

“The Social Impact Bill will amend sections 2(1)(b)(i) and (ii), as well as section (2)(1)(d)(i) of the PPPFA and introduce criteria based on sustainable development goals (SDGs),” it said.

This SDG-based model will better serve social and economic development for the most vulnerable communities in the country, the party said in a statement on Wednesday (16 March).

“For many years, the rich and politically connected have abused the PPPFA to enrich themselves. This was enabled by an ANC government that only focused on cadres and comrades, and paid little mind to founding principles of the Act which was to root out inequality and create a better future for all South Africans.”

The DA said its proposed SDG model has several ‘benefits’ over the current BBBEE model, including:

  • It will leverage the significant government procurement expenditure of almost a trillion rand, approximately 22% of our GDP, to incentivise a private company’s contributions towards achieving SDGs;
  • The most important factor for government procurement will remain price and functionality as capability to execute and lowest cost will benefit those reliant on government services the most, and in turn, lead to the greatest upliftment of society as a whole;
  • Root causes of inequality will be directly addressed without relying on ineffective trickle-down redress;
  • The SDG model will target the vulnerable and disadvantaged directly, the majority of whom have been classified as black under Apartheid, and make it more difficult for those who do not require benefits to accrue them. This will also stem rampant corruption and patronage;
  • The SDG model will provide for 17 different goals, which companies focus on based on what they will have the most sectoral impact on;
  • The SDG model is globally recognized, and is increasingly international best practice, whereas existing legislation is highly localised and not internationally accepted;
  • The SDG model may encourage investment in companies with strong SDG awareness and commitments. The PPPFA tends to discourage local and international investment.

“The DA encourages the public and all interested parties to submit their comments on our proposed Social Impact Bill once our Notice of Intention has been gazetted. These comments will be evaluated and the Bill will then be submitted to Parliament,” said the DA’s Dean Macpherson.

“The current legislation needs a serious and urgent overhaul if South Africa is to weather its current economic decimation. True equality can only be achieved when individuals have a wealth of opportunities to better their lives.”

Read: Updated Covid rules for businesses and workers in South Africa – including mandatory vaccinations

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