Ramaphosa stands firm on BEE and transformation laws in South Africa

South Africa’s need for economic transformation is still prevalent, and broad-based black economic empowerment is here to stay, says President Cyril Ramaphosa.

Concern over the preservation of transformative business practices has risen to the surface after recently published laws on preferential procurement for organs of state came under scrutiny by government and black businesses alike.

Writing in his weekly letter to the public, Ramaphosa set out to clarify the situation, noting that empowerment in public procurement is, in fact, enshrined in the Constitution as it pertains to the promotion of those who have been historically disadvantaged by unfair discrimination, such as black people, women and persons with disabilities.

“Government remains wholly committed to transformation and empowerment as envisioned in the Constitution,” said Ramaphosa.

He said that under the National Treasury’s new Preferential Procurement Regulations, when public bodies contract for goods and services, they must do so in a manner that is fair, equitable, transparent, competitive and cost-effective.

The president said that people had mischaracterized the purpose and effect of the new regulations.

The new regulations fulfil an order of the Constitutional Court last year declaring that the preferential procurement regulations from 2017 are illegal and requiring that the Minister of Finance replace them within 12 months, said Ramaphosa.

The crux of the judgment is the scope of ministerial powers to make preferential procurement regulations, said the president.

“These regulations now fully comply with Section 217 of the Constitution in that they empower organs of state to develop and implement preferential procurement policies when contracting for goods and services.”

He went on to add that these new regulations are an interim measure pending the enactment of the Public Procurement Bill.

The Public Procurement Bill is set to be submitted to Cabinet and Parliament soon. This bill intends to increase the value-for-money and preferential procurement objectives of the legislation, said Ramaphosa.

The new regulations have no effect on the Broad-Based Black Economic Empowerment Act, as all organs of state must fully comply with this Act when developing their procurement policies. This Act remains in force as one of the most transformative pieces of legislation to come out of democratic South Africa.

Empowerment criteria will still be applied in government contracting, and organs of state must comply with the BBBEE Act when developing their procurement policies, said Ramaphosa.

“What has changed is that organs of state will be able to set and apply specific ‘goals’ when evaluating a tender under a preferential procurement policy. There should be no mistake or misunderstanding: broad-based black economic empowerment is not under threat and is not being reconsidered.”

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