BEE not under threat, Godongwana says

• New procurement rules empower state organs to set own BEE prequalifying criteria

Finance minister Enoch Godongwana has mounted a vigorous defence of the new procurement rules that empower state organs to set their own BEE prequalifying criteria, saying on Tuesday they are a stop-gap measure until the Public Procurement Bill is finalised.

Last week, Godongwana published amendments to the Preferential Procurement Regulations Act of 2017, the standout feature of which is to devolve powers to state organs to determine their own procurement procedures from his department. This triggered criticism from Cosatu and business lobby the Black Business Council.

Both organisations called for the withdrawal of the new regulations, saying they threaten to undermine efforts to give black people a bigger slice of the white-dominated economy and are at odds with the country’s industrial policy plan, the cornerstone of which is to revive distressed local sectors such as steel and cement.

Godongwana, whose department oversees R1-trillion in yearly procurement, disagreed with the assessment. “There is some suggestion that we are throwing away BEE ... There is no substance in that speculation,” he told reporters at a news conference in Pretoria.

“[What] the regulations are trying to achieve is to comply with the court, which states that procurement regulations belong to the organ of state,” he said. He was referring to the Constitutional Court ruling in February that confirmed that then finance minister Pravin Gordhan had overstepped his authority when he introduced prequalification criteria in the public tendering process in 2017.

The regulations were widely used by Transnet, SAA and Eskom at the height of the state capture project, opening the door for politically connected people to score lucrative tenders and trashing the commercial rationale for companies such as Anglo American to be suppliers of coal to Eskom.

In an 800-page investigation report into widespread corruption under the state capture project, chief justice Raymond

Zondo outlined how plans to use procurement as a policy tool to advance SA’s transformation goals were “grossly manipulated and abused to advance the interests of a few individuals”.

In a separate statement, the Treasury reiterated its commitment to SA’s transformation policy goals as enshrined in the constitution. “In fact, organs of state must comply with the BBBEE Act when developing their procurement policies,” the Treasury said.

When the Public Procurement Bill is enacted, “it will bring back the powers that the minister [of finance] has to regulate procurement,” acting directorgeneral Ismail Momoniat added.

“It’s my prayer the [bill] will be tabled in parliament in March next year and enacted by September,” he said.

POWERLESS

The Black Business Council said the new regulations open the door for state organs to ignore SA’s transformation agenda.

Godongwana was “passing the buck by leaving everything to the organs of state to determine their own transformation targets with the new procurement regulations as most state organs will choose to do nothing on economic transformation and localisation,” said council

CEO Kganki Matabane.

His comments were largely echoed by Cosatu, whose parliamentary co-ordinator, Matthew Parks, said the new rules would render the government powerless when these state organs simply chose to import goods that can be locally produced or refuse to support emerging entrepreneurs.

Sakeliga, a business lobby group that successfully challenged the validity of the Treasury’s preferential procurement regulations, said more than 700 state-owned entities and government departments had applied for exemption from preferential procurement rules since the apex court confirmed the illegality of the 2017 regulations.

“The exemption requests that piled up since then from organs of state, and the administrative burden brought upon the Treasury, seems to have compelled the minister of finance to promulgate his new regulations last week without any BEE or local content requirements,” Sakeliga said in a statement.

IN A SEPARATE STATEMENT, THE TREASURY REITERATED ITS COMMITMENT TO SA’S TRANSFORMATION POLICY GOALS