SA cannot afford to back down on B-BBEE project and its plans
Court ruling against transformation ideals to uplift black business must be challenged
On November 2 2020, advocates and proponents of broad-based black economic empowerment (B-BBEE) and economic transformation were dealt a near-fatal blow by the Supreme Court of Appeal (SCA), which ruled in favour of critics of B-BBEE and transformation.
By way of background, Afribusiness, supported by SA Property Owners’ Association (Sapoa), filed an appeal at the SCA after losing at the Pretoria High Court. At the core of the matter was the challenge by Afribusiness to have 2017 preferential procurement regulations set aside for allegedly being inconsistent with the 2000 Preferential Procurement Policy Framework Act.
Those regulations, which have now been set aside, are in support of the spirit and letter of the Act: namely, to shore up B-BBEE and economic transformation by using state procurement as a lever. Among others, the regulations require tenderers in state procurement to be empowered as a prequalification for government contracts an aspiration of all long-suffering black entrepreneurs and advocates of B-BBEE.
While the North Gauteng High Court in Pretoria saw logic in the regulations, the SCA differed, declaring the regulations as invalid and inconsistent with the Act – a victory for the antitransformation brigade.
In effect, the transformation project, which has been under attack for years, has been set back a few more years.
In its simplest form, this means that an entity’s BBBEE level contribution has been made irrelevant for state procurement. Worse, it
This is good and bad at the same time. It’s good as it allows government, through the National Treasury, to appeal it (which it must do with the support of all the progressive forces), but it is bad as it creates unhelpful uncertainty in the business environment.
The blow wouldn’t be as bad as it is had B-BBEE and transformation been a runaway success over the past 15 years. Far from it – large companies have found cynical ways of getting round the Act as well as Employment Equity Act. Also, most B-BBEE transactions have either classifies a B-BBEE requirement as being a breach of fairness in procurement. This is despite the fact that the Constitution of the Republic recognises the role of discrimination – a preference for B-BBEE compliant entities – as a means of addressing past injustice.
The ruling of invalidity has been suspended for a year. expired or are under water.
The other implication of this SCA ruling is to legitimise the status quo where players in the SA economy find it acceptable to deprioritise B-BBEE and transformation. If the SCA ruling is allowed to stand, it also means that we should all accept the inevitable: that is, the multibillion rand infrastructure investment plan – the centrepiece of government’s Economic
Recovery and Reconstruction Plan (ERRP)
will be dominated by untransformed large companies. This cannot be allowed.
On a broader front, there are several observations to be gleaned from this sorry saga. First, over time, the transformation forces have demobilised, allowing space for the anti-transformation brigade to regroup and mobilise to undermine and slow the pace of transformation. For example, it was only government via the Treasury that fought the case on the side of the transformation. This is a fight for everyone who cares about transformation.
Second, this is not the time to mourn and moan. This is the time to mobilise and defend the project.
Third, the economic emergency is a magnificent opportunity to advance transformation and B-BBEE instead of entrenching the uneven playing field. We have heard calls being made during the coronavirus pandemic that this is no time to solve long-standing social ills. This is the time to resolve them and not defer them.
And finally, unfortunately, the fight for economic justice
– and transformation in the workplace – is not cost-free. It requires significant resources. This is a time for true believers to put their money where their money is.