The department of trade, industry & competition and the broad-based BEE (BBBEE) Commission are planning amendments to legislation to give the commission greater enforcement powers because of poor compliance.
The act lays down the generic code requirements and scorecard for ownership, management control, supplier and enterprise development, skills development and socioeconomic development. Economic sectors have promulgated their specific sectoral codes implementation of which are monitored by sector councils.
A company’s BBBEE status in terms of the scorecard is used in calculating preference points for economic opportunities in the public and private sectors.
The legislation is meant to redress white dominance of the economy and increase black participation. Members of parliament’s trade and industry committee on Tuesday agreed that economic redress was necessary but it had not been achieved.
In a briefing to the committee, BBBEE commissioner Tshediso Matona bemoaned the commission’s lack of enforcement powers. The only measure at the commission’s disposal is to rely on the courts, but Matona said none of the commission’s more than 50 referrals had appeared in court. A dedicated BBBEE tribunal and administrative sanctions for the failure submit reports on BBBEE compliance was required, he said, which would require a review of the legislation.
Under the act at present penalties can only be imposed for fronting, misrepresentation of BBBEE status, providing false information to verification agencies and misrepresentation by verification agencies. These penalties can only be enforced through a court process.
Matona gave 2022 figures derived from submitted compliance reports which showed overall black ownership in the economy at 33.9% and average black ownership in JSE-listed entities at 29.7%. With regard to black participation in management control this stood at 58% in JSE-listed companies, 69% in organs of state and SOEs and 62% overall.
Committee chair Mzwandile Masina said the committee was not satisfied with the status quo. BBBEE legislation needed to be reformed and Matona and the department’s acting deputy director-general, Susan Mangole, undertook to provide the committee with plans for the future within a month.
Mangole said most sector councils were either not up to date in their submission of compliance reports or had not done so at all. Matona also said a major challenge was the unavailability of implementation reports.
Mangole complained about the “ticking boxes” approach to the implementation of BBBEE, saying monitoring and compliance mechanisms were required, including strengthening the commission and the sector charter councils and to strengthen the verification industry.
Wayne Thring of the ACDP and Nobuntu Hlazo Webster, the deputy leader of Bosa, criticised BBBEE for having benefited the politically well connected elite rather than facilitating the economic inclusion of the majority.
Matona agreed that had been the case initially but said the situation had changed with the broadening of the scope of the act to include broad-based empowerment.
MK MPs Siyabonga Gama and Edward Ntshingila said transformation in the economy had been slow if not non-existent and BBBEE needed a rethink. The economy was still in the hands of the white minority.
Ntshingila said the transformation programme could not be perceived as successful when basic compliance levels were deteriorating and there were no consequences. Superficial compliance with a scorecard did not mean fundamental transformation, he said.
DA spokesperson Toby Chance said tighter compliance was needed because the scorecard measured the wrong factors and should instead measure new business formation, growth, job creation, innovation, competitiveness and exports, all of which were indicators of a thriving economy.
Applying race as the prime criterion of disadvantage enabled elite capture by a small minority of black people or companies, Chance added.
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