The ANC and its deployees in government have found themselves on the back foot after a backlash over government’s plans to comply with the Constitutional Court ruling on regulations governing preferential procurement.
In the process the commitment to BEE by the government — and by extension the ANC — has been called into question.
In a recent judgment the apex court ruled that the 2017 procurement regulations are inconsistent with the constitution, and gave the finance minister a year to amend them. The minister’s powers were deemed excessive. In an attempt to comply with the ruling the National Treasury diluted them by delegating them to organs of state and state-owned enterprises, a move widely criticised by BEE advocates as backtracking on black empowerment.
This, coming ahead of the ANC elective conference and after a new Eskom board member has been questioning BEE, was a perfect weapon with which to club President Cyril Ramaphosa’s administration, widely seen as having sold out on the “radical” part of economic transformation.
Attempts by the Treasury to assuage these concerns failed, merely fuelling regulatory uncertainty in this important area of public policy. In a clarificatory statement on November 8, the Treasury said: “While we are finalising the Public Procurement Bill, which will empower the minister of finance to set preferential procurement, the 2022 regulations repeal the 2017 regulations and take effect on January 16 2023. In essence the 2022 regulations are a place holder while we finalise the bill.”
The subject also attracted the attention of delegates at the ANC’s national executive committee (NEC) meeting last weekend, the last before the party’s national conference next month.
In its closing statement the party reiterated its commitment to BEE, saying: “The NEC noted the work by the National Treasury in responding to the Constitutional Court deadline on preferential procurement in the public sector. The ANC affirms its position that broad-based BEE remains one of our key policy instruments, and urged our deployees to ensure that this principle is sustained.”
Sheer bureaucracy
The matter is clearly not going away. The president weighed in on it in his weekly newsletter from the Union Buildings, and it will most likely form part of what promises to be divisive discourse at the party’s conference next month. Though the debate has been dominated by emotion, as with the other perennially contentious issue — land redistribution — these are real issues that need to be tackled head-on if SA is to avoid a social explosion.
Many programmes of government to advance the cause of BEE have stalled or been hobbled by either a lack of resources or sheer bureaucracy. A case in point is the well-intentioned black industrialist programme, which is not achieving results.
The fragmented approach to BEE by government entities and departments must be fixed. BEE is seen as the province of Ebrahim Patel’s trade, industry & competition department, not a programme of government as a whole. This is the same myopic approach that informed the establishment of the small business development department as a stand-alone department instead of insisting that every government department promote small business.
There is a genuine problem of resources. For example, the National Empowerment Fund, the one development finance institution tasked with supporting BEE, is underfunded and its future is a subject of much speculation. The same goes for the BEE commission, which is supposed to jail those abusing the policy. Only the Competition Commission has set itself apart from the economic regulatory ecosystem of SA.
General fatigue
Successive ANC governments have been obsessed with reorganising institutions, despite having minimal capacity. The current transfer of small business support development finance institutions from the department of trade, industry & competition to small business development should be a cause for concern for small business owners, who desperately need financial and nonfinancial support in a tough economy.
There is general fatigue and lack of commitment to BEE. It is seen as an idea whose time has come and gone. Increasingly there is reluctance to support a new wave of BEE transactions. The last decade has seen fewer BEE deals than the first and second waves of BEE. There are several reasons for this. The economy is underperforming , and most recently the hawkish stance adopted by the Reserve Bank to slay the inflation monster is making debt-funded transactions unattractive.
Large companies are standing by as they await more certainty in the political and policy environments. In this instance two issues are at play: next month’s ANC conference (especially who will lead the ANC and the temptation to engage in policy adventurism to win votes in 2024); and the ongoing debilitating intra-ANC factional squabbling, which is paralysing government and decision-making.
There have also been missed opportunities, primarily due to government’s lethargy in driving BEE. Three instances come to mind: little thought was given to BEE in allocating the much delayed high-demand spectrum; BEE hasn’t featured prominently in the solutions to the energy emergency; and little, if anything, is said about BEE in monetising the cannabis opportunity.
In his Monday newsletter Ramaphosa promised a “new vision for BEE that builds on successes, learns from shortcomings, and ... responds to local and global economic realities”. The ANC has a poor track record of recalibrating. Change, if it occurs, is far too slow.
• Dludlu, a former Sowetan editor, is CEO of the Small Business Institute.
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