The policy on broad-based BEE (BB-BEE) is set for a new footing, which will ban and criminalise fronting, and will encourage the emergence of a class of black industrialists, Trade and Industry Minister Rob Davies has said.
He was referring to the BEE Amendment Bill, which was passed by the National Assembly on June 20. It is now going to the National Council of Provinces for the mandates it has received.
Davies said the presidential BB-BEE council had a self-critical review of the empowerment policies, which gave rise to a new framework.
“If you present yourself as empowered or you present yourself to the public as such to benefit from procurement, then it is fronting,” he said.
Davies was speaking on Thursday on the sidelines of the first national summit on BB-BEE, 10 years after the publication of the BB-BEE strategy as a precursor to the BB-BEE Act.
He said the framework in the bill provided for improvement on BB-BEE across the board.
This would be spearheaded by revised codes of good practice, which would be gazetted on Friday, and the alignment of sector charters with the codes.
Davies said the revised codes also made provision for the establishment of a BB-BEE commission, with the powers to oversee and promote adherence to the act in the interest of the public, to prosecute fronting and to investigate complaints relating to BB-BEE.
Davies said fronting had always been an offence amounting to fraud under common law but was difficult to prosecute. Now the bill gave it a statutory definition.
Davies said a review of the codes found there was very little performance. The codes will be reduced from seven elements of empowerment to five. Enterprise development and procurement are to be elevated. This was to encourage relationships between black suppliers and big companies, said Davies.
He said under the old score board it was easy to earn points.
“Under the refined system, in companies that present a sub-minimum performance, a discount will be taken from the overall score,” he said.
Davies said: “We want a symbiotic relationship between big companies and empowerment suppliers.
“We can not allow low performance. We cannot allow you to simply tick the box, with the same results.”
He said black small enterprises would be exempted from having to obtain a verification certificate and would require only an affidavit.
Davies said the big issue was to align the BB-BEE codes with the department’s industrial policy. BB-BEE had too many black passive shareholders and not enough industrialists.
President Jacob Zuma told the summit South Africa was yet to see the growth of black industrialists despite government’s aggressive focus on boosting the manufacturing sector.
He said: “The day we see factories all over the country owned by black entrepreneurs taking advantage of our industrial policy action plan, we will be moving towards achieving our BB-BEE goals.”