REVIEW OF BROAD BASED BLACK
ECONOMIC EMPOWERMENT ACT and
CODES OF GOOD PRACTICE
27 JANUARY 2012
Overview
• With the enactment of the BBBEE framework in 2007 government
created a legally conducive and enabling environment to
transform and build capacity in the economy through broaden the
framework :
• Significant progress has been achieved in the direct equity
element as evidenced by the number of deal mergers in the past
four years.
• Indirect elements have fallen under the radar
• Change the behaviour of how BBBEE is being implemented,
through effective monitoring and sanction for non-compliance
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Observations
The Presidential Council made the following observations:
•
Moderate progress has been observed and noted in other elements.
•
Many existing legislations are still misaligned to the principles of the
Codes and the BBBEE Act, thus leading to ineffective
implementation(Granting of licenses and Procurement)
•
Tick box approach and circumvention has become prevalent
•
Substantive application and the broad based component lacking
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Key Interventions
•
Amendment of B-BBEE Act:
• B-BBEE Fronting
• Regulating BBBEE Verification Industry
• Clarifying the status of the Sector Codes
•
Alignment of the BBBEE Act to other key pieces of legislation and other policy
instruments ( e.g. PPPFA, NGP, IPAP and Mining Charter )
•
Refinement of the Codes of Good Practice
•
Monitoring and evaluation of BBBEE
•
Establishing a BBBEE Commission
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Key intervention
Key Challenge:
• Non-alignment of key pieces of legislation and other policy
instruments to B-BBEE policy thus leading to non-coherence when
it comes to application across government, e.g. procurement and
granting of licence
Proposed Solution: Policy Alignment and Harmonisation
•
•
Alignment of the B-BBEE primary legislation to other key pieces of
legislation and other policy instruments (e.g. NGP, IPAP, PPPFA,
MINING ETC)
BBBEE Act to be the overarching framework for BBBEE(mitigate
conflict in law)
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Proposed solution: cont..
• Transfer of general principles from the Codes to the BBBEE
Act, including the concept of the balance score-card
receiving express recognition in the Act;
• BBBEE Act to have trumping provision over other conflicting
provisions in Legislations dealing with empowerment;
• Clarify the status of the BBBEE Codes and Sector Codes to
ensure proper application across all spheres of Government
and public institutions and the private sector;
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GAZETTED SECTOR CODES
Gazetted in terms of section 9 (1) (Legal Code)
• Tourism
• Construction
• Construction
• Integrated Transport
• Chartered Accountancy
Gazetted in terms of Section 9 (5): (Public commentary)
• Property
• Financial Services Charter
• ICT
Gazetted in terms of Section 12(Statement of Intent)
• MAC
• AgriBEE Charter
Key Challenge:
•
Key intervention
Circumvention of the B-BBEE Codes (Fronting) The sophistication of
fronting practices has necessitated the need to amend the legislation and
to strengthen enforcement in this area.
Proposed Solution:
•
Inclusion of specific statutory offences involving fronting and other forms of
fraudulent misrepresentation of empowerment status and the specification
of penalties and blacklisting of entities and/or management for those
offences.
•
Empowering the Special Investigation Unit to investigate all offences
involving fronting or corruption with regard to the application of the Codes
of Good Practice(for both public and private sector).
•
Collaboration between the dti and National Treasury
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Key Challenge:
•
Non regulated BEE Verification Industry, leading to opportunistic
tendencies and lack of accountability
Proposed Solution (Administration and Institutions)
•
Extend the mandate of the Independent Regulatory Board for
Auditors as the institution with the responsibility for registering and
regulating verification agencies.
•
Specify provisions to regulate the verification industry by
amending the Audit Professions Act
•
Specifying the issues on which the Minister is empowered to
propose regulations
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KEY AMENDMENTS TO
THE ACT
Administration and institutions
•
Establishing an BEE Commission to deal with complaints
concerning BBBEE transactions and other matters related
thereto, including but not limited to fronting, noting of
transaction advocacy, research etc .
• The Act will specify the h jurisdiction of the Commission and
the threshold applicable to transactions.
• It is envisaged that the jurisdiction of the Ombudsman will be
limited to transactions involving substantial value.
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Key Challenge:
•
Lack of proper implementation by Government departments,
Public entities, and Private sector
Proposed Solution:
•
Strengthen Monitoring and Evaluation of B-BBEE
•
Organs of State, public entities and other enterprises to prepare
BBBEE plans and to report on compliance with such plans.
•
All spheres of Government and public entities to submit regular
reports on their compliance to B-BBEE annually;
•
HODs and CEOs of the public entities must have a performance
obligation to report on the implementation of B-BBEE and to be
part of Ministries/Departments Performance Agreements
•
Private Sector to include BBBEE reporting in the Sustainability11
Reports
CODES OF GOOD
PRACTICE
The proposed refinement of the Codes will entail inter alia:
•
setting sub-minimums/threshold for each element;
•
Enterprise Development(ED) and Procurement to be elevated with each
requiring sub-minimum and enhanced recognition for ED targeted at key
sectors in IPAP and NGP;
•
The appropriate integration of financial and non-financial support services
is critical in ensuring the success of some of the funding interventions by
both the public and the private sector.
•
The scorecard to be broadened to include designated groups in the main
points;
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•
Alignment of the Employment Equity element to the Employment Equity
Act: (Targets, reporting periods, and definitions)
•
Align reporting times and Methodology EEA and BBBEE
•
Skills Development Element to be aligned to the New Skills Development
Strategy(NSDSIII, NGP) and to be outward focused
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THANK YOU
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