When are you legally obliged to implement a BEE programme?

This news may come as a surprise to many private companies operating in South Africa. Black economic empowerment is a voluntary process. It could never be made mandatory because the constitution would never permit it. It’s just become such that it’s now almost impossible to do business in this country without a BEE certificate.

However the broad-based BEE codes make it absolutely clear that all organs of state and public entities are “measurable under the Codes.” Strangely enough it is these same entities that have barely paid any attention to a full scorecard. They certainly are aware of the procurement requirements but little else.

The uptake of compliance is so dire that that the BEE Commission, in their National Status and Trends on B-BBEE Transformation Report 2021 observed that of the 326 organs of state (including municipalities) only 82 submitted their BEE report to the commission. Something that the BEE Act compels them to do. Interestingly of these 82 entities, one third of them were non-compliant.

Rudolf Rautenbach of Ownershield, a BEE solutions company observes that there could be greater consequences for these entities if they do not comply with the BEE Act. “The BEE Commission might not appear to carry much weight in this process, but the Auditor General may flag this as being a non-compliance in that entity’s overall governance.” He adds that, “many municipalities are far behind on service delivery and need to show their constituents that they are making progress towards a good governance track record.”

Why do so few organs of state submit reports and many of those that do can’t show much in terms of BEE compliance? Rautenbach suggests that they simply don’t know what to do. “BEE compliance in the smaller towns is almost non-existent because the municipalities themselves are not leading by example. This is a simple education issue. “

Observing that BEE Compliance is complicated, Rautenbach argues that once the many principles are understood then it’s a process of implementing what needs to be done on an annual basis. “We often come across municipalities that tell us that their management is completely black and that they only target black-owned suppliers and service providers. Our response is that at best they may have achieved less than 40 points on the scorecard and remain non-compliant.”

On the other hand Rautenbach says he’s come across municipalities that have developed an understanding of compliance and in the process helped build the local economy through their enterprise and supplier development programmes. “I have seen certain towns creating youth empowerment programmes under the socio-economic development element.” All of this adds to a social cohesion that appears to be sorely lacking in this country at the moment. The solution appears to be education and guidance. “The benefits are enormous to each municipality, we’ve found that our day workshop has started a thought process that has resulted in the beginning of a process that has steadily improved year on year.”

To find out more about the Ownershield BEE Courses for Municipalities email admin@ownershield.co.za