Pretoria – President Jacob Zuma says for any economy to succeed, the majority of citizens must have a meaningful role to play beyond being workers.
The President was addressing the Black Business Council (BBC) Baobab Awards Gala Dinner in Sandton, Johannesburg, on Tuesday.
The President said citizens must participate in the economy as owners, executives and senior managers and also as policymakers in the economy.
“To promote economic transformation and inclusive growth, the Broad Based Black Economic Empowerment (B-BBEE) policy was designed and is being implemented. For the country to succeed, both the public and private sectors need to institutionalise the policy and implement it,” said the President.
He said the private sector has a big role to play in sharing and transferring economic ownership, control and the necessary skills and capabilities to black people. The President thanked international investors for the amount of interest they show in South Africa.
“We are impressed by the cooperation of the international investor community. We have found that most investors only want certainty and clarity. They want to know how the policy works and what is expected from them. They are not opposed to reversing the legacy of the apartheid past,” he said.
President Zuma said government must use its procurement muscle to sustain and grow black businesses to enable the B-BBEE policy to succeed in the public sector.
Annually, he said, through the public sector procurement system, government spends in the region of R500 billion on goods and services and construction works alone.
“The buying power of the State is a powerful economic transformation tool. It can and must be used to advance black economic empowerment.”
PPPFA to be repealed
President Zuma said the Preferential Procurement Policy Framework Act (PPPFA) will be repealed by the Public Procurement Act, as it has been noted that the PPPFA does not work.
He said the Public Procurement Bill is now going through the different government stakeholder engagement processes before it is tabled in Parliament, hopefully early next year.
“I trust that the BBC has made its inputs to National Treasury. In the interim, government is to produce regulations that will improve the PPPFA to make them more responsive to the economic transformation imperatives.
“One of the main changes contained in the proposed new Preferential Procurement Regulations is the introduction of a compulsory sub-contracting clause,” said President Zuma.
He said it will be compulsory to sub-contract a minimum of 30% of the value of the contract for all contracts above R30 million to small and emerging enterprises owned by women, youth, black people and people with disabilities.
“We have located the implementation of the policy on the 30% set-aside of the public procurement budget for small business in a work stream led by the Minister of Small Business Development,” he said.
National Small Business Act review
President Zuma said government is reviewing the National Small Business Act.
“We invite black business to work with the Small Business Department to ensure that the Amendment Bill supports the creation of a thriving environment for small business.”
One of the biggest challenges facing black businesses and the implementation of empowerment policies is access to finance. Government, President Zuma said, established the National Empowerment Fund (NEF) to be used as an instrument to financially support empowerment initiatives.
“Since its inception, the number of approvals by the NEF have totalled R7.6 billion, supporting 770 black businesses. For the 2015/16 financial year, the NEF has approved 120 deals worth R1.3 billion,” said the President.
Government is currently exploring various means to recapitalise the NEF as an apex institution to facilitate BEE finance.
“I am sure that we are all in agreement that all development finance institutions must be used as vehicles of economic transformation. Within the Public Investment Corporation fold, the Government Employees Pension Fund (GEPF) has allocated a further R70 billion, while the Unemployment Insurance Fund (UIF) increased its allocation to R25 billion towards developmental investments.
“The IDC has provided R31 billion over the past five years to companies that are black-empowered. The IDC has also allocated R23 billion to the Black Industrialist Programme, which was established recently,” he said.
The President also joined government in campaigning against the practice of fronting. He said fronting undermines black economic empowerment by creating a false sense of achievement.
The newly-established Broad-Based Black Economic Empowerment Commission has to date received 118 complaints, specifically pertaining to fronting.
“Investigations are in progress and the B-BBEE Commission will issue reports in due course,” said the President.
He said South Africa is currently doing well in promoting cooperation between government and business.
“This positive collaboration also needs to include the promotion of transformation. It must go beyond reigniting growth and staving off a ratings downgrade.
“We will also continue working with labour and the community sector to ensure that the clauses that are in the Freedom Charter are achieved. Indeed, the struggle for economic inclusion continues in earnest. With your support, and working together, we will succeed.”