Out of 195 compliance reports received from the Broad-based Black Economic Empowerment (B-BBEE) Commission, only eight were from State entities and government departments, representing a gross level of under compliance, Trade and Industry Minister Dr Rob Davies said on Thursday.

None were from sector education and training authorities, he lamented.

Addressing the B-BBEE Commission’s annual conference in Midrand, Davies stressed that all State-owned entities and government departments were required to implement the B-BBEE Act and that noncompliance was undermining transformation efforts.

“To ensure that B-BBEE is a reality for black people, Section 10 of the B-BBEE Act requires all government and State entities to integrate B-BBEE requirements in awarding contracts, licences, grants, incentives and concessions to entities that are B-BBEE compliant.”

Government, he said, had deliberately amended Section 10 in order to ensure that it was obligatory. The amendment included a requirement under Section 13G of the B-BBEE Act for all organs of State and public entities to report on their B-BBEE compliance in the audited financial statements and annual reports.

These need to be submitted to the B-BBEE Commission to monitor the state of economic transformation.

The commission had also identified a worrying trend of manufacturers or companies creating black-owned intermediaries with exclusive dealing agreements through which products were marketed and supplied. These intermediaries acted as fronts for the manufacturer to sidestep transformation.

Davies urged the B-BBEE Commission to be tougher with companies bypassing the Act.

Portfolio Committee on Trade and Industry chairperson Joan Fubbs urged business to have the desire to be part of the real economic transformation by implementing the B-BBEE Act’s objectives.

She also called for integrity within the BEE verification agencies.

“We need to send a strong message that we are not tolerating any cases where scores have been manipulated for personal financial gain,” Davies added.

Business should also be aware, the Minister added, that there was now full alignment between the B-BBEE rules and the way government was administering incentives.

Incentives would be offered against empowerment performance, which needed to be “real and economically significant”.

Ensuring that there is a quid-pro-quo in terms of the industrial incentives, is one of the ways government aims to encourage greater transformation of industry and the participation of black industrialists.

This participation, in turn, will add to the productive capabilities of the country, see an employment benefit and accelerate transformation of the productive sectors.

“That is the basic rule of thumb for all transactions, licences, incentives and all of the other measures that government provides incentives in the private sector,” Davies averred.