Out of 195 compliance reports received by the Broad-Based Black Economic Empowerment (BBBEE) Commission, only eight were from State entities and government departments, representing a gross level of undercompliance, Trade and Industry Minister Dr Rob Davies said in an address at the BBBEE Commission’s recent annual conference. None, the Minister added, were from sector education and training authorities, he lamented.

Davies stressed that all State-owned entities and government departments were required to implement the BBBEE Act and that noncompliance was undermining transformation efforts.

“To ensure that BBBEE is a reality for black people, Section 10 of the BBBEE Act requires all government and State entities to [take into account] BBBEE requirements when awarding contracts, licences, grants, incentives and concessions to entities that are BBBEE 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 BBBEE Act for all organs of State and public entities to report on their BBBEE compliance in the audited financial statements and annual reports.

These needed to be submitted to the BBBEE 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 BBBEE Commission to be tougher with companies bypassing the Act.

Portfolio Committee on Trade and Industry chairperson Joan Fubbs urged business to become part of the real economic transformation by implementing the BBBEE 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 BBBEE rules and the way government was administering incentives.

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

One of the ways government aims to encourage greater transformation of industry and the participation of black industrialists is to ensure there is quid pro quo in terms of the industrial incentives.

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 the other measures that government provides,” Davies averred.