Lehmann Brothers South Africa
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BBBEE Act Discussion
 

Notice :
This information is Copyright by Advocate Marika van der Walt ( marikav @ law.co.za) and republished with her kind permission.
For BBBEE seminars or dispute resolution please contact her directly referencing Lehmann Brothers. (http://www.dispute.co.za)

Broad-Based Black Economic Empowerment (BBBEE) Act, 53 of 2003

There is little that can be criticised in the intention behind the Broad-based Black Economic Empowerment (BBBEE) Act.

The Preamble to the BBBEE Act states that under apartheid race was used to control access to South Africa's productive resources and access to skills. It continues by stating that South Africa's economy still excludes the vast majority from ownership of productive assets and the possession of advanced skills.

Then it draws our attention to the fact that South Africa's economy performs below its potential because of the low level of income earned and generated by the majority. Finally, it makes an appeal to our self-interest by stating that unless steps to increase the effective participation of the majority in the economy, the stability and prosperity of the economy may be undermined.

The BBBEE Act was enacted in order to redress the imbalances of the past. Firstly, it was enacted to promote the achievement of the constitutional right to equality, in terms of S 9, the Equality clause in the Constitution. More particularly, the BBBEE Act was enacted to increase broad-based and effective participation of black people in the economy and also to promote a higher growth rate, increased employment and more equitable income distribution.

This being a modern, Constitutional state, where there are diverse people and a variety of competing interests at stake, the need for redress is tempered by modern constitutional and economic principles. The first is the need to establish a national policy on broad-based black economic empowerment.

The national policy on BBBEE also has sound economic as well as constitutional objectives in mind. They are "to promote the economic unity of the nation, protect the common market, and promote equal opportunity and equal access to government services".

The Constitutional objectives are:

o The promotion of equal opportunity and
o equal access to government services.

S3 of the BBBEE states that
Any person applying this Act must interpret its provisions so as -
(a) to give effect to its objectives; and
(b) to comply with the Constitution.

The question that comes to mind is what does the Constitution have to say about Broad Based Black Economic Empowerment?

To answer this question we must go to the source.

In the Preamble, the Constitution states

"We, the people of South Africa…respect those who have worked to build and develop our country; and…believe that South Africa belongs to all who live in it, united in our diversity.
"We therefore, through our freely elected representatives, adopt this Constitution as the supreme law of the Republic so as to… heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights;…Improve the quality of life of all citizens and free the potential of each person."

When evaluating the effect of BBBEE, we need to give special attention to phrases like:

South Africa belongs to all who live in it, united in our diversity.

…heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human right

Improve the quality of life of all citizens and free the potential of each person."

It is clear that everybody has these rights, but in reality some people's circumstances do not allow them to enjoy these rights. This explains the need for affirmative action and broad-based black economic empowerment. While drafting and implementing these policies, one should always keep in mind that those left out from the ambit of these policies, also have the right to equality and to live according to their potential.

The BBBEE Act definitely has teeth
Depending on the content of the possible small business charter, most business' will need a BEE score. They will otherwise not be able to get licenses or buy state assets.

Section 10 states that :
Every organ of state and public entity must take into account and as far as is reasonably possible, apply any relevant code of good practice issued in terms of this Act in-
(a) determining qualification criteria for the issuing of licences, concessions or other authorisations in terms of any law;
(b) developing and implementing a preferential procurement policy;
(c) determining qualification criteria for the sale of state-owned enterprises; and
(d) developing criteria for entering into partnerships with the private sector.

Reference and Credits:
http://www.dispute.co.za,
http://www.dti.gov.na,
http://www.info.gov.za/speeches/2005/05071409151002.htm

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