South Africa Policy, Plans and Priorities
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- BEE Act and BBBEE
- Local Content and Participation
- Access and Admission of Foreign Investors
1.6Other IssuesMinerals and Petroleum Development Act and BBBE The MPRDA 2002 defines broad based black empowerment as a social or economic strategy, plan, principle, approach or act which is aimed at –
The MPRDA converted common law mineral rights by establishing that the sovereignty of the State over resources and places the State as the custodian of mineral resources. Together with the Mining Charter there is an aim for increased ownership of mining by historically disadvantaged persons through equitable access to resources. There is a target of 26% ownership of mining assets for historically disadvantaged persons by 2014 and employment equity and BEE procurement requirements. The Mining Charter was reviewed and amended in September 2010. BEE Act and BBBEE The Black Economic Empowerment (BEE) Act, No. 53 of 2003, establishes a legal framework for BEE and empowers the Minister for Trade and Industry to issue Codes of Good Practice and Transformation Charters and establishes the BEE Advisory Council. The Broad Based BEE (B-BBEE) Codes of Good Practice February 2007 is an implementation framework and institutional mechanisms were established for the monitoring and evaluation of B-BBEE. Broad-Based Black Economic Empowerment (B-BBEE) is to advance economic transformation and enhance the economic participation of black people in the South African economy. The BEE Unit at DTI works through equity and empowerment policies and strategic interventions, to ensure that the economy is restructured, to enable the meaningful participation of black people, women and rural or under-developed communities in the mainstream economy, with a positive impact on employment, income redistribution, structural re-adjustment and economic growth. “Black people” is defined in the BEE Act as a generic term which means Africans, Coloureds and Indians and this definition is qualified by BBEE Code of Code of Good Practice Schedule 1 issued under Section 9(1) of BBEE Act as including only natural persons who are citizens of RSA by birth, descent or naturalisation (a) occurring before the commencement date of the Constitution of RSA Act 1993, or (b) occurring after the commencement date of the Constitution but who, without the Apartheid policy would have qualified for naturalisation before then. There is a generic BEE Scorecard which measures empowerment progress in direct empowerment through ownership and control of enterprises and assets, human resource development and employment equity, and indirect empowerment through preferential procurement and enterprise development. The Codes of Good Practice include measures of:
The Codes of Good Practice are binding on all state bodies and public companies, and the government is required to apply them when making economic decisions on procurement, licensing and concessions, public-private partnerships, and the sale of state-owned assets or businesses. Private companies must apply the codes of good practice if they want to do business with any government enterprise or organ of state whether they wish to tender for business, apply for licenses and concessions, enter into public-private partnerships, or buy state-owned assets. Companies are encouraged to apply the codes of good practice in their interactions with one another, since preferential procurement will affect most private companies throughout the supply chain. The preferential procurement policy is used to enhance the participation of historically disadvantaged individuals and the government hopes to influence the promotion of enterprises located in specific provinces, regions, municipalities and rural areas to uplift and empower communities. A business with a turnover of less than R5 million (€500,000) is classified as an Exempt Micro Enterprise (EME), is not required to complete a scorecard, may acquire an exemption certificate giving Level 4 or Level 3 status as a contributor to B-BBEE, while a customer of an EME can claim at least 100% of its procurement spend with the EME towards its own B-BBEE scorecard. A business with a turnover of more than R5 million and less than R35 million is classified as a Qualifying Small Enterprise (QSE) and is measured on the best four out of the seven sections of the BEE Scorecard. DTI growth strategy includes a focus on broadening participation, equity and access to redress for all economic citizens, particularly those previously marginalised. National Empowerment Fund Act 1998 created a trust to hold equity stakes in state-owned enterprises and other private enterprises on behalf of historically disadvantaged persons. The NEF Corporation manages the trust in order to:
Local Content and Participation Local content and substantial transformation requirements are an integral part of some of South Africa trade policies. They are an instrument of industrial policy to encourage investment, especially from overseas, and production of certain goods, including by SMEs. Local content considerations are taken into account when comparing tenders for government procurement purposes, granting some incentives, providing export credit insurance, and using the "Proudly South Africa" logo. Under the National Industrial Participation Programme 1996, which is managed by DTI, all government purchases or lease contracts (goods, works, and services) are subject to an industrial participation (IP) obligation. Any contract having an imported content equal to or exceeding US$10 million is subject to an IP obligation. No contract can be awarded to a bidder who has not satisfied this requirement. This obligation requires the seller / supplier to engage in commercial or industrial activity equal to or exceeding 30% of the imported content of total goods purchased under the government tender, with the exception of defence related contracts. In the case of defence contracts, an additional 50% on the imported content (referred to as DIP – Defence IP) is required. The obligation may take the form of investments, joint-ventures, sub-contracting, licensee production, export promotion, sourcing arrangements, and research and development collaboration. Bidders must submit their projects, which should be beneficial to the South African economy, to the Industrial Participation Secretariat at DTI for approval before implementation. Projects are evaluated by two committees. One assesses the technical merit of the proposal and determines whether it meets the DTI's and the industry's objectives, and the other ensures adherence to the principles of the NIPP. Any company is free to object to a decision, and a project can be reconsidered based on new information.
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