South Africa is making slow progress on economic transformation, but there is work to be done, B-BBEE Commission

South Africa is making slow progress on economic transformation, but there is work to be done, B-BBEE Commission

Broad-based black economic empowerment in South Africa is moving in the right direction, but too slowly,  said Zodwa Ntuli, Acting Commissioner of the Broad-Based Black Economic Empowerment Commission (B-BBEE Commission), on Wednesday, 26 September.

Speaking at a media breakfast in Sandton, Ntuli said the Commission is confident that the pace of broad-based black economic empowerment in South Africa will soon accelerate.

“The whole purpose of B-BBEE is to provide an integrated programme, a framework pointed at moving South Africa towards a transformed, inclusive economy,” Ntuli said.

Since its inception in 2016, the B-BBEE Commission has made issued 55 preliminary and 14 final findings from complaints received, said Joseph Melodi, the B-BBEE Commission’s acting Senior Manager: Investigation and Enforcement.

Melodi said the B-BBEE Commission had found that most entities that had findings against them opted to comply with the Commission’s recommended remedial action. Only three cases had been referred to the South African Police Service or the National Prosecuting Authority for criminal investigation.

Approximately 10 cases had been referred to other regulatory entities, including the Companies and IP Commission. More than R100-million has been paid in redress to black people found to have been disadvantaged by misaligned B-BBEE deals, Melodi said.

Ntuli said: “We are comforted by the fact that most entities have taken up the opportunity to correct their transformation deals and transactions, so people are willing. We are going in the right direction as a country.”

Ntuli said broad-based black economic empowerment had previously been hampered because many government entities had been unaware that B-BBEE legislation pertained to them too; the legislation’s proposed beneficiaries – black people – were often unaware of their rights under the Broad-Based Black Economic Empowerment Act (2013); the private sector often received poor advice from B-BBEE advisers; and, in some instances, there had been an element of mendacity within the private sector.

B-BBEE is an integrated framework that seeks to advance South Africa’s economic transformation so that the number of black people who manage, own and control the economy is increased. This transformation is guided by the B-BBEE Act, with the accompanying codes, the latest amendments to which were published on 1 May 2015.

An entity that is found to have violated the Act can be fined up to 10% of its annual turnover, while individuals found to have violated it face a fine, imprisonment of up to 10 years, or both.

“If we implement B-BBEE the way it is intended, we’ll be able to create more jobs and integrate more graduates into the economy,” Ntuli said.

Unfortunately, fronting is still a hurdle to South Africa’s economic transformation, she said. Under the Act fronting is any action that undermines the letter or spirit of the B-BBEE legislation.

In the 2016/17 financial year, the B-BBEE Commission received 191 complaints of fronting, 14 of faulty B-BBEE certificates, 10 complaints regarding contracts and two of misleading advertisements. In that period, five complaints were marked under “other”. In the 2017/18 financial year, complaints of fronting dropped to 92, there were 14 complaints of faulty B-BBEE certificates, four contractual complaints, one about a misleading advertisement and one “other”.

So far in the 2018/19 financial year, to the end of August, the B-BBEE Commission had received 125 complaints of fronting, six regarding faulty B-BBEE certificates and nine contractual complaints. Ntuli emphasised that they are referring more cases for criminal processes to deal more decisively with fronting as a criminal offence.

The B-BBEE Commission has a two-pronged strategy for monitoring and investigating B-BBEE. The commission always first approaches a valid complaint with an eye to working with the offending entity to remedy the deal or other transaction so that it meets the B-BBEE Act’s objectives. It is only when the Commission meets with a refusal to remedy the situation that it moves towards enforcement. Blatant criminal conduct cannot be remedied by the Commission, so such are referred to appropriate authorities.

Entities wishing to confirm that their transformation-related actions are above board are welcome to phone the B-BBEE Commission, send an email or even visit its headquarters.

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