Business group Sakeliga is ready to defend any appeal against its court victory over BEE-based pre-disqualification in procurement regulations (PPPFA). This follows a media statement by the ANC over the weekend, in which it expressed its dissatisfaction with the judgment and insisted, by way of its General Secretary, Ace Magashule, on an appeal.
“Public service delivery should be about outcomes for the public, not about income for service providers,” says Piet le Roux, CEO of Sakeliga. “With political pre-disqualification criteria in procurement policy Mr Magashule and the ANC are denying the public and end-users access to the full scope of expertise and value-for-money available on the market. They are also sending out a damaging message to local and international investors.”
Le Roux says the responsible step for Mr Magashule and the ANC would have been to support the Supreme Court of Appeal’s finding “that ministers may not assume legislative powers, that BEE or other political considerations may not serve as pre-qualification criteria, and that each tender should be considered based on value for money. Instead, they are defending ministerial abrogation of powers, and openly insisting on pre-emptive disqualification. In fact, they are calling pre-emptive disqualification ‘a very critical BEE instrument,’ regardless of the obvious implications on service delivery and higher prices on the fiscus.”
“Sakeliga will not accept harmful policy such as pre-disqualification based on BEE-requirements. We will take all steps, including litigation, to prevent its re-introduction. It is time for less politics, more business,” says Le Roux.
Sakeliga also welcomes the BEE-related findings of the recent research paper of the EU-South Africa Partners for Growth Project. According to the report, EU Investors’ responses to Broad-Based Black Economic Empowerment, BEE is one of the main obstacles to foreign investment and should be reformed and have its ownership requirements downscaled.
The latest research paper is one of many over the years and supports the findings against BEE’s ownership and management requirements in the 2007 report by the International Panel on Growth, formed at the time by President Thabo Mbeki. The report, drafted by international economists such as Ricardo Hausmann and panellists including Daron Acemoglu, called BEE’s ownership requirements an “open-ended tax on existing and new capital.” They also warned against management requirements, finding that “it complicates the creation of new firms by demanding either equity or senior-management participation.”
Le Roux concludes: “Mr Magashule and the ANC blame Sakeliga for BEE’s woes. While it is true that we play a big role in opposing it and will continue to do so, its failure as a policy is the real reason why BEE is facing headwinds. BEE is today generally viewed by foreign and local businesspeople as one of the major stumbling blocks to doing business in South Africa. The public distrusts it because they experience what it does to service delivery, and they see how it accompanies corruption. Employees from all communities – including black people – are tired of the consequences to them when their companies lose tenders because the race of its owners was all that mattered to policy makers. In the interests of a favourable business environment and prosperity in South Africa, Sakeliga will continue to subject BEE to strict scrutiny.”