Sakeliga releases Department of Agriculture’s confidential plans for unlawful BEE enforcement 

Internal documentation obtained by Sakeliga indicates that the Department of Agriculture, Land Reform and Rural Development (DALRRD) has quietly developed and partially implemented an unlawful AgriBEE enforcement plan. 

The enforcement plan poses substantial medium-term risk to agricultural production, imports and exports, and food security in South Africa. As such, it disempowers, portends great harm, and is against the public interest. Sakeliga invites the Minister to withdraw DALRRD’s unlawful and confidentially classified AgriBEE enforcement plan, and we have instructed our attorneys to initiate formal correspondence with the Minister. 

Under the plan, DALRRD intends to eventually restrict agricultural and food-related import and export licenses, permits, quotas, and more based on companies’ racial characteristics.  Fortunately, the implementation of the veiled plan over the last eight years has – like government plans generally – been sluggish and haphazard. 

The AgriBEE enforcement plan is unlawful because of its flagrant intention to redirect the majority of permit and licensing requirements in the agricultural sector from its initial regulatory objective to a race-based regulatory system. Under the plan, a business not even engaged in BEE (typically those outside the government tender value chain) is to be penalised in the allocation of quotas or permits, such as fishing and export licenses, or to be entirely precluded from acquiring a permit, as observed with the plan’s handling of wine and liquor export licenses. Regulations aimed at maintaining food safety or access to water resources are transformed into political mechanisms for the government to enforce changes in the ownership structure of all participants, whether they are corporations, family farmers or sole proprietors. The plan seeks to limit a person’s ability to access and participate in the general agricultural sector based on the racial composition of their business undertaking, which is unlawful.  

Sakeliga obtained the information under PAIA requests filed between November 2021 and May 2022. At the time, we requested access to the policies under which the Perishable Products Export Control Board (PPECB) were requiring BEE certificates from companies exporting agricultural products.  

Considering the Department’s recent denials that businesses’ BEE compliance level could result in exclusions or penalisation, we now release two internal DALRRD documents classified ‘Confidential’, as well as two of its implementation letters: 

1. The Department’s 2015 AgriBEE Plan: ‘A plan for the alignment of DAFF’s internal tools for the implementation of the AgriBEE Sector Code: Enforcement measures’ 

2. The Department’s 2019 ‘AgriBEE Enforcement Guidelines’ 

3. Implementation letter from Director-General M. M. Mlengana to the PPECB (27 July 2018) 

4. Implementation letter from Director: BEE Charters Compliance Dr Madime Mokoena to the PPECB (12 June 2019) 

While far from fully executed, gradual implementation of the AgriBEE Plan and the AgriBEE Enforcement Guidelines remains an ongoing undertaking for DALLRD, as we shall point out below.  

The AgriBEE Plan seeks to 

1. selectively restrict DALRRD’s activities in order ‘to enforce compliance of sector stakeholders to the transformation programme of the government and in particular the agreed agricultural sector transformation plan, i.e., AgriBEE Sector Code’; 

2. ensure that ‘before applicants or clients receive a service from the line function directorates (such as inspections, licenses, permits, grants, subsidies and concessions), they must first be subjected to the pre-determined compliance criteria aligned to the AgriBEE Sector Code;’ and 

3. convince other government departments, provinces, municipalities and state-owned entities to restrict their activities based on BEE levels as well, ‘amongst others but not limited to water licenses, fresh produce agents licenses, statutory levies, etc.’ 

The AgriBEE Enforcement Guidelines 

The Enforcement Guidelines refers to itself as the ‘teeth’ of the AgriBEE Sector Codes. It proposes delaying or withholding government ‘services’ (in most cases, government requirements) to businesses because of racial requirements. It envisages B-BBEE as ‘a qualification and legal requirement for Government to’, among other things: 

1. issue new licenses and permits, as well as renewals; 

2. grant concessions and rights (for example, water rights); 

3. enter into partnership agreements with industries, investors, and other governments; and 

4. dispose of state assets. 

DALRRD considers the Enforcement Guidelines to be applicable to the interpretation of at least 17 Acts, such as the Meat Safety Act and the Agricultural Products Standards Act. It identifies 24 ‘levers’ administered by the Department, 5 ‘levers’ administered by provincial executives, and 4 state-owned entities that should implement the guidelines. In all these cases, except for one (the PPECB), it is said that:  

1. preference must be given to entities with a higher BEE level first and lower ones later; and 

2. no certificates/permits/funding/support/granting of statutory measures/licenses ‘to be issued to non-compliant entities/contributors’. 

While the Enforcement Guidelines purports to offer “guidance”, it amounts, in reality, to instructions. This true nature of the Enforcement Guidelines is evident not only from its own text and its relation to the AgriBEE Plan, but also in several departmental letters. These letters include, for example, a “request” by the Director-General of the Department on 7 July 2018 to the PPECB to ensure that ‘administrators of levers … align their regulations and services in accordance with the approved AgriBEE Enforcement Guidelines’ for ‘implementation effective from 1^st of April 2019.’ 

State of implementation of the Plan and the Enforcement Guidelines 

Fortunately, the Plan and Enforcement Guidelines have not nearly been successfully implemented everywhere and to their full extent. This much should be clear from the high degree of agricultural activity and trade in South Africa, which would otherwise have been impossible. It is (ironically) good news that state failure and inefficiency goes quite some way to preventing harmful policy implementation. 

Nevertheless, DALRRD remains actively guided by these strategic documents. We highlight three facts to underscore this:  

1. DALRRD provided the documents to us within the last year, upon our insistence on receiving copies of the Plan and Enforcement Guidelines as approved and being used.  

2. A PPECB media release from October 2021 states that the PPECB is being ‘compelled’ to implement the ‘AgriBEE Enforcement Guidelines’, and Sakeliga is in possession of PPECB documents that point to possible implementation of aspects of the policy in 2022.  

3. Dr Madime Mokoena, Director for BEE Charters Compliance in DALRRD, is on record in July 2023 that ‘The goal [of the AgriBEE Enforcement Guidelines] is to enforce compliance by stipulating any business that isn’t BEE compliant will not receive certification to export its products.’ 

That at least some implementation is taking place is clear. For example, it is becoming standard practice for entities in the Departments’ sphere of influence to demand BEE certificates. Far from constituting a harmless statistics-gathering exercise, this in fact represents significant implementation on the part of DALRRD, as it lays the foundation in what is really a multi-phase BEE enforcement plan. 

In some instances, implementation has proceeded even further. For example, DALRRD lauds its Directorate Marketing for having already developed a BEE point system for the ‘allocation of agricultural trade permits’, based on ‘principle’ that ‘Black Economic Empowerment is the primary requirement for the allocation of marketing permits’. 

Thankfully, there are also welcome signs that at least some current administrators and state entities appear unwilling to accept all of the Department’s unlawful instructions, for now. Notably, section 5.4 of the Enforcement Guidelines appears to reflect concerns of the PPECB about the legality of requiring BEE certificates and, unlike elsewhere in the guidelines, contains no proposal to restrict ‘services’ based on BEE status. This could also help explain the apparent contradiction between the Department’s Plan and Enforcement Guidelines, and the PPECB’s public assurances in its 9 November 2021 media statement: ‘The PPECB would also like to clarify that it will not suspend or withhold service from its clients who are not B-BBEE compliant. Therefore, companies that do not comply can still export at this stage’ (emphasis added). 

Regarding the Departmental regulations on tariff rate quotas and otherwise 

Recently, public controversy arose around the Government Gazette notices on 31 October and 1 November, relating to tariff rate quotas for certain exports. Last week, the Department (correctly) pointed out that similar versions of these notices have been issued for several years now. It also assured the public and industry stakeholders that ‘there is no [BBBEE] threshold or level that an applicant must reach to be awarded a permit.’ While this may currently be the case for these specific permits, the confidential policy documents suggest that the Department would prefer otherwise. 

Until publicly retracted, we suggest that Government Gazette notices – and possibly every other regulation or statement DALRRD makes – should be interpreted with reference to the AgriBEE Plan and AgriBEE Enforcement Guidelines to discern their full potential meaning. This includes, but is not limited to, the notice published on 2 November (nr 4024) stipulating BEE conditions for certain preferential import quotas.  

Sakeliga invites the Minister of DALRRD to publicly:  

1. acknowledge its AgriBEE Plan and AgriBEE Enforcement Guidelines, which propose to restrict the delivery of ‘services,’ such as the issuance of permits, licenses, and certificates, based on an applicant’s race; 

2. acknowledge that her department has applied pressure on the various state entities to impose BEE requirements on all permits and licences and to refuse ‘services’ to so-called ‘non-compliant’ businesses;  

3. withdraw the AgriBEE Plan and the AgriBEE Enforcement Guidelines; alternatively, provide reasons as to why the Plan and Enforcement Guidelines should be deemed to be lawful (so that such reasons can be considered and potentially challenged); and 

4. provide an undertaking that her department will not apply pressure on its internal divisions or other state entities to restrict their activities (such as the issuance of permits, licenses, etc.) based on a member of the public’s race or ‘compliance’ with BEE thresholds.