B-BBEE - statement

Chamber News
27.03.17 Chamber News

EU Chamber of Commerce and Industry in Southern Africa

B-BBEE - statement
March 24, 2017

The South African Government has in unity expressed a clear demand for economic transformation in the latest SONA and the national Budget Speech. The EU Business Chamber acknowledges the importance of economic transformation, especially in view of the European experience, where the growth of the middle class and greater economic inclusiveness has been key for social stability in the region.

With the European Union being the largest foreign direct investor in South Africa accounting for close to 80% of the total FDI and more than 500,000 direct and indirect jobs, European companies substantially contribute to the economic transformation of South Africa and have been consistently enhancing their B-BBEE profile in line with the existing legal provisions.

However the latest EU Business Survey 2016 conducted by the EU Chamber in South Africa shows that uncertainty around the B-BBEE policies and the cost of implementation is among the top three challenges for the European investors in the country.

Also, growing emphasis on ownership over other aspects of the B-BBEE policy, whether supply chain or skills development, is compromising existing and prospective investors' ability to continue and/or expand their operations in South Africa.

In this respect, members of the EU Chamber have reported that an increasing number of tenders by the state-owned enterprises (SOEs) in South Africa include a requirement of 51% black ownership for their suppliers. The EU Chamber has been informed that such a discretionary measure lacks sound legal basis as it will require pre-approval from the DTI, based on appropriate studies examining the skills level and other market dynamics in the respective sectors. The EU chamber is aware of cases where this requirement has not been fulfilled, which has created uncertainty around the tendering process.

This development is also particularly concerning as it defeats the efforts of a number of companies which have chosen to invest in South Africa in the recent past, creating jobs and bringing expertise to the country and which are now faced with the surprising new rules in relation to crucial tender procedures. This has already caused investments to be put on hold or downscaled.

The EU Chamber therefore is urgently requesting to bring clarity on the legal basis of the 51% black ownership requirement in the SOEs' supply tenders and calls for a more intensive dialogue with the South African authorities on the future direction of the B-BBEE policies and targets.

The EU Chamber supports continued economic transformation in South Africa through the B-BBEE.

The process however should be scaled to ensure investments' long-term sustainability and the availability of the required skills, both critical aspects in the implementation of the National Development Plan. EU companies are eager to play a greater role as economic transformation will lead to economic growth, which in the long run will bring win-win opportunities for everyone.

For comments please contact info(at)euchamber.co.za and for further information, visit our website at www.euchamber.co.za.