REPUBLIC OF SOUTH AFRICA

________________

BROAD-BASED BLACK

ECONOMIC EMPOWERMENT

BILL

__________

(As amended by DTI following the parliamentary hearings)

29th July 2003

________________________

 

(MINISTER OF TRADE AND INDUSTRY)

 

[B 27-2003]

[ ] Words in bold type in square brackets indicate omissions from B 27-2003.

________ Words underlined with a solid line indicate insertions.

BILL

 

To establish a legislative framework for the promotion of black economic empowerment; to establish the Black Economic Empowerment Advisory Council; to empower the Minister to issue codes of practice and to publish transformation charters; and to provide for matters connected therewith.

PREAMBLE

WHEREAS under apartheid race was used to control access to South Africa's productive resources and access to skills;

WHEREAS South Africa's economy still excludes the vast majority of its people from ownership of [fixed] productive assets and the possession of advanced skills;

WHEREAS South Africa's economy performs below its potential because of the low level of income earned and generated by the majority of its people;

AND WHEREAS, unless further steps are taken to increase the effective participation of the majority of South Africans in the economy, the stability and prosperity of the

economy in the future may be undermined to the detriment of all South Africans,

irrespective of race;

AND IN ORDER to -

BE IT ENACTED by the Parliament of the Republic of South Africa,

as follows:-

ARRANGEMENT OF ACT

Sections

  1. Definitions
  2. Objectives of Act
  3. Interpretation of Act
  4. Establishment of Black Economic Empowerment Advisory Council
  5. Functions of Council
  6. [Constitution] Composition of Council and appointment of members
  7. Constitution and rules of Council
  8. Remuneration and [R] reimbursement of expenses
  9. Codes of practice
  10. Status of codes of practice
  11. Broad-based black economic empowerment plans
  12. Strategy for broad-based black economic empowerment
  13. Transformation charters
  14. Support services and funding of Council
  15. Regulations
  16. Short title and commencement

 

Definitions
  1. In this Act, unless the context indicates otherwise-

''black people'' is a generic term which means Africans, Coloureds and Indians

[who are also South African citizens or permanent residents of the Republic];

"broad-based black economic empowerment" means the economic empowerment of all black people including woman, workers, youth, people with disabilities and people living in rural areas through diverse but integrated socio-economic strategies that include but are not limited to -

(a) increasing the number of black people that manage, own and control enterprises and economic assets;

  1. human resource and skills development;

  2. achieving equitable representation in all occupational categories and levels in the workforce;

  3. preferential procurement;

(e) investment in enterprises that are owned or managed by black people;

''Council'' means the Black Economic Empowerment Advisory Council established

by section 4;

''members'' means members of the Council;

''Minister'' means the Minister of Trade and Industry;

''organ of state'' means [an organ of state as defined in section 239 of the Constitution]-

(a) a national or provincial department as defined in the Public Finance Management Act, 1999(Act 1 of 1999);
  1. a municipality as contemplated in the Constitution of the Republic of South Africa, 1996 (Act 108 of 1996);
  2. Parliament;
  3. a provincial legislature;
  4. a constitutional institution listed in schedule 1 of the Public Finance Management Act, 1999, as amended from time to time;

''prescribe'' means prescribe by regulation;

"public entity" means a public entity listed in schedules 2 and 3 of the Public Finance Management Act, 1999, as amended from time to time;

"strategy" means a strategy for broad-based black economic empowerment

issued in terms of section 12"; and

''this Act'' includes any code of practice or regulation made under this Act.

Objectives of Act

  1. The objectives of this Act are to facilitate broad-based black economic empowerment by -
      1. [promote] promoting economic transformation in order to enable meaningful participation

of black people in the economy;

(b) [achieve] achieving a substantial change in the racial composition of ownership and

management structures of existing and new enterprises;
  1. (c) [increase] increasing the extent to which communities, workers, collective enterprises and
  2. cooperatives own and manage existing and new enterprises;
  3. (d) increasing the extent to which black women own and manage existing and new enterprises;

(e) [promote] promoting investment programmes that lead to broad-based and meaningful

participation in the economy by black people in order to achieve sustainable

development and general prosperity; [and]

(f) [develop] empowering rural communities and [empower] local communities by enabling

access to economic activities, land, infrastructure, ownership and skills; and

(g) promoting access to finance for black economic empowerment.

Interpretation of Act
  1. Any person applying this Act must interpret its provisions so as-
      1. to give effect to its objectives; and
      2. to comply with the Constitution of the Republic of South Africa Act, 1996.

Establishment of Black Economic Empowerment Advisory Council

  1. (1) The Black Economic Empowerment Advisory Council is hereby established.

[(2)The Council must advise the President on black economic empowerment].

Functions of Council

  1. The Council must -
      1. advise the President on black economic empowerment;
      2. review progress in achieving black economic empowerment;
      1. advise on draft codes of practice which the Minister intends publishing for comment in terms of

        2. section 9(43);

      2. advise on the development, amendment or replacement of the strategy referred to in section 12;
      3. if requested to do so, advise on draft transformation charters; and
      4. promote the development of partnerships between organs of state and the private sector that will advance the objectives of this Act.

[Constitution] Composition of Council and appointment of members

[5. (1) The Council consists of the President and such other members as may be

determined by the Council's constitution.

(2) The President is the chairperson of the Council.

(3) The Council may by resolution provide further for its constitution, the terms of

office of its members, quorums, procedures and any other matter affecting the carrying

out of its functions.]

6. (1) The Council consists of -

      1. the President, who is the chairperson of the Council;

      2. four cabinet ministers, appointed by the President, with their respective Directors-General as

alternates;

      1. no fewer than 10 and no more than 15 other members appointed by the President.

  1. When appointing members in terms of subsection (1)(c) the President shall have regard to the need for the Council to represent different relevant constituencies including trade unions, business, community based organisations and academics.

  2. The President shall appoint a cabinet minister who is also a member of the Council to act as

chairperson of the Council in the President's absence.

Constitution and rules of Council

  1. (1) The Minister must establish a constitution for the Council.

    1. The Minister may amend the constitution of the Council from time to time, after consultation with

the Council.

(3) The Council may, by resolution, and after consultation with the Minister, make rules to further regulate the proceedings of the Council.

 

Remuneration and reimbursement of expenses

  1. The Minister may, with the concurrence of the Minister of Finance, determine the reimbursement of expenses incurred by members of the Council.]

8. Council members will not be remunerated for their services, but will be reimbursed for expenses incurred by them in carrying out their duties, as determined by the Minister, with the concurrence of the Minister of Finance.

Codes of practice

[7] 9. (1)In order to promote the purposes of the Act, the Minister may by notice in the Gazette issue codes of practice on black economic empowerment that may include-

      1. the further interpretation and definition of black economic empowerment and the

interpretation and definition of different categories of black empowerment entities;

(b) qualification criteria for preferential purposes for procurement and other economic activities;

(c) indicators to measure black economic empowerment;

  1. (d) the weighting to be attached to black economic empowerment indicators referred to in paragraph (c);

(e) guidelines for stakeholders in the relevant sectors of the economy to draw up

transformation charters for their sector;
  1. [(f) a system for reporting on the implementation of black economic empowerment

    2. by organs of state, employers and other enterprises]; and

  2. [g](f) any other matter necessary to achieve the objectives of this Act.

    3. (2) A code of practice issued in terms of subsection (1) must be consistent with the framework established by the Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000).

    (3) A code of practice issued in terms of subsection (1) may specify-

      1. targets consistent with the objectives of this Act; and
      2. the period within which those targets must be achieved.

    (4) In order to promote the achievement of equality of women, as provided for in section 9(2) of the Constitution of the Republic of South Africa, 1996, a code of practice issued in terms of sub-

    section (1) and any targets specified in a code of practice in terms of subsection (2), may distinguish between black men and black women.

    (5) The Minister must, before issuing, replacing or amending a code of practice in terms of subsection (1)-

    (a) publish the draft code of practice or amendment in the Gazette for public

  3. comment; and
  4. (b) grant interested persons a period of at least [30] 60 days to comment on the draft
  5. code of practice or amendment, as the case may be.

  6. Status of codes of practice

  7. [8] 10. Every organ of state and public entity must take into account any relevant code of practice issued in

    terms of this Act in-

      1. determining qualification criteria for the issuing of licences, concessions or other
  8. authorisations in terms of any law; [and]
  9. (b) developing and implementing a preferential procurement policy;
      1. determining qualification criteria for the sale of state-owned enterprises;
      2. developing criteria for entering into partnerships with the private sector; and
      3. developing, adopting and implementing a broad-based black economic empowerment plan in terms of section 11.

Broad-based black economic empowerment plans

  1. (1)Every national or provincial department and every public entity must develop, adopt and implement a broad-based black economic empowerment plan, and must submit a copy of this plan to the Council within one year of this Act coming into effect.

    1. A national or provincial department or a public entity may change or replace its plan as required, and any change to or replacement of a plan must be submitted to the Council within 30 days of the change or new plan being adopted.

    2. A plan, replacement plan or change to a plan adopted in terms of this section -

      1. must be consistent with the Act;

      2. may, for the purposes of promoting representivity in relation to the demographic composition of the area in which the plan is applicable, distinguish between African, Coloured and Indian people.

    1. Every national or provincial department and every public entity must review its plan at least once every two years and assess compliance with the plan.

(5) Every national or provincial department and every public entity must submit a report assessing compliance with its plan to the Council at least once every two years, on a date determined by the Minister.

(6) The Minister may prescribe standard forms to be used by national or provincial departments and public entities -

      1. to record plans adopted in terms of subsections (1) and (2); and

      2. for reporting to the Council in terms of subsection (5).

Strategy for broad-based black economic empowerment

  1. (1) The Minister may -

      1. issue a strategy for broad-based black economic empowerment;

      1. change or replace a strategy issued in terms of this section.

(2) A strategy issued in terms of this section must -

      1. provide for an integrated, co-ordinated and uniform approach to black economic empowerment by all organs of state, public entities, the private sector, non-governmental organisations, local communities, and other stakeholders;

      2. provide for mechanisms to finance black economic empowerment;

      3. be consistent with this Act.

Transformation charters

[9] 13. The Minister [may] must publish in the Gazette for general information and promote a

transformation charter for a particular sector of the economy, if the Minister is satisfied that the charter-

      1. has been developed by major stakeholders in that sector; and
      2. advances the objectives of this Act.

Support services and funding of Council

[10] 14. (1) The Department of Trade and Industry must provide the Council with the

necessary support services and funding out of money appropriated by Parliament for

that purpose.

(2) The funds referred to in subsection (1), must be utilised for-

  1. (a) the establishment and operating costs of the Council; and

(b) the development and implementation of a communication plan on black economic

empowerment.

Regulations

[11] 15. The Minister may make regulations with regard to any matter that it is necessary

to prescribe in order to ensure the proper implementation of this Act.

Short title and commencement

[12] 16. This Act is called the Broad-Based Black Economic Empowerment Act, 2003, and

comes into operation on a date to be determined by the President by proclamation in the

Gazette.

MEMORANDUM ON THE OBJECTS OF THE BROAD-BASED

BLACK ECONOMIC EMPOWERMENT BILL

        1. BACKGROUND

South Africa's economy cannot operate to its full potential because the majority of

South Africans earn very low incomes and are still excluded from ownership of fixed

assets and the possession of advanced skills. This is to the detriment of all South

Africans and it is therefore necessary that steps are taken to increase the effective

participation in the economy by the majority of South Africans.

The Broad-Based Black Economic Empowerment Bill (hereinafter referred to as ''the

Bill'') is one of a number of steps being taken by Government to address the problem.

  1. OBJECTS OF BILL

The term 'broad-based' is used in the Bill's title in that the Bill seeks to-

management and skills development;
  1. The Bill's objectives are to-

The Bill does this by proposing the following -

Attached to this Bill are the following draft documents -
  1. FINANCIAL IMPLICATIONS FOR STATE
    2.

    It is envisaged that Council members will not be remunerated except for disbursement

    costs and that the establishment and operating costs of the Council will be

    accommodated in the DTI budget.

  2. ORGANISATIONS CONSULTED
    3.

    The following organisations were consulted:

    Black Business Council

    Black Business Working Group

    Big Business Working Group

    NEDLAC

  3. CONSTITUTIONAL IMPLICATIONS
    4.

    None.

  4. COMMUNICATION IMPLICATIONS
    5.

    It is recommended that the GCIS (Government Communication and Information

    System) and DTI develop a comprehensive communication plan around Black

    Economic Empowerment generally and this Bill in particular.

  5. PARLIAMENTARY PROCEDURE

The State Law Advisers and the Department of Trade and Industry are of the opinion

that this Bill must be dealt with in accordance with the procedure established by section

in section 74 or 76 of the Constitution applies.