The government is abandoning B-BBEE through public procurement regulations

South Africa’s greatest missed opportunity is not failure to create new progressive policies, but the failure to harness the constitutional instruments we already possess.

Every year, the government spends hundreds of billions of rand buying goods, services and infrastructure. That purchasing power should be the country’s single most effective instrument for dismantling the economic architecture of apartheid. Instead, the latest draft public procurement regulations suggest that the government is retreating from one of the few levers capable of driving meaningful economic transformation.

Globally, public procurement is not simply about purchasing goods at the lowest price. In many other jurisdictions, it is used to drive the developmental agenda, and in South Africa, we have always understood that it is one of the Constitution’s most powerful tools for creating a more inclusive and employment-creating economy.

Sections 9 and 217 of the Constitution impose transformative obligations that procurement must do more than deliver value for money. It must also advance those who were disadvantaged by decades of racial exclusion.

Transformation and empowerment were never intended to be an optional policy choice. It is a constitutional obligation.

Yet, the draft regulations signal a worrying shift in government philosophy. Transformation is increasingly treated as an administrative afterthought rather than the organising principle of public procurement.

That should concern every South African. Broad-based black economic empowerment (B-BBEE) has been the primary legislative mechanism through which procurement has promoted supplier development, enterprise growth, skills development, employment equity, management control, ownership transformation and broader participation in the economy.

Now, the draft regulations leave transformation to the discretion of individual institutions. This gives rise to three significant risks.

First, the draft regulations risk reversing many of the transformation gains achieved since the advent of democracy. They reduce preferential procurement to a narrow focus on ownership. In doing so, they marginalise millions of beneficiaries, including participants in learnerships, internships and apprenticeships, etc.

This represents a fundamental departure from the B-BBEE Strategy adopted by the government in 2003, and cannot credibly be presented as progress. It is, a step backwards in South Africa’s transformation journey.

Second, it weakens the constitutional purpose of procurement itself. The Constitution specifically authorises procurement policies that protect and advance those disadvantaged by unfair discrimination. That historical purpose cannot simply be diluted because transformation has become politically inconvenient.

Third, it creates inconsistency across government institutions. Instead of establishing a clear national framework, the regulations grant broad discretion to individual organs of state. One municipality may pursue transformation aggressively, while another may ignore it almost entirely. Constitutional obligations should never depend on the enthusiasm of individual accounting officers.

Perhaps the clearest illustration of this retreat lies in the bid evaluation matrix itself. This bid evaluation matrix doesn’t include B-BBEE as a criterion for evaluating large bids where bids are not published as a set-aside. In effect, substantial public expenditure could proceed lawfully without serious consideration of the very transformative objectives the Constitution sought to advance.

Even more revealing is what the regulations do not say. The provisions focusing on strategic procurement and procurement methods speak extensively on procedures but are almost entirely silent on transformation.

This reflects a deeper policy failure or, at best, a systematic retreat from B-BBEE. Procurement methods are presented as neutral administrative processes but procurement is never neutral. Every tender awarded shapes ownership patterns. Every contract determines who accumulates capital, who creates jobs, who develops industrial capability and who remains excluded from opportunity.

When the government chooses not to use procurement to transform the economy, it is making a policy choice in favour of preserving existing patterns of economic power.

Even more troubling is the treatment of set-asides.

Whilst we acknowledge and appreciate the introduction of set-asides, the regulations effectively confine set-asides, the only direct preference mechanisms, to contracts below R20-million.

This means that many of the largest opportunities, such as major infrastructure projects, energy projects and strategic acquisitions, would remain largely inaccessible to historically disadvantaged enterprises.

Ironically, the sectors that need transformation most become the very ones where it is least likely to occur.

Imagine Eskom being unable to reserve, through set-asides, significant coal supply opportunities for emerging black-owned enterprises, or IPP projects or rail infrastructure projects proceeding without meaningful participation by black women-owned businesses.

Equally concerning is the absence of accountability. The regulations require reporting when transformation measures are not implemented but prescribe virtually no consequences for officials or institutions that ignore their constitutional obligations.

In practice, this turns transformation into a matter of institutional goodwill.

Government cannot continue to speak passionately about inclusive growth while weakening the very instrument designed to achieve it.

• Mpafa is the head of policy at the Black Business Council and leads BBC’s Public Procurement Regulations Task Team

Mpho Sibanyoni