In a significant political challenge to the ruling party’s economic framework, the Democratic Alliance (DA) has announced a legislative push to abolish Broad-Based Black Economic Empowerment (B-BBEE) and replace it with a new system targeting poverty, rather than race, as the primary measure of disadvantage.
The party’s head of policy, Mathew Cuthbert, accused the African National Congress (ANC) of introducing “crude race-based policies” and “red tape that cuts ordinary South Africans off [from] economic activity.”
The proposed solution, dubbed the “Economic Inclusion for All Bill,” seeks to fundamentally reshape South Africa’s public procurement system. According to Cuthbert, the bill would amend the Public Procurement Amendment Act of 2024 to “repeal all race-based preferential procurement provisions.”
The new model would be an “outcomes driven system” offering incentives for “tangible developmental outcomes” such as job creation, poverty reduction, skills enhancement, and environmentally sustainable practices. Cuthbert stated the bill aligns with Section 217 of the Constitution, which requires public procurement to be “fair, equitable, transparent, competitive, and cost-effective.”
Key Features of the Proposed Bill
The DA’s plan involves a complete overhaul of the current B-BBEE architecture. Transitional measures include the winding down of the B-BBEE Commission over 12 months and the “systematic removal of references to B-BBEE across legislation.”
The proposed system would be based on a simplified preference point system, to be developed by the Minister of Trade, Industry, and Competition. The DA’s alternative scorecard comprises three components:
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Value for Money (80% weighting): Assessing cost-effectiveness, technical capacity, and the reliability of bidders.
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Economic Inclusion (20% weighting): Evaluating a bidder’s contribution to United Nations Sustainable Development Goals across categories like human development, economic empowerment, and environmental sustainability.
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Disqualification Criteria: Excluding bidders with a proven record of fraud, corruption, or misrepresentation.
The bill would remove provisions for “set asides, pre-qualification criteria, subcontracting conditions, and local content designations.”
Linking B-BBEE to Corruption and Scandals
The DA directly linked the current B-BBEE model to high-profile corruption scandals. Cuthbert cited the “notorious example” of the “R54 billion locomotive procurement scandal” investigated by the Zondo Commission. He stated that Transnet unlawfully inflated a contract price to favor certain suppliers and channel over R6 billion in kickbacks to Gupta-linked companies “under the pretense of transformation.”
“The B-BBEE model has become a key driver of corruption within our society,” Cuthbert asserted, further pointing to the alleged looting of approximately R2 billion from Tembisa Hospital and the murder of Ekurhuleni Metropolitan Municipality’s chief auditor, Mpho Mafole, following his report on R1.8 billion in chemical toilet tenders.
A Shift in Economic Policy
Cuthbert explained that the DA’s bill “quietly removes ownership, management control, and equity participation,” which he described as “the very pillars of B-BBEE that attempt to shift structural power in the economy.” The party’s position is that its alternative model seeks to create “a pathway towards sustainable economic growth” by targeting disadvantage directly, rather than using race as a proxy.
The introduction of this bill sets the stage for a heated national debate on economic transformation, redress, and the future of empowerment policy in South Africa.