Cut BEE premiums to put residents ahead of tenderpreneurs, IRR tells provinces

In its engagements with provincial finance MECs this week, the Institute of Race Relations (IRR) has implored them to act on their own promises to maximise value for money as a way of restoring their provinces’ fiscal good health.

Finance MECs have begun tabling their provincial budgets this week with more promises being made about implementing value for money, yet the residents will not see the effects if BEE premiums persist. Limpopo, Gauteng, Northern Cape and Western Cape are among some of the provinces whose budget speeches have been delivered.

Says IRR Strategic Engagements Manager Makone Maja: “MECs such as Lebogang Maile of Gauteng must be lauded for acknowledging the importance of value for money, including in his 2025 budget speech. But the real work of seeing to its application should have begun thereafter, which so far has not been the case.”

Maja warns that BEE premiums and value for money cannot coexist. She argues that BEE premiums carry severe implications for provinces and especially their residents by ensuring that, even where budgetary allocations are set aside for infrastructure development and social spending, tenderpreneurs eat first and taxpayers are left with the scraps. Healthcare, education, human settlements and all other programmes procure goods and services at a premium many times greater for poor quality, rather than with the goal of achieving cost-effectiveness and maximum quality for residents.

Says Maja: “MECs must choose. Either we pay above-market value for goods and services procured on the basis of racial and gender preferences, which come at a high cost to the provinces and serve no purpose other than to create a class of rich tenderpreneurs, often with patronage links to politicians who have a financial interest in maintaining this system. 

“Or we procure for quality and cost-effectiveness which will assure millions of residents who rely on public infrastructure for their basic needs that their healthcare, education and housing are not only the best quality, but that without the premium, more money can be allocated to these programmes, which will disproportionately benefit poor communities.”

The IRR has shared its draft Value For Money Bill with all nine MECs to guide them on how to implement value-for-money measures so that ordinary people benefit from them.

Read – and support – the Value For Money Bill here: https://irr.org.za/whatsacanbe/value-for-money

Media contact: Makone Maja, IRR Strategic Engagements Manager Tel: 079 418 6676 Email: makone@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za