IRR engages provincial legislatures on BEE premiums

The Institute of Race Relations (IRR) has begun engagements with provinces about their Appropriation Bills, recommending that they remove BEE premiums which impinge on provincial budgets, limit service delivery and defer development by wasting taxpayers’ money on premiums rather than actual goods and services.

The Provincial Financial Management Act obligates the MECs of all provinces to table their annual budgets within two weeks of the delivery of the national budget. The IRR seized the opportunity to submit recommendations to all MECs ahead of their provincial budget speech, urging that they make Black Economic Empowerment (BEE) premiums an explicit expenditure item in their accounting, which they currently do not. The IRR further pushed for MECs to eliminate BEE premiums altogether as they fail to serve the goals set by provinces to advance development and provide basic services. Instead, money spent on these premiums only fills the pockets of tenderpreneurs without an exchange of value flowing to residents.

The next step in this process is for the provincial legislatures to invite the public to make written and verbal submissions on their Appropriation Bills to foster the spirit of public participation, democracy and accountability by allowing the public to say what they think of the Bills. So far only the Western Cape, Gauteng and North West have communicated their submission dates, to which the Institute responded with written submissions and, in the case of the Western Cape, a verbal submission. The Institute awaits the opportunity to communicate verbally with the legislatures of the latter two provinces.

The IRR’s submission can be summarised in these points:

1. Adopt and apply procurement policies that maximise value for money within the current legal framework;
2. Measure, record, and publish the cost of any preference-related premium paid in procurement decisions;
3. Protect education, health, and other frontline services from avoidable procurement inflation, and
4. Use the province’s voice in the NCOP to advocate for a national procurement framework that places value for money first and sharply limits premiums that reduce service delivery.

Says IRR strategic engagements manager Makone Maja: “The provincial legislatures have a duty to be transparent with residents about the extent to which preference premiums rob communities of the basic services many of them depend on. As we contend in the submission, premiums have a real human cost. Money that could be going to equip the classroom, the clinic, the ambulance fleet, road maintenance, and basic service delivery is instead used to promote BEE. Value for money is a better choice for residents and is the only option for provinces that are interested in adequately meeting the needs of their people.”

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