B-BBEE for Organs of State

The B-BBEE Commission’s 2022 Annual report made some interesting findings in terms of B-BBEE compliance and the public sector, particularly the organs of the state.     It noted:

1) Public Entities and Organs of the State are mandated by the B-BBEE Regulations to report annually to the B-BBEE Commission within 30 days after the approval of their audited annual financial statements and annual reports.

2) 82 Organs of State out of 326 submitted their Annual Compliance Reports to the B-BBEE Commission. 

3) Of the 1448 certificates that were submitted in terms of the BB-BEE regulations only 33 of those certificates were from Public Entities and Organs of State.

It’s possible that most municipalities are not aware that they are compelled legally to implement a B-BBEE process within their municipality and even more likely that few municipalities know how to do it.

Paragraph 3.1 of CODE SERIES 000, STATEMENT 000 (gazette no 42496) states that

3. APPLICATION OF THE CODES

3.1  The following Entities are measurable under the Codes:

3.1.1 all Organs of State and Public Entities

What is an organ of the state?

The term Organs of State appears in section 239 of the Constitution of South Africa

“organ of state” means—

(a)  any department of state or administration in the national, provincial or local sphere of government; r

When read in conjunction with 156 it is very clear that the local sphere

Preferential Procurement Policy Framework Act, 2000 defines an organ of state as

5 (iii) ‘‘organ of state’’ means—

(a) a national or provincial department as defined in the Public Finance Management Act, 1999 (Act No. 1 of 1999);

(b) a municipality as contemplated in the Constitution;

(c) a constitutional institution defined in the Public Finance Management Act

of government includes municipalities.

It’s quite clear that the intention of the B-BBEE codes made compliance with the B-BBEE codes compulsory for organs of state which includes municipalities.

Whilst the BEE Codes cover a broad series of requirements, one of the requirements is the stimulation of local black economic activity.  This is a constitutional requirement under section 153. 

An entity must—

(a) structure and manage its administration budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community.