The proposed amendments to the Preferential Procurement Regulations‚ which govern the tender process to be followed by government‚ are irrational and ought to be scrapped as government regulations are “increasingly being dictated by powerful lobby groups who are close to President Jacob Zuma‚ and who have a massive vested interest in ensuring that empowerment laws benefit them”.

Democratic Alliance (DA) shadow minister of trade and industry‚ Geordin Hill-Lewis said on Tuesday a small group of already wealthy and well-connected businesses “all too often use BEE (black economic empowerment) as a scheme to further enrich themselves. This new proposal exacerbates that problem.

“It only leads to more public money flowing to a small group of well-connected cronies‚ and less public money going to the actual delivery of services. We support rational and fair broad-based empowerment‚ that gives credit for actually growing the economy and creating jobs‚ and does not just see as its end the creation of a few billionaires at the cost of the public.”

The amendments sought to further economic transformation by drastically increasing the empowerment thresholds by which tender applications are assessed.

“All procurements less than R10-million will now be assessed on the basis of 50% price and 50% non-price factors. The non-price factors include black ownership‚ women ownership and ownership by persons with disability. This is a drastic increase from the current 80% price — 20% non-price assessment rule.

“This increase poses a major threat to the procurement process‚ which is already viewed with scepticism and discontent by the public. The process will now become even more susceptible to abuse and manipulation‚ serving to benefit a small elite at the expense of the majority of South Africans.

“In effect the regulations allow bidders to increase their price by up to 50% more than market value‚ and still win the tender.

“This will have a damaging effect on our economy and our national fiscus. By paying more of a premium on tenders‚ less money will be available for government to spend on service delivery‚ which negatively impacts poor and disadvantaged South Africans the most‚” Hill-Lewis said.

“Procurement policy should focus on truly involving new entrants in the economy‚ including giving preferential treatment to those previously disadvantaged South Africans who have not been awarded tenders in the past. This will go far to ensure that BEE is truly broad-based‚ in order to benefit the millions of disempowered South Africans who remain outside of the economy.

“Empowerment which focuses primarily on the transfer of ownership in businesses has done little to change the economic circumstances of the majority of people disadvantaged by apartheid. The current approach to empowerment has not yet helped to overcome the real obstacles to black advancement in South Africa.

“The DA believes that to have an inclusive society‚ government must focus its policy interventions on expanding economic opportunities and creating jobs through growth. These regulations are in stark contrast to such a goal‚ and must be scrapped at once.”

Hill-Lewis said he would write to Minister of Finance Nhlanhla Nene requesting him to withdraw the amendments with mediate effect.