The Department of Trade and Industry (DTI) intends to make sweeping changes to black economic-empowerment (BEE) certification processes and preferential procurement policy in a bid to create a class of black industrialists and accelerate “radical” transformation in the South African economy.

Newly incumbent Deputy Minister of Trade and Industry Mzwandile Masina said in strident commentary during an address to a Black Industrialists’ Stakeholder Engagement session on Thursday that the DTI aimed to create a minimum of 100 black industrialist-led firms active in the productive sectors within the next three years.

Describing this as a “radical” stage of the country’s economic “transition”, he said the department was in the process of engaging with National Treasury over the reform of the Preferential Procurement Policy Framework Act (PPPFA), as there was a “major” problem with the designation of goods and services under this legislation.

“We need to change the PPPFA so that it is aligned with the new manifesto of the ruling party [to advance black economic inclusion] and ensure that 70% of government goods and services are procured from local, [black-owned] firms.

“In its current form, the policy is [anti-transformational] and a hindrance,” he commented, adding that this proposal was achieving “high priority” within government.

Among the aspects of the PPPFA identified by the DTI as problematic were the inability to institute set-asides, as well as what the DTI considered to be low BEE accreditation requirements.

“We’re not changing the law so that it is a free-for-all, but rather to enable real BEE. Don’t think you can short-change government…the black-owned firms that are awarded contracts with government [under this scheme] must deliver quality products and services. This is not a grant,” he noted.

Saying the DTI would be “rough, not reckless”, Masina added that the department had established an advisory panel to assist government to “work fast” in the creation of a framework strategy and implementation plan for the creation of the envisaged black industrialist class and would announce a suite of related incentives by the end of the month.

DTI director-general Lionel October further noted that no global business class had been created without the support of the State and it allowing preferential access to finance and procurement.

“We will fast-track these incentives. The DTI provides just under R6-billion a year to the private sector [through its various incentive schemes] and, in future, the bulk of that must go towards black industrialists,” he asserted.

Masina also outlined the department’s intention of doing away with agencies that were accredited to grant BEE ratings and certificates, saying the power to issue certification would soon shift to the DTI exclusively, after which these companies would fulfil an advisory function on BEE policy.

He argued that such agencies sought to undermine the State’s transformation agenda by indiscriminately issuing BEE certification.

“This is linked to the issue of fronting…[and] whether you like it or not, we’re going to take away the responsibility of these firms and close down this industry. It is us who gave them [the right] to issue BEE accreditation and now we’re taking it back,” he outlined.

Masina added that government would also look to create a package of financial services to support the emerging black industrialists, likely recapitalising the National Empowerment Fund to enable it to “continue lending” to companies identified under the strategy.

Equally, the DTI said it would leverage other development finance institutions, such as the Industrial Development Corporation, the Development Bank of Southern Africa, the Public Investment Corporation and the Small Enterprise Finance Agency, to provide identified recipients with development funding.

“[These institutions] will need to refine some financing measures, but we will continue to engage with them on this matter. Everyone that is granted a loan will, however, be required to repay it – we won’t be dishing out free money,” he said.

Masina’s announcement has received fervent support from the Black Business Council, Business Unity South Africa, the BEE Charter Council and the State Owned Enterprise Procurement Forum.