The importance of BEE compliance in accessing Covid-19 relief funding

17 August 2020 454
“I am a restaurant owner and my business has been adversely affected by the Covid-19 pandemic.  I want to apply for relief funding, but I heard that my business needs to be B-BBEE compliant in order to qualify for such. How important is B-BBEE compliance in accessing relief assistance for my business?”

Since March 2020, various initiatives and forms of relief funding has been established for businesses in South Africa, to mitigate the severe impact of the Covid-19 pandemic and national lockdown.

For example, the Tourism Relief Fund, amongst other debt relief mechanisms, provides a once-off grant assistance of R50,000 per qualifying business operating within the Tourism sector. It should be noted though that the Tourism Relief Fund is administered in line with the objectives of economic transformation and is guided by the Tourism B-BBEE Sector Charter.

Tourism Minister, Mmamoloko Kubayi-Ngubane’s decision to include broad-based black economic empowerment requirements among the criteria to determine who is eligible for grant assistance through the Tourism Relief Fund, was recently challenged in Court. The Pretoria High Court however dismissed the case, confirming that the Minister acted within her powers and that the inclusion of B-BBEE requirements in accessing relief funding, was justified and in line with the transformation strategies of South Africa.

Recently, two parliamentary committee reports on Budget Vote No. 38 and Budget Vote No. 39, also highlighted the importance of B-BBEE compliance in accessing Covid-19 relief funding, in light of the current pandemic and national state of disaster, which has been extended to 15 August 2020.

According to the Budget Vote No. 38 report, members of the National Assembly’s Trade & Industry Committee requested the Department of Trade, Industry & Competition (DTIC) to ensure compliance with the provisions of the B-BBEE Act and B-BBEE Codes of Good Practice during the national state of disaster. The DTIC was also requested to consider measures to strengthen the B-BBEE Act during the Covid-19 pandemic, to which the DTIC responded that the B-BBEE Act is currently being reviewed to strengthen the participation of certain groups such as women, youth, and people with disabilities, in the economy.

The committee further enquired in Budget Vote No. 39, whether B-BBEE levels would be applied when providing relief in terms of the various relief funds available to South African businesses, during the Covid-19 pandemic. The DTIC confirmed that B-BBEE levels were considered for relief programmes currently available. The application of B-BBEE levels were determined after consultation with industry and in line with transformation imperatives, to ensure that the country has an economy that reflects economic inclusion.

What the above confirms is that it remains imperative for businesses to ensure their B-BBEE compliance, particularly if businesses are looking to access relief support provided by Government in relation to the current pandemic.