The 23rd of July 2024 saw three new laws signed by President Cyril Ramaphosa. The three legal frameworks signed into law are the:
- The Climate Change Act
- The National Small Enterprise Amendment Act
- The Preferential Procurement Act 28 of 2024 (prev. Preferential Procurement Bill).
On Tuesday the 23rd of July South African President, Cyril Ramaphosa, signed three bills into law, formalising them as Acts of legislation after issuing the 2024 State of the Nation Address (SONA2024).
The Climate Change Act
The Climate Change Act (prev. Climate Change Bill B9-2022) has the key objective of developing an effective response to climate change, inclusive of activities that can be undertaken to mitigate risk and reduce emissions as well as to implement adaptive actions under the Paris Agreement to align South Africa’s response to its commitments under same. The signature by the president triggers the starting point of the timelines as envisioned in the Act.
The Act has been welcomed with mixed reaction as South Africa battles to move itself down the rungs where it currently sits as the 15th largest Green House Gas (GHG) emitter globally due to heavy reliance on fossil fuels to generate electricity, as well as a collapsed rail transport system leading to increased road freight use and larger GHG emissions due to internal combustion engines still being the major player in the transport space. This heavy reliance on fossil fuels will prove to be a significant challenge in meeting our national goals and commitments, and we eagerly await the draft regulations as well as sectoral plans on how government plans to work with the private sector to tackle this seemingly insurmountable problem.
The Climate Change Act has six
- Credits and how these will be allocated, bought and sold.
- Roping in Municipalities and Provinces by setting a range of obligations related to Climate Change, including the mapping of risks and areas of vulnerability and the development of plans on how to tackle these.
- Ensuring adaptive measures are taken up by all stakeholders through the development of the National Climate Change Adaptation Strategy 2030, which requires input from a mix of ministries and departments.
- Making the Presidential Climate Commission (PCC) a statutory body and Organ of State to ensure it is capable of carrying out its mandate of developing climate change response options through science-based evidence.
- Provides powers to the Minister in the Environment to have a say on matters related to the Departments of Transport, Electricity, Energy and Agriculture, including those of setting mandatory sectoral emissions targets and reporting guidelines.
- Enable further scrutiny by the general public, including individuals, businesses and civil society. All policies and measures that the minister is required to Gazette will be made available to the public to allow for independent monitoring.
The Minister of Forestry, Fisheries and Environment (Dr Dion George) is expected to publish the first draft regulations in the very near future, with confirmation that the drafting started back in 2022 when the bill was presented to the National Assembly and National Council of Provinces (NCOP). The promulgation of the act is a vital next step towards the regulation of mandatory environmental impact reporting as seen in many countries on a global scale. The Act serves as a great starting point on the road to environmental sustainability, allowing for the formulation of regulations and legal frameworks, as well as punitive measures for non-compliance, such as the increased Carbon tax for those organisations failing to meet their commitments. South Africa’s delay in implementing a clear and relevant climate strategy has resulted in a game of catch-up against more developed global players. This runs the risk of rushed and expensive implementation plans and strategies.
The finalisation of this Act is more than likely an important trigger to receipt of the Just Energy Transition finance commitments which are much-needed to address the job losses from mine closure that is planned or already underway and the transition from fossil fuel to renewable energy sources.
The National Small Enterprise Amendment Act
The National Small Enterprise Amendment Act seeks to streamline the services provided by government to support SMME’s to ensure economic growth, reduced unemployment and poverty, and increase the participation of small businesses within the economy.
The Act sets forth the establishment of the Small Enterprise Development Finance Agency, absorbing both the Small Enterprise Development Agency and the Cooperative Banks Development Agency. According to the Presidency, “The new Small Enterprise Development Finance Agency will function as a one-stop-shop for aspiring entrepreneurs and promote the development of the Co-Operative Banking Institutions”.
Furthermore, the Act establishes the Small Enterprise Ombud Service which will be tasked with managing complaints and making motivated suggestions to the Minister of Small Business Development should it feel practices are having a negative impact on small enterprises, and where the practices may be declared as unfair trading. The minister is also afforded the powers to issue regulations that set out the measurement criteria to be used to determine the class of the organisation, being that of Micro, Small & Medium sized enterprises.
South African SMME’s employ just 28% of the working population, globally this figure sits at the 60 to 70% mark, and the reason behind these poor figures is simple; SMMEs do not last long (only 1 in 5 SMMEs will make it to the 5 year mark) as there is a lack of support from Government, a lack of available funding opportunities, and markets fraught with monopolistic and other unfair practices. SMME’s contribute roughly 34% of the national GDP and make up 90% of all registered businesses and are therefore vital to our economy.
The promulgation of this law has been welcomed by the public, where currently a large portion of the burden of support for small business sits with the Private sector through the Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice (and sector codes and/or charters) and the Enterprise and Supplier Development elements of the scorecard. Companies should not, however, misconstrue this as meaning they can now step back and no longer do their part in ensuring inclusive & diverse supply chains, but should see this as an opportunity to collaborate around SMME Development solutions to ensure the success and sustainability of this initiative through private-public cooperation, and to create sustainable and meaningful employment with the aim of eradicating unemployment and reducing poverty levels.
The Public Procurement Act 28 of 2024
The Public Procurement Act 28 of 2024 (prev. Public Procurement Bill B18-2023) aims to regulate public procurement practices, promote transparency, and prescribe a single preferential procurement framework and address any weaknesses in the current procurement processes, including those of corruption, cadre deployment and tenderpreneurs. Furthermore, the Act aims to achieve more efficient, effective and economic use of public resources and advance the transformation agenda whilst broadening economic participation.
The goal, as stated by the Presidency, is to ensure the new Act and related regulations comply with the stipulation in section 217 of the Constitution in that “contracting of goods and services by organs of state in all spheres of government must occur in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.
In order to combat cadre deployment, corruption and state capture, the new regulations provide specific criteria of who will be precluded from submitting bids for public tenders, these include Public Office Bearers, employees of Parliament or Provincial Legislatures, any officials or employees of, among others, public entities, constitutional entities, municipalities and municipal entities and their immediate family members. In addition to the preclusion of specific persons from the bidding on public tenders is the new requirement that all organs of state must ensure they comply with these regulations with efficiency, cost-effectiveness and integrity, and they are encouraged to use technology to achieve this.
The Gazetting of this Act is a boon for the private sector who have lost faith in the governments procurement policies after experiencing years of corruption and state capture under former President, Jacob Zuma. It is vital to remain cognizant that despite these new regulations, all existing regulations issued under the Preferential Procurement Policy Framework Act 5 of 2000 and Preferential Procurement Regulations of 2017 regarding the preference system will remain in place as confirmed by Sections 17 & 18 of the amended Act, these being the 80/20 and 90/10 preference point systems whereby the latter figure is a direct measure of your Broad-Based Black Economic Empowerment compliance status.
Siyakha’s teams have more than 26 years’ experience in Advisory Services, B-BBEE, Sustainability & Impact, People Services and our work on the ground, delivering development in communities, townships and SMME Development. Our work in Outplacement programme management on a large scale, added to our work in sustainability, impact investment, and ESG reporting and compliance, creates an ideal blended approach to address the increased pressure to understand these legislative changes and reconfigure the business strategy to apply a world-class approach to doing business, achieve growth and build resilient businesses.
Suzaan Bezuidenhout
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