Introducing the Democratic Alliance's Social Impact Bill

22 June 2023

The DA is proud to announce the unveiling of our ground-breaking Social Impact Bill, officially known as the Preferential Procurement Policy Framework Amendment Act. This transformative legislation aims to comprehensively reform public procurement in South Africa and address the root causes of inequality of opportunity, benefiting the majority of poor and vulnerable citizens.

The Social Impact Bill is currently undergoing consultations with the National Economic Development and Labour Council (NEDLAC) and will soon be introduced into Parliament for consideration.

With public procurement accounting for a significant portion of government expenditure—nearly a trillion rand, approximately 22% of South Africa's GDP—it presents a crucial opportunity for the government to tackle socio-economic challenges by incentivising companies to engage in behaviours that contribute positively to the nation's goals.

In line with this vision, the DA's Social Impact Bill seeks to repeal the Broad-Based Black Economic Empowerment Act (BBBEE) and references to it in other legislation. Instead, the Bill proposes the adoption of Sustainable Development Goals (SDGs) within ancillary Acts.

The BBBEE policy, rooted in the concept of "trickle-down redress," has proven ineffective in promoting economic inclusion. Currently, it tends to benefit politically connected, already wealthy, or highly educated individuals, excluding the majority of South Africans who were meant to benefit from it.

The Social Impact Bill will eliminate BBBEE considerations and amend the Preferential Procurement Policy Framework Act (PPPFA) to incorporate a company's contributions towards a range of SDGs, under certain circumstances, thereby giving practical effect to the DA’s Economic Justice Policy. This shift will enhance social and economic development, particularly for vulnerable communities across the country.

It's important to note that the primary factors of price and efficiency will remain pivotal in government procurement decisions. Prioritising the lowest cost and most effective delivery of government services will ultimately benefit those who rely on these services and uplift society as a whole.

The SDG model proposed in the bill offers several advantages over the current BBBEE model, namely:

Leveraging significant government procurement expenditure to incentivize private companies in contributing towards SDGs;

Maintaining price and functionality as key factors, benefiting those reliant on government services and promoting overall societal upliftment;

Addressing the root causes of inequality without relying on ineffective trickle-down redress;

Directly targeting the vulnerable and disadvantaged, especially those historically classified as black under Apartheid, while minimising benefits to those who don't require them. This will also help curb corruption and patronage;

Incorporating 17 different SDGs, allowing companies to focus on the goals with the most sectoral impact;

Aligning with increasing international best practices, in contrast to localised and less internationally accepted existing legislation; and

Encouraging investment in companies with strong SDG awareness and commitments.

The DA’s Social Impact Bill represents a significant step forward in transforming public procurement for the betterment of South African society. By embracing the SDG model and prioritising price, efficiency, and the needs of the most vulnerable, we can create a more inclusive and prosperous future for all.

Issued by Dean Macpherson, DA Shadow Minister of Trade, Industry and Competition, 22 June 2023