South Africa - International Franchise Association

BEE Codes of Good Practice and other pertinent legislation may be found on DTI’s
website: http://www.dti.gov.za/economic_empowerment/bee.jsp
In 2011 DTI announced that it would increase efforts to combat BEE fronting and
tokenism (i.e. where the control and benefit still reside with previously advantaged
individuals).
Public Private Partnerships (PPP):
Closely linked to BEE, the South African Government and its parastatals are giving close
attention to Public Private Partnerships (PPP). This mode of outsourcing operational
responsibility is an alternative to direct government procurement. While it allows a
variety of leasing options, it can also include buying a service from a private entity. This
mode of business implies less risk for government due to a significantly reduced capital
investment requirement, and a predictable expenditure model (linked to the fee structure
payable to the service provider) while at the same time allowing BEE entities to benefit
from traditional government operations. The more complex PPP tender bidding process
has in some cases also led to longer adjudication and awarding timelines. In some
quarters of organized labor, the PPP process has been scrutinized for policy conformity
since it underscores privatization and deregulation – faced with increasing
unemployment these organizations have become more critical of the allegedly probusiness
stance of the South African Government.
The SA Department of Finance (Treasury) administers the government procurement
process. For more information:
South African National Treasury
PPP Unit
Tel: +27 (0)12 315 5741
Fax: +27(0)12 315 5477
Website: http://www.treasury.gov.za
Offsets and Counter-Trade:
South Africa has a National Industrial Participation Program (NIPP), which mandates a
counter-trade/offset package for all state and parastatal purchases of goods, services,
and lease contracts in excess of US$10 million. Under the program, all bidders on
government and parastatal contracts who exceed the imported content threshold must
also submit an Industrial Participation package worth 30 percent of the imported content
value. The bidder then has seven years to discharge the Industrial Participation
obligation. Non-performance of the contract is subject to a penalty of five percent of the
outstanding Industrial Participation obligation. These IPP requirements are issued with
the tender documentation of all government and parastatal tenders and are overseen by
the Industrial Participation Secretariat of the Department of Trade and Industry.
The Department of Trade and Industry administers the NIPP:
http://www.thedti.gov.za/industrial_development/nipp.jsp
Parastatals: