Page 17 - Q&A

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

July 2020
“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.

10