New regulations for the Preferential Public Procurement Finance Act came into force yesterday. The Democratic Alliance (DA) welcomes this long-overdue alignment of the Act with the Broad Based Black Economic Empowerment Act.

We are concerned, however, that many municipalities across the country are not ready to implement the new regulations. National government had a responsibility to communicate in good time with municipalities, yet we understand that important guidelines - and other relevant documents - were only received by local governments last Friday.

We are also in possession of a letter and a memo to the Minister of Finance, from the Chairperson of the South African Local Government Association, Mr Thabo Manyoni, wherein he lays out a long list of additional concerns around the rushed implementation of the new regulations.

The new regulations were only finalised in June 2011 and most municipalities seem to have not been properly briefed on how to deal with their complexities. Apparently only the Western Cape and KwaZulu-Natal hosted road shows to inform municipalities of the upcoming changes and how to deal with them. Some municipalities have reportedly only been made aware of the changes in the last weeks of November.

In addition, while we support the spirit of the regulations, we are concerned that businesses with turnover of less than R5m, who were previously exempt from having to submit BEE verification certificates, will now have to get certified. This new provision will constrain the number of small business – black- and white-owned - that can today supply municipalities. It also strengthens the case for an extension.

The DA believes that the turnover exemptions for micro businesses and qualifying small businesses are too low, and should increase to R20m and R50m respectively. This would reduce the cost of doing business for the categories of businesses that provide most of our jobs.

We also note the designation of certain industries for local procurement by the Minister of Trade & Industry, namely: Power Pylons; Rolling Stock; Buses; Canned Vegetables; Clothing, Textiles, Footwear and Leather products and Set Top Boxes. We are concerned that, despite the fact that the designations were announced at the COP17 climate change conference, solar water heaters weren’t designated.