The Preferential Procurement Policy Framework Act (PPPFA) has not yielded the transformation results it was set to achieve, and given the shortcomings of the act, it will be repealed, said President Jacob Zuma.

Zuma delivered an address at the Black Business Council (BBC) Gala Dinner at the Hilton Hotel in Sandton on Tuesday night. He discussed the importance of continuing to strive for transformation for the purposes of economic freedom. Among other issues, he mentioned new initiatives and changes to the PPPFA to continue the quest for a transformed economy.

“We thought it (PPPFA) would work and make an impact. But you (BBC) pointed out it does not work. We are aware of the shortcomings… It is rigid and not responsive to government objectives,” he said.

Zuma said a “flexible” preferential procurement programme would be introduced, that is responsive to government objectives.

The current PPPFA has failed to substantiate the “skewed” ownership and controlled South African economy, he explained.

The amended public procurement bill is scheduled to be tabled in parliament in early 2017, he said. To make the PPPFA responsive to transformation imperatives, a new regulation is being proposed to have a compulsory subcontracting clause. “It will be compulsory to subcontract 30% of the value of a contract, for all contracts above R30m,” he said.

The intention is to finalise the regulations for approval by October 2016 and it is to be made public by 1 November 2016.

Recently the BBC came under fire for supporting the president by declaring publicly that the association wanted Zuma to complete his term, despite calls by businessman Sipho Pityana to have Zuma removed.

The BBC told Fin24, that the decision to remove Zuma would be up to the ANC.

Economic freedom a work in progress

Zuma also said that although political freedom has been achieved, economic freedom is still a work in progress. He added that the majority of citizens should start playing a meaningful role in the economy, not only participating as workers but as executives, senior managers and policy makers.

“In China, the Chinese are in control of the economy. In India, the Indians are in control of the economy… The case in South Africa is not the same,” he said. What sets these countries apart is the “iron discipline” to work hard. He said that the lack of discipline among South Africans is what counts us down.

Further, Zuma said that the black empowerment policy was developed to remove the historical and current impediments that inhibit the black majority from participating and benefitting from the activities of the economy.

Zuma added that the investor community was supportive of black empowerment policies. “Most investors only want certainty and clarity. They want to know how the policy works and what is expected from them. They are not opposed to reversing the legacy of the apartheid past.”

The country will only succeed if both the public and private sector “institutionalise” these policies and implement them. “The private sector is expected to share and transfer economic ownership and control, skills and capabilities to black people,” he said.

As for the role of the public sector, government must use its “procurement muscle” to sustain and grow black business, he said. Annually, through the public sector procurement system, government spends R500bn on goods and services and construction works.