BEE changes for healthcare in South Africa – with major fears over the NHI – BusinessTech

The South African Health Products Regulatory Authority (SAHPRA) plans to introduce Black Economic Empowerment (BEE) conditions for the issuing of licences.

The group’s draft broad-based BEE policy aims to promote the objectives of the B-BEE Act by factoring in the code of good practice when determining qualification criteria for licence issuing.

Thus, B-BBEE elements will be added to SAHPRA’s activities related to its issuing of licenses to manufacture, wholesale, distribute, import, and export health products and permits as envisaged in section 22c of the Medicines Act.

SAHPRA’s plans to implement the policy in two phases.

In the first one-year phase, SAHPRA will require an applicant to submit their B-BBEE level certificate when applying for a licence. SAHPRA will then verify the B-BBEE level status.

If an applicant fails to submit their B-BBEE level certificate or the certificate is unverifiable, SAHPRA will not issue a licence to such an applicant.

SAHPRA will then use the information gathered to understand the industry structure.

“SAHPRA will then develop, consult with industry, including relevant stakeholders and finalise criteria to be applied when licence applications are reviewed and eventually issued,” said the policy.

In the second phase, SAHPRA will utilise the applicant’s B-BBEE level to review and issue licences according to the approved criteria.

Business interest group Sakeliga said that the new BEE requirement offers an alarming preview of the drastic consequences of the NHI system, under which the state would control the entire medical supply chain.

“The BEE licensing of health products and equipment is a grim illustration of how BEE promotes the narrow interests of politicians, bureaucrats, and self-enriching intermediaries at the expense of the public,” said Sakeliga.

“It is inevitable that the addition of BEE requirements – a measure with inherently no relevance for the effective supply of medical products – will lead to declines in the quality, affordability, and availability of medical products. The stifling effect will discourage both local and international operators.”

Although the policy was published last year, stakeholders will still be allowed to send comments to SAHPRA by the close of business on 9 September 2024.

The policy can be found below(for mobile users, click here):

Larger trend

Sakeliga said that the proposed licensing changes from SAHPRA are part of a more significant trend to make all economic activity subject to the state’s approval, with a particular focus on BEE.

“The cover-up method followed by Sahpra, namely a first phase aimed at seemingly innocent BEE reporting to pave the way for a second phase requiring BEE compliance, is part of a pattern that manifests itself in more or less explicit terms also repeated with other regulators.”

“We see similar efforts in the financial services industry, the real estate industry, in decisions of the competition commission, the telecommunications industry, the agricultural industry on issues such as water, and more.”

For instance, the Property Practitioners Regulatory Authority (PPRA) said that level 8 BEE compliance (40 points) is now non-negotiable for all real estate agencies with a turnover of over R2.5 million.

Jan le Roux, CEO of the Real Estate Business Owners of South Africa (Rebosa), previously said that the PPRA’s B-BBEE requirements for the next round of Fidelity Fund Certificates (FFCs) for 2025 had significantly changed.

According to the Property Practitioners Act, no entity may act as a property practitioner without a valid FFC.

In the past, the only requirement was a valid BEE certificate, where no minimum score was required.

Le Roux added that the PPRA issued FFCs without the minimum BEE requirement, mainly for information-gathering purposes.

However, this has now changed, with the PPRA doubling down on the requirement for higher BEE scores.

“Regarding Rebosa’s points, while precedents may have been set in the past to allow additional time for industry alignment, it is imperative to underscore that compliance with regulations such as those set forth by the PPRA is non-negotiable,” said PPRA CEO Thato Ramaili.

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