- The Constitutional Court will not hear an appeal against a ruling that it was incorrect to include B-BBEE as a criterion for state Covid-19 tourism aid subsidies.
- The ruling marks a victory for the Solidarity union and the AfriForum lobby group, which initially took the tourism department to court in 2020.
- Funds paid to small businesses under the relief plan do not need to be repaid.
- For more financial news, go to News24 Business Cover.
South Africa’s highest court has refused to hear an application for leave to appeal a lower court’s ruling that the state erred in including Broad-Based Black Economic Empowerment (B-BBEE) as a grant criteria. Covid-19 aid in the tourism sector. .
In April 2020, when the Covid-19 pandemic brought local and international tourism to a halt, the then tourism minister Mmamoloko Kubayi created a Tourism Relief Fund.
Some R200 million would be allocated for one-time payments of up to R50,000 for small businesses in distress. The minister included the B-BBEE status level of applicants as one of the criteria for funding.
The Solidarity union and lobby group AfriForum took the Department of Tourism to the North Gauteng High Court in Pretoria, arguing there was no need to use “race as a benchmark” for relief.
Although they lost their initial case, AfriForum and Solidarity won on appeal at the Supreme Court of Appeals (SCA) in September 2021.
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The minister argued that she was required to include the B-BBEE level of applicants as one of the criteria for relief under the B-BBEE Tourism Sector Code.
But the court concluded that the minister was wrong, as relief grants administered under the Disaster Management Act could not be regarded as grants “in support of B-BBEE”.
The SCA said:
Therefore, their inclusion of the B-BBEE status level of applicants for assistance as eligibility criteria for grants from the fund was invalid.
However, the court did not rule that the R200 million already distributed to small businesses should be recovered, noting that neither Solidarity nor AfriForum have requested it.
Appeal Offer
The department then applied for leave to appeal the SCA’s ruling to the Constitutional Court.
On Wednesday, the high court denied leave for the appeal. This means that the SCA’s September 2021 ruling stands.
In its ruling, the Constitutional Court noted that the issue was “moot” as SA’s state of disaster was lifted long ago and the funds have already been distributed.
READ | Tourism sector devastated by Covid-19 on the road to recovery, with an increase of more than 100% in domestic travel
And while he would sometimes rule on “moot” issues, an increased caseload means you have to pick and choose your cases carefully.
Solidarity’s deputy executive director for legal affairs, Anton van der Bijl, said that while some might see the case as “academic”, it still sets an important precedent.
It would make it more difficult for the state to include B-BEEE requirements as part of the criteria for future relief funds, he said.
