BEE will be replaced by a black empowerment tax – Dawie Roodt

Efficient Group chief economist Dawie Roodt said President Cyril Ramaphosa’s State of the Nation Address signalled the beginning of the end for Black Economic Empowerment (BEE).

BEE has come under significant pressure over the past year, with many stakeholders calling for its abandonment.

A 2025 study by the Free Market Foundation and the Solidarity Research Institute showed that BEE costs the country between R145 billion to R290 billion per year.

Apart from the direct cost to the economy, it drives away much-needed direct investment into South Africa.

Dr Frans Cronjé, a prominent political and economic analyst, said BEE is a tax on capital on arrival.

By requiring companies to give away portions of their business to invest in South Africa, the policy makes many potentially viable projects unviable.

Cronje said South Africa’s BEE policy cannot be tweaked and should be removed entirely to encourage investment.

This aligns with the United States’ request to scrap BEE for American companies as a prerequisite to resetting the strained relationship.

The Democratic Alliance (DA) has proposed replacing the current Broad-Based Black Economic Empowerment (BBBEE) framework with a new model.

It said the current BEE model has failed the majority of South Africans while only enriching a politically connected elite.

The party’s alternative, the Economic Inclusion for All Bill, uses poverty and socio-economic disadvantage as proxies for redress rather than race.

“We reject the protection of BEE, which has benefited only politically connected elites at the expense of the poor,” the DA said.

It added that the poor remain trapped in poverty, locked out of employment, and with little hope of climbing the opportunity ladder.

“We will relentlessly pursue the replacement of BEE with a policy that truly focuses on addressing poverty,” it said.

President Cyril Ramaphosa defends BEE

President Cyril Ramaphosa took a firm stand against growing calls to scrap South Africa’s race-based B-BBEE policies.

In his State of the Nation Address (SONA) on 12 February 2026, he announced a review to refine, realign, and strengthen the BEE framework.

Last year, he said the state would set up a R100 billion Transformation Fund to support black-owned and small businesses.

On 19 February 2026, during his reply to the 2026 SONA debate, he rejected suggestions that BEE should be abandoned.

He framed the policy not as an economic burden, but as a constitutional necessity and an investment in sustainable growth.

Ramaphosa said it was not the time to scrap BEE, but rather to make it more effective.

He explained that South Africa’s Constitution requires the country to redress past injustices and build a society that is equal and just.

“We cannot do that without transforming the various aspects of South African life, but more particularly the economy,” he said.

“It cannot be acceptable to anyone in this house for African people, colored people, and Indian people to be poorer and have fewer opportunities than white people.”

Dawie Roodt says BEE will be replaced by an empowerment tax

Roodt argued that there is no true black empowerment in South Africa as poor black people continue to struggle.

He said true empowerment is providing people with quality education, a safe environment to live in, and essential services like water and electricity.

The government has failed to provide black people with these essential services over the last 20 years.

Instead, BEE has created a small group of ultra-wealthy individuals who are politically connected.

Roodt believes that the R100 billion Transformation Fund will replace the current BBBEE legislation.

He said this fund will offer an alternative where they can simply pay into a fund rather than dealing with complex BEE scorecards and racist forms.

“In the future, you will buy your BEE rating. Businesses will give the state money and forget about BEE,” he said during a State of the Nation discussion.

“It is a much more attractive alternative to South African businesses. It will simply become another tax.”

He said the R100 billion Transformation Fund will lead to the official BEE framework coming to an end.