BEE is not going anywhere

The government has reaffirmed its commitment to Black Economic Empowerment (BEE) policies in South Africa amid rising calls for these policies to end and be replaced with more effective alternatives.

This comes after the Democratic Alliance announced its intentions to introduce the Economic Inclusion for All Bill to replace existing BEE legislation.

When Broad-Based BEE (BBBEE) was first introduced in South Africa in 2003, it aimed to advance economic transformation and enhance the participation of black people in the South African economy.

However, critics of these empowerment policies have argued that BBBEE has not achieved the transformative goals it set out to reach but merely benefited a small group of well-connected elites.

They claim these policies have been tainted by corruption and cronyism, with estimates that around R1 trillion worth of BEE deals have only circulated among around 100 well-connected individuals.

On Wednesday, 22 October, the government indirectly addressed these critiques in a media statement, reaffirming that BBBEE remains a “key policy instrument of the state”.

The government said the policy remains central to South Africa’s economic transformation and forms part of the country’s long-term strategy to redress historic injustices, broaden economic participation, and build a truly inclusive economy.

In addition, the state said the BBBEE Act is constitutional, as it followed all the prescribed requirements to become law.

“This Act is, therefore, a product of democratic processes. If any person requires a change of policy or law, then the appropriate channels and processes should be followed,” the government said.

It added that, as part of the Government of National Unity (GNU), all parties within the coalition share a responsibility to advance policies that contribute to economic transformation and sustainable development.

Therefore, the government argued that BBBEE is not prejudiced – “rather, it is a constitutional and moral imperative rooted in South Africa’s commitment to equality, fairness, and redress the imbalances of the past”.

A necessary tool

In its statement, the government acknowledged that South Africa still has a long way to go in leveling the playing field, despite progress made over the past three decades.

“Despite the progress made over the past three decades, the disparities in ownership, management, and income distribution remain stark,” it said. 

Critics of BEE policies have made similar points, arguing that these policies need to be reviewed as they have not achieved the transformative goals they set out to reach.

Trade Minister Parks Tau and former president Kgalema Motlanthe recently joined this chorus of critics, calling for current BEE policies to be reviewed.

“In fact, we have said in the department that a review of the architecture of the entire transformation programme, policies, and instruments is called for,” Tau said.

“Progress has not been enough to equal the post-1994 promise to free the potential of each citizen, as ownership patterns remain skewed and top management representation for black South Africans remains low.”

“Too often, empowerment has been undermined by fronting, tokenism, and financial structures that deny true control.”

However, the government said in its statement that BBBEE continues to serve as a mechanism through which the state works to level the playing field.

It said this policy ensures that the previously disadvantaged and discriminated South Africans, especially women, youth, and persons with disabilities, are meaningfully included in the mainstream economy. 

“Importantly, the ongoing refinement of empowerment policies is part of government’s effort to ensure that implementation is effective, transparent, and aligned with national development priorities,” it said. 

“The success of any economy rests with wider inclusion and participation of the masses of the population.”

Wits School of Governance Professor William Gumede has estimated that up to R1 trillion has been redistributed to just 100 individuals and companies in South Africa under BEE.

This has added credence to claims that BEE has only benefitted a handful of well-connected elites, rather than disadvantaged South Africans who remain economically excluded.