Beginning of the end for BEE in South Africa

Black Economic Empowerment (BEE), as it is currently known and implemented, is coming to an end in South Africa as criticism from businesses, civil society, and members of the government force changes. 

This does not mean that transformation as a broader policy framework will disappear in South Africa. Rather, the way businesses comply and how it is achieved will change. 

The most significant change is the implementation of a Transformation Fund, which companies can contribute to and earn points for their BEE scorecard, as opposed to identifying their own enterprise and supplier development beneficiaries. 

This gives businesses an entirely new way to comply with BEE and transformation policies in South Africa, which may make the system more efficient, less burdensome, and less obstructive to new investors in South Africa. 

Efficient Group chief economist Dawie Roodt said that this indicates the beginning of the end of BEE in South Africa, with the government slowly admitting it has failed to achieve true transformation. 

Implicit in this admission is that BEE has negatively impacted the country’s economy, slowing its growth and resulting in extremely high levels of unemployment. 

Speaking after the State of the Nation Address (SONA), Roodt said this is a key admission for the government to make, with it historically defending BEE very strongly and refusing to make any changes to the policy. 

This is set to kick off a process of BEE being redefined with regard to its objectives and how it is imposed on businesses, particularly regarding how they comply. 

In his SONA, Ramaphosa said the government is undertaking a review to refine, reeling, and strengthen its broad-based BEE framework to ensure that it supports greater transformation and inclusive growth. 

“This shows that BEE is probably going to be redefined, and I think this is probably the beginning of the end of BEE as we know it,” Roodt said. 

Roodt explained that the existing BEE framework is likely to be replaced with the new Transformation Fund, with businesses paying into the fund to secure points for their BEE scorecard. 

“This will probably be the end of BEE when this process is followed through to its conclusion,” Roodt said. 

The R100 billion transformation fund

Roodt’s predicted replacement of BEE as it is currently implemented with the new Transformation Fund comes after significant progress has been made in setting up the investment vehicle. 

At the beginning of February 2026, Minister of Trade, Industry and Competition, Parks Tau, announced significant changes to the existing BEE framework. 

These changes included alterations to the BEE Codes of Good Practice, with a special focus on how the new Transformation Fund will be capitalised. 

Crucially, they also include changes to how preferential procurement is measured, with companies set to be able to earn more points for contributing to the fund than other BEE activities. 

Tau’s draft changes show that the intention is for the fund to be capitalised through businesses’ enterprise and supplier development contributions, legal experts at Webber Wentzel said. 

This fund will then use the capital it manages to invest in and finance small- and medium-sized black-controlled businesses. 

Under the existing BEE codes, all businesses must make contributions, in cash or in kind, to these types of businesses, with some also being their suppliers. 

This gives companies points for their BEE scorecards, increasing their chances of securing government contracts or deals with big businesses. 

Tau’s changes are set to allow businesses to instead make contributions to a centralised fund, which will then deploy money to beneficiaries in line with BEE principles.

This would mean that businesses would no longer have to identify their own enterprise and supplier development beneficiaries or go through third-party intermediaries.

Crucially, while the 3% net profit after tax spending target will remain unchanged, businesses could score more points by contributing to the fund than by making individual contributions to black-controlled companies. 

The proposal is to increase the total points businesses can score in the Enterprise and Supplier Development element from 46 to 53, including bonus points, if they contribute to the fund.