End of BEE as you know it in South Africa

Finance Minister Enoch Godongwana revealed that the government is open to an honest debate about the unintended consequences of Black Economic Empowerment (BEE) policies. 

This admission is stark, with the ANC government of the past having refused to even debate the merits of BEE with opposition parties. 

Furthermore, the openness to debate comes amid increasing pressure on the ANC’s transformation framework in South Africa, which has become synonymous with cronyism and corruption. 

The government, through the Department of Trade, Industry, and Competition, is currently conducting a two-phased review of BEE and its effect on South Africa’s economy. 

Godongwana, fielding questions from Members of Parliament (MPs) after the tabling of the 2026 Budget, said South Africa must have an honest debate about BEE. 

DA MP Andrew Bateman asked Godongwana whether the framework is holding back the economic growth required to improve South Africa’s balance sheet. 

“We must have an honest debate about BEE. But, first and foremost, it is a constitutional imperative. You cannot dismiss BEE as it is required by the Constitution,” Godongwana said. 

“What we need to ask is whether there are any unintended consequences. You can’t say ‘Do away with BEE.’ Are there any unintended consequences?” 

Godongwana said the debate around BEE must focus on the policy’s efficacy and whether it is actually driving the empowerment of black individuals in South Africa. 

“If the debate starts there, it can start from an objective basis of analysing some of the unintended consequences, and then we can have a constructive discussion,” he said. 

“The discussion at the moment is an ideological attack more than an objective analysis of its efficacy. Let’s move away from the ideological attacks on BEE.” 

“Let’s go into the practicalities of analysing what some of the effects are which were not intended by the framework.” 

Fellow minister and high-ranking ANC official, Parks Tau, has argued that BEE has become associated with cronyism and corruption. 

This is due to the policy framework having various loopholes that are being exploited by well-connected individuals to win government contracts and businesses at the expense of the majority.

End of BEE as you know it

Godongwana’s call for a debate on the efficacy of BEE is revealing, as it shows the government may be willing to make changes to one of its signature policy frameworks. 

The call for a debate has also been coupled with major changes to key parts of the BEE framework and a two-phased review of its impact. 

This has led some to argue that it is the beginning of the end for BEE in South Africa, with it unlikely to withstand the ongoing criticism in its existing form. 

The most substantial change has been the progress made with the implementation of the Transformation Fund, which will significantly change how businesses can comply with BEE. 

Companies can contribute to this fund to earn points for their BEE scorecard, rather than 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.

Webber Wentzel’s experts explained that businesses could even 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.

On the back of these changes, announced by Tau in early February, Efficient Group chief economist Dawie Roodt said this marks the beginning of the end of BEE in South Africa. 

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 2026 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.

In his SONA, Ramaphosa said the government is undertaking a review to refine, realign, 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.