Eliminating BEE can save taxpayers R150 billion per year

The Institute of Race Relations (IRR) has requested that Parliament’s finance committees expose the extra costs of Black Economic Empowerment (BEE) policies.

The IRR previously estimated that BEE places a premium of up to R150 billion on government procurement.

“The government can save taxpayers R150 billion by eliminating BEE premiums and appointing providers on a value-for-money basis,” it said.

On Monday, 2 March 2026, IRR Legal submitted a report to Parliament on the constitutional duty of making BEE premiums in public procurement explicit.

IRR Legal also called on Parliament to use the 2026 Budget review process to bring BEE premiums down to zero.

It added that its polling showed that four out of every five voters likely want BEE premiums to be zero.

Government expenditure is expected to increase at an average annual rate of 3.9%, from R2.58 trillion in 2025/26 to R2.89 trillion in 2028/29.

“The National Treasury has repeatedly stated that BEE preference premiums are part of that cost,” IRR Legal’s executive director, Gabriel Crouse, said.

However, since they are capped at 25% for most contracts, the total cost of BEE premiums in the forthcoming period has not been estimated.

Crouse explained that the 2026 Estimates of National Expenditure document is 1,095 pages long.

It tabulates costs across departments along a range of classifications to show South Africans how the state plans to spend people’s money.

However, there is no indication of the cost of BEE premiums in South Africa at any point in that long document.

This is despite National Treasury officials repeatedly insisting that BEE premiums are paid, have been paid in the past, and will continue to be paid in the future.

Crouse argued that the National Treasury’s lack of transparency violates the South African Constitution, which states that public procurement must take place “in accordance with a system which is fair, equitable, transparent, competitive and cost-effective”.

IRR Legal has reminded the parliamentary committees of their legal duty to make BEE premiums transparent, as well as the simple legal mechanism to do so.

It alerted both the Standing Committee on Finance in the National Assembly and the Select Committee on Finance in the National Council of Provinces.

“Once those premiums are exposed, their unpopularity may cause them to be extinguished,” Crouse said.