New state capture in South Africa happening in front of everyone’s eyes

Trade union Solidarity’s Research Institute claimed that Broad-Based Black Economic Empowerment (B-BBEE) policies have encouraged “elite capture” in South Africa.

In other words, these policies have benefited those with political access, legal sophistication, or existing capital, at the expense of ordinary unemployed South Africans.

By benefiting only the well-connected elite, B-BBEE policies have also led firms to delay investment, refrain from hiring, or exit the market entirely as compliance becomes too costly.

The Solidarity Research Institute (SRI) made these comments in its recently released report, Non-Racial by 2030, which outlines the organisation’s suggested roadmap to phase out race legislation in South Africa over the next four years.

Part of the report focuses on B-BBEE in South Africa and how, according to the SRI, these policies have severely harmed the economy. 

“A policy that enriches a narrow group while weakening the growth prospects of the broader population cannot be described as broad-based in any meaningful economic sense,” the report said.

“Elite capture is therefore not a marginal criticism; it is central to the policy’s failure. High-profile ownership transactions, preferential procurement arrangements and advisory structures often benefit those with political access, legal sophistication or existing capital.”

The SRI argued that the Zondo Commission’s findings strengthen this conclusion, as South Africa’s era of State Capture showed how empowerment and procurement rules could be manipulated.

These rules and policies, the organisation argued, create a pathway for corruption, rent-seeking, and politically connected enrichment, which is antithetical to their intent of broad-based development.

The SRI said the failure of B-BBEE in South Africa can be seen in the fact that black unemployment has increased despite legislation expressly aimed at increasing black economic participation.

“This is decisive – if the purpose of empowerment is to improve the lives of those excluded from the economy, then the primary criteria should be linked to exclusion from work, not merely racial classification,” it said. 

“The ultimate exclusion from the economy is being unemployed. Using race rather than employment status, along with other socio-economic criteria, is more divisive and more vulnerable to elite capture.”

Solidarity’s solution

The SRI’s roadmap to phase out race-based legislation in South Africa by 2030 includes suggestions to reconfigure B-BBEE policies.

The organisation proposes that the definition of “designated group” in the Employment Equity Act should be changed, because it still relies on apartheid-style racial classification as the main proxy for disadvantage.

This is despite South Africa’s most pressing present crises being poverty, unemployment and youth exclusion.

“A class-based and needs-based definition would better align empowerment with measurable hardship: low household income, unemployment, absence of support, youth status and lack of access to capital or skills,” the report explained.

The SRI suggested that the definition of “designated group” should be changed to:

• People whose households currently earn less than R350,000 per annum (as per current NSFAS guidelines for study loans)
• People who are currently unemployed and do not receive any form of income, social grant or UIF payment (as per the government Social Relief of Distress Grant guidelines)
• People born after 1994

“The possible impact of changing the definition to no longer include apartheid-style racial classification would be that businesses would be incentivised to reduce poverty, unemployment, and youth unemployment,” the report said.

Statistics South Africa recently released the country’s latest Quarterly Labour Force Survey for the first quarter of 2026, which showed an increase in unemployment.

The official unemployment rate reached 32.7% in the first quarter of 2026, up from 31.4% in the last quarter of 2025.

Concerningly, South Africa’s youth unemployment rate now stands at 45.8%, up from 43.8% in Q4 2025. This means 4.7 million young South Africans were unemployed in the first three months of 2026.

Young people now account for 2 million out of the country’s 3.9 million discouraged job-seekers.