R1 trillion moved between 100 politically connected individuals through BEE

Prof. William Gumede of the Wits School of Governance said black economic empowerment (BEE) has led to increased poverty, unemployment, and inequality in South Africa.

He said BEE across Africa failed terribly because it focused on benefiting a small group of connected individuals rather than a large group of people.

Gumede stated that the government had asked him to conduct an assessment of black economic empowerment in South Africa.

He said it was very clear that BEE only benefits a tiny group of politically connected people linked to the African National Congress and trade unions.

In countries where empowerment is effective and has reached its goal, it has been implemented to reach the widest possible group of people.

However, in South Africa, black economic empowerment only benefits a very small group of connected people.

Gumede said he had calculated the amount of money which has been moved through empowerment in South Africa.

“Conservatively, R1 trillion has been moved between under 100 people since 1994. The same people have been empowered and re-empowered over and over,” he said.

“South Africa’s BEE model has created a model of corruption because people set up companies just to get a contract.”

He added that genuine South African entrepreneurs who are not politically connected do not benefit from black economic empowerment funding.

Gumede said that R1 trillion could have been spent more effectively on things other than enriching a small group of connected individuals.

He said companies could have spent the money on housing for black South Africans or sponsoring schools in Soweto. “This would have delivered a much wider impact,” he said.

Tata did that in India, and Mitsubishi did it in Japan. These educational empowerment projects were highly successful.

When Starlink enters South Africa, for example, it can sponsor a group of underprivileged schools to enhance their mathematics and science education.

This will ensure that a large group of children is empowered and better equipped for further education or entering the workforce.

“We want to create millions of black South Africans who have R500,000 each, not a small group of billionaires,” he said.

Parliament must hold the government accountable for BEE failures

The Institute of Race Relations (IRR) said Parliament must answer for its failure to oversee BEE policies that obstruct investment and job creation.

IRR Head of Strategic Communications Hermann Pretorius said that despite South Africa’s severe unemployment crisis, the government persists with BEE.

Like Gumede, Pretorius described black economic empowerment as an elitist policy that benefits the connected few while keeping millions in poverty.

The IRR sent formal letters to 64 MPs on key economic committees, urging them to demand answers on how many jobs, investments, and businesses had been lost due to BEE.

“A recent example is Starlink, which was blocked from entering the market, sacrificing economic opportunities to protect BEE elites,” Pretorius said.

He argued that many businesses have been discouraged from investing in South Africa due to racial quotas and empowerment requirements.

“Parliament cannot ignore policies that deepen poverty and economic exclusion,” Pretorius said in a press statement.

The IRR has also written to ministries involved in BEE enforcement, including Employment and Labour, Small Business Development, Trade and Industry, and International Relations.

“Support economic inclusion and job creation, or enable a system that serves only the cadre elite while millions suffer. History will judge their actions or inaction,” he said.