Former president and minister call for a rethink of BEE in South Africa

Broad-Based Black Economic Empowerment (B-BBEE) is at a turning point, with the consensus being that it has failed to uplift the majority of black South Africans. 

The current narrative is that empowerment means sitting at someone else’s boardroom table. Real empowerment is about innovating, building something new, and creating jobs.

This was discussed during the Frank Dialogue on B-BBEE, by Minister of Trade, Industry and Competition, Parks Tau, as well as former President Kgalema Motlanthe.

B-BBEE is a legislatively mandated and regulated system of laws and policies aimed at addressing the exclusion of the majority of black South Africans from effectively participating in the formal economy.

Former president Motlanthe praised the existence of the policy, calling it an “existential need” to reverse years of colonisation and apartheid. 

He noted that critics insist B-BBEE has failed to uplift the majority, fueled corruption, entrenched cronyism, deterred investment, and placed race above merit. 

Professor William Gumede from the Wits Business School stated, based on research he conducted, over R1 trillion has been transferred to fewer than 100 individuals with political connections under the banner of black economic empowerment.

“BEE only benefits a very small group of politically connected, linked to the ANC, linked to the trade unions, and the same people are empowered again and again.”

Motlanthe said that this is not accurate in his opinion, and that economic growth cannot happen while the majority of the country is sidelined.

“The problem is not the principle, but the practice,” he said. He referred to the repeated selection of a small elite, “the so-called usual suspects,” who continue to benefit from the policy. 

“This has left the policy vulnerable to attack. But who chooses and funds these players? Not government alone, but capital itself,” he said.

“Corporations nominate the same black partners again and again, while complaining that the policy only benefits an elite few.”

Real empowerment is innovating, building something new, and creating jobs

Motlanthe said there needs to be a shift in focus for how South Africa views empowerment. 

“We need to change the narrative that empowerment means sitting at someone else’s boardroom table,” he said. 

“Real empowerment is innovating, building something new, and creating jobs.”

South Africans have missed opportunities to make this the focus of B-BBEE, according to Motlante.

He said that the first generation of B-BBEE beneficiaries who took over mines made significant amounts of money when the gold price rose in the 90s.

This money was not put to productive causes, Motlanthe explained, such as investing this money in a financial instrument that would provide seed funding for deserving black entrepreneurs. 

Instead, “the same problem of access to capital is staring us in the face again today.”

Minister Tau agreed that B-BBEE is on a faltering trajectory, and said that the widespread “unhappiness” about the policy is ‘justified’.”

“There is no correlation between expenditure and output,” he said. “The department believes that a comprehensive review of the architecture of the entire policy is called for.”

Statistics on the progress of the policy were revealed by the head of the B-BBEE commission, Tshediso Motana. 

The data revealed that B-BBEE compliance has been dropping since 2022. Montana said that this decline in the percentage of compliant companies is partly caused by an increase in entities being subject to assessment.

However, he added that this shows that the momentum of the policy is dropping and is not self-sustaining. 

He added that there are continued gaps in policy, and there needs to be an increased focus on enterprise formation and curbing illegal practices like falsifying certificates. 

“B-BBEE is at a turning point; we cannot continue on this faltering trajectory,” he said.