R100 billion spent on BEE skills development and nothing to show for it

Convening a meeting to discuss the way forward for South Africa’s Broad-Based Black Economic Empowerment (BEE) legislation, Minister of Trade, Industry and Competition, Parks Tau, acknowledged that BEE in its current form is not working. 

“Transformation works when it is implemented. It fails when it is ignored or circumvented,” Tau said. The meeting, held on 24 February, was the first to convene all sector charter councils to discuss changes to the legislation. 

Tau said that there has been notable progress due to BEE laws, with black ownership sitting at 29% and 31% for JSE-listed companies and transaction values reaching R600 billion. 

However, he added, there is a need for more effective measures. He suggested that the focus of BEE needs to be moved away from compliance and onto a numbers-based approach. 

“We must ask what has actually changed in ownership, management, skills, enterprise growth and industrial capability,” said Tau.

The focus then shifted to skills development. Tau noted that over R100 billion has been spent by South African companies on supposed skills development over the last three years. 

“With that level of investment, we should not be facing the skills crises we see today,” he said. “Sectors must demonstrate tangible skills outcomes rather than expenditure alone.”

BEE skills development is a key element of the BEE scorecard, which requires businesses to invest in training for black South Africans to address skills shortages and enhance employability. 

Companies are required to meet targets for money spent on skills development and the number of individuals trained. This includes learnerships, internships, apprenticeships, bursaries and scholarships. 

While companies have been complying with this requirement, providing a collective R100 billion to this cause, South Africa faces a widening skills gap. 

Career Junction recently revealed that, while recruitment activity has increased by 6% in the last quarter – showing that hiring activity is on the rise, unemployment rates remain significantly high. 

Stubbornly high unemployment rates – currently at 31.4% – indicate that, despite job vacancies being open, South Africans lack the necessary skills for available positions. 

Skills gap proof that BEE is not working

The sectors concluded that a three-point action approach should be adopted. This would include addressing funding mechanisms, optimising implementation within the current legal framework, and reviewing institutional architecture where systems don’t work. 

“We are not here to create conflict. We are here to fix what is not working, strengthen what is working and ensure that transformation remains central to South Africa’s economic trajectory,” said Tau.

The feedback Tau collected during the meeting will be consolidated and presented to the cabinet as part of an ongoing process to review the BEE framework. 

The talks come amid growing calls to abolish BEE, particularly from the second-largest party in the Government of National Unity (GNU), the Democratic Alliance (DA). 

In 2025, the DA introduced its Economic Inclusion for All bill, aiming to abolish BEE in favour of a needs-based system. 

Introduced amid ongoing debates in the Government of National Unity (GNU), the DA argues that BEE, enacted in the early 2000s to redress apartheid-era inequalities, has failed in its core mission.

Instead of delivering broad-based upliftment to the majority of disadvantaged South Africans, the policy has enriched a narrow, politically connected elite while deterring investment, stifling job creation, and enabling corruption.

The party highlights persistent high unemployment, poverty affecting millions, and economic stagnation as evidence that race-based quotas and preferential scoring in government contracts have not worked.

However, despite acknowledging that BEE legislation requires a review, President Cyril Ramaphosa said during his State of the Nation Address (SONA) that now is not the time to abandon BEE, but the time to strengthen it.