President Cyril Ramaphosa has doubled down on Black Economic Empowerment in South Africa, saying that instead of loosening the laws or heeding calls to abolish them, the country should lean into taking them further.
Responding to the debate on his State of the Nation Address last week, the president chided political parties, including those within the Government of National Unity (GNU), for wanting to scrap the laws.
He insisted that broad-based BEE (BBBEE) had been fundamental to improving the lives of black people in South Africa, reducing inequality and reversing the injustices of the past.
BEE critics have long argued that the laws have only worked for a select few—typically those connected to the once-majority ANC and its control over government contracts—while leaving the vast majority of the population in poverty.
BEE proponents, meanwhile, have often cited the yawning gap between black and white wealth in South Africa as evidence of why race-based laws are necessary to make the playing field more equal.
However, this same point has been used in response to show exactly why BEE does not work, as the inequalities persist despite the government’s very direct interventions.
In his response, Ramaphosa addressed these points directly, noting that between 2006 and 2023, black African households experienced real income growth of 46%, coloured households 29 % and Indian households 19%.
This disproves the “myth” that BEE has only worked for the few.
“It is no accident that the level of poverty in the black African population fell from 67% in 2006 to 44% in 2023,” he said.
“Nor is it any accident that the level of poverty in the coloured population fell from 43% to 25% in the same period.”
However, he said that, despite this progress, the average income of white households is still nearly five times higher than that of black African households.
“This is the gulf we must close through deliberate and sustained efforts to expand opportunity. Now is not the time to abandon BEE. Now is the time to make it more effective,” he said.
Reviewing BEE laws
Ramaphosa said that South Africans should stop seeing BBBEE as a cost to the economy, but rather an opportunity for sustainable growth.
“That is why I announced in the State of the Nation Address that we are undertaking a review of our Broad-Based Black Economic Empowerment framework to ensure that it supports greater transformation and inclusive growth,” he said.
The government has launched several initiatives over the past year that have taken different approaches to BEE—some extremely interventionist, others more flexible.
On the interventionist side, the Department of Employment and Labour has forged ahead with new racial Employment Equity targets across 18 sectors in South Africa.
These targets, characterised as racial quotas by critics and “flexible goals” by the government, require businesses with over 50 employees to file five-year plans to ensure their workforces reflect the country’s demographics.
While the laws allow for exemptions and deviations, companies have to racially profile their workforces and ensure they meet percentage-based targets by 2030, or face steep fines and penalties.
On the more flexible side, the government has shown a willingness to waive strict BEE compliance measures on ownership requirements to attract foreign companies and investment.
This is particularly in the telecommunications and mining space—though not without controversy and pushback from both sides of the BEE debate.
The Department of Trade and Industry is also in the process of setting up a R100 billion fund for black businesses, with the latest iteration offering BEE points to companies that contribute.
Under the proposal, companies that contribute 3% of their net income to a so-called Transformation Fund will earn double the points currently available for a scorecard that measures businesses’ support for greater economic inclusion.
The increased number of points will improve companies’ access to government and corporate procurement.
