Illustrative image. More than a thousand DA supporters marched to parliament to protest against the Employment Equity Act Draft Regulations on July 26, 2023 in Cape Town, South Africa. The Draft Regulations aim to give effect to Section 15A of the Employment Equity Amendment Act, and if implemented, will exacerbate existing gender disparities in the workforce, with virtually every sector setting higher targets for men than women. (Photo by Gallo Images/Brenton Geach) Board with stats. Photo: iStock 
When you start asking questions about opposition to the idea of employment equity, the loudest voices opposing the government’s stance in the transformation debate generally give praise to the ambition of the policies. Nobody wants to look like they’re opposed to the transformation agenda.
Business Unity South Africa (Busa) has dragged the government to the Labour Court, challenging the new employment equity targets that came into effect on 1 September 2025, while foreign investors are carving out alternative paths to compliance that bypass traditional ownership requirements entirely.
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At the heart of the legal challenge lies a fundamental question: Are South Africa’s race-based transformation policies helping or hindering the country’s economic prospects?
For its part, the Institute of Race Relations has no quarrel with the idea of transformation — or the recent amendments to the land expropriation laws — it’s the presentation and communication that they’re against.
A grand performance
Busa CEO Khulekani Mathe has always been clear about the consultation process that led to the new sectoral targets.
/file/dailymaverick/wp-content/uploads/2024/05/DM24-NHI-Khulekhani.jpg "CEO of BUSA Khulekani Mathe is looking for meaningful consultation. (Photo: Supplied)")
“What took place was not meaningful consultation; it was a presentation. As social partners, we cannot allow performative engagement to substitute for genuine collaboration,” he told Daily Maverick.
The organisation’s court papers don’t challenge the principle of transformation or even the minister’s power to set targets. Instead, they target what Mathe describes as a fundamentally flawed process that produces unworkable outcomes.
“Unworkable targets do not advance transformation. They deepen frustration and erode trust in public policy,” Mathe argues.
The consultation process was particularly egregious, according to Busa. Employers were given less than a week to respond to draft targets, often receiving them the night before one-hour meetings. Association for Savings and Investment South Africa (Asisa) members were placed on a single one-hour call to discuss amendments affecting more than 100 financial sector companies.
Read more: Explainer: Ramaphosa making sunshine out of RDP and RET shadows
But Busa’s most damning critique goes to the substance of the targets themselves. Mathe explains the core irrationality: “What we’re asking the department is that in setting targets you cannot ignore the supply side of the equation... (For example) If you say to me I must employ 100 engineers, have you checked whether the education and training system does in fact produce 100 engineers? You can’t ignore that.”
When Busa raised this concern, the department’s response was that skills development “belongs to another ministry” — an argument Mathe calls irrational coming from the same government.
The transformation fallacy
The Institute of Race Relations goes a step further, arguing that policies like employment equity and Broad-Based Black Economic Empowerment are actively sabotaging South Africa’s investment prospects. Strategic engagements manager Makone Maja distinguishes between “true transformation” — which is inclusive and sustainable — and “fake transformation” where policies purportedly for public good actually serve narrow elite interests.
/file/dailymaverick/wp-content/uploads/2025/05/01-ED_460913.jpg "More than 1,000 DA supporters marched to Parliament in Cape Town on 26 July 2023 to protest against the Employment Equity Act draft regulations. (Photo: Gallo Images)")
“Race-based policies have only concentrated wealth into the hands of the few, instead of actually targeting poor people,” Maja argued in a conversation with Daily Maverick.
The Institute of Race Relations links these policies to what President Ramaphosa described in 2018 as an “investment strike” by the private sector, evidenced by declining gross fixed capital formation and barriers to entry that make South Africa less competitive than other developing nations.
The Institute of Race Relations’ solution? Move away from race as a proxy for disadvantage toward means-tested interventions like their proposed Freedom from Poverty Bill, which would use vouchers for housing, schooling and health to empower impoverished individuals directly.
Maja suspects the government’s primary motive is to consolidate its own authority.
“I think we have a government that is trying to centralise as much power as possible, and that unfortunately hurts job creation.” She argues that South Africa’s economic progress should not be “sacrificed at the altar of governments acquiring more power”.
Wait, what is all the fuss about?
- The Employment Equity Amendment Act 4 of 2022 took effect on 1 January 2025, introducing five-year sectoral numerical targets across 18 national economic sectors, from mining to financial services. The targets focus on representation of “designated groups” — black people (Africans, coloureds, and Indians), women and people with disabilities — at top management, senior management, professionally qualified and skilled technical levels.
- Companies must develop employment equity plans for the period 1 September 2025 to 31 August 2030, setting annual numerical targets that align with the five-year sectoral goals. The first assessment of progress begins in 2026.
- Crucially, compliance is tied to state contracts — only companies with Employment Equity Compliance Certificates can secure government business. However, the regulations do recognise that meeting targets may not always be possible, allowing for justifiable grounds including insufficient recruitment opportunities, lack of suitably qualified candidates from designated groups, or adverse economic conditions.
Foreign investors chart new courses
While local businesses battle in court, multinational corporations are pioneering alternative compliance strategies that challenge traditional notions of transformation.
For a global satellite network like SpaceX’s Starlink, a key obstacle is that ceding 30% local ownership could compromise operational control over the entire international business model. A precedent set in one country could unravel its structure worldwide.
Instead, SpaceX champions an alternative route through Equity Equivalent Investment Programmes (EEIPs), making the case that direct investment in areas like education delivers a more profound and widespread transformative impact than ownership transfers.
Proponents of this approach question how the financial benefit of a 30% stake for a single entity could be considered more transformative for the country than programmes that provide education to millions of young people, suggesting the two outcomes are not comparable in scale or societal impact.
Read more: Starlink promises internet for rural SA schools — if BEE rules bend
This approach has backing from Communications and Digital Technologies Minister Solly Malatsi, who has issued policy directions encouraging the Independent Communications Authority of SA to recognise Equity Equivalent Investment Programmes to unlock investment.
Maja shares similar beliefs about empowerment, proposing the Institute of Race Relations’ voucher model to give people “full autonomy over their choices”. For example, where they send their children to school, with the belief that this would incentivise competition among service providers to improve quality.
She turns to the government’s failure to issue more than a million title deeds as a key barrier to redress, suggesting that direct ownership and property rights are a critical and immediately actionable form of empowerment.
(Re)structured compliance
French media giant Canal+ took a different route in its MultiChoice acquisition, demonstrating that foreign investors can navigate South Africa’s complex regulatory landscape through corporate restructuring. The company created a separate entity to hold broadcasting licences while Canal+ remains a minority stakeholder, ensuring South African control.
The French executives have embraced their B-BBEE commitments publicly. CEO Maxime Saada responded to Daily Maverick questions about compliance during a conference call with media, saying that “we have complied, and we are actually more than compliant. We’ve always considered that Phuthuma Nathi, for example, is a perfect example of MultiChoice going beyond what is expected.”
Read more: Canal+ seals R55bn MultiChoice merger with intricate compliance gymnastics
The chairperson of Canal+ Africa, Calvo Mawela, reinforced this commitment: “Maxime has understood that Phuthuma Nathi and the investment in BEE is an important pillar of this company and has supported us throughout from day one.”
The jury is still out
The contrast between these approaches — Busa’s legal challenge, the Institute of Race Relations’ ideological opposition that is baked into its investigations, SpaceX’s education-focused alternative, and the Canal+ compliance through restructuring — paints a full spectrum picture of the complexity of South Africa’s transformation landscape.
Busa’s court case will test whether the government’s process can withstand judicial scrutiny. But the broader question remains: In a country desperate for investment and job creation, do the current policies advance genuine transformation or merely create new barriers to economic growth?
As Mathe warns, the risk extends beyond individual companies: “We’re not asking for leniency here... Don’t make things difficult for those who want to comply just because you thought you were dealing with the extremists who hate transformation.”
The court’s decision will probably shape not just employment equity compliance, but the entire future of transformation policy in a country battling unemployment rates that are above 30%. DM