Decoding the controversy around Black Economic Empowerment in South Africa

The policy of economic empowerment is under attack. The BEE commission is perceived as Accused No 1 for promoting racism and a so-called “race to the bottom”, for worsening inequality, for undermining economic growth and for encouraging corruption.

From the Chambers of Parliament to billboards meant to welcome G20 Summit visitors, to meetings and selfies in the White House, and celebrated think tanks in the most powerful country in the world, the battle has been joined. And so, because ‘bad, bad things are happening in South Africa’, we are all expected to cower in terror; beg for forgiveness and mend our ways.

Whence does this inversion of narratives find its genesis; from which well do these campaigners imbibe their warped logic; and what do they hope to achieve?

In my view, the starting point of all this is simple: the oppressed people of South Africa committed the original sin of liberating themselves from years of colonial subjugation, then staking their claim as human and deserving of equal treatment; and in line with the injunctions of our Constitution to:

• Heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights; and…
• Improve the quality of life of all citizens and free the potential of each person.

In 2020, the Mapungubwe Institute for Strategic Reflection (Mistra) published a book, Beyond Tenderpreneurship: Rethinking Black Business and Economic Empowerment. When the research was conducted, there were serious concerns about a form of “empowerment” that, at its zenith, had spawned state capture.

And so, in this book, Mistra set out to trace the history of black entrepreneurship and the legal and extra-legal measures, under apartheid colonialism, to suppress the entrepreneurial impulse among black people. The book deliberately seeks to remove the oog-klappies (blinkers) of cynicism about economic empowerment; dispassionately to critique the praxis in relation to good intentions, and to propose measures that can help improve the policy’s impact.

The book examines the endeavours of black entrepreneurs before the formalisation of the South African nation-state at the turn of the last century. It argues that the core essence of attacks they faced was the expropriation of land, which made the native “not actually a slave, but a pariah in the land of his [sic] birth” to quote Sol Plaatjie; and South Africa “by law ceased to be the home of any of her native children”.

Black people were, by law, prevented from acquiring significant assets; and they were prohibited from skilled occupations. With the introduction of the bantustan system, a “high fence, small yard” approach was adopted. And later, attempts were made in collaboration with big business to avail some opportunities for a few black entrepreneurs and sections of the middle strata, so they could have a stake in the apartheid system to defend.

I suppose many of us have read the instructive biography of Sam Motsuenyane, A Testament of Hope, about how his endeavours in Nafcoc and attempts to set up the African Bank were treated by the apartheid regime as acts of defiance and subversion. Many other accounts by Wiseman Nkuhlu, Franklin Sonn, Nolitha Fakude, Lot Ndlovu, Mustaq Brey, Gloria Serobe, Irene Chanley, Reuel Khoza, Nonkululeko Gobodo and other luminaries speak eloquently to such experiences.

Why is it necessary to cite this background? It is because the judges, juries and executioners against black economic empowerment seek to turn that lived experience on its head.

At the centre of their argument is that a privileged few, connected to the ANC, have been the sole beneficiaries of black economic empowerment; and that its detrimental effects are to be found in South Africa’s pedestrian rate of economic growth, low investment rates, high unemployment and social inequality.

In a recent article, Investec CEO Fani Titi slays these dragons eloquently:

…economic inclusion, implemented with integrity and in the broad interests of society, is not merely consistent with, but supportive of, investment, business confidence, and productivity.

I say this with the personal conviction of one for whom economic inclusion policies afforded a chance to realise my potential and contribute meaningfully to society.

…the progress made over the past 30 years in transforming the management, control, and ownership of an economy dominated by an exclusively white and male elite is nothing short of remarkable. (Titi: 2025)

And, lest we forget, Fani Titi and virtually all of the other people we have mentioned are not part of the so-called politically connected “usual suspects” or “fab four”.

Let us now briefly cite some facts and figures which confirm what Fani Titi and others have said.

At the top management level, whites constituted 74.9% in 2006, 64.7% in 2020 and 61% in 2024, while the black cohort has increased from 22.2%, 32.1%, to 36.1% in 2024. In senior management, this has shifted from 26.9% black in 2006 to 49.7% in 2024. Among the professionally qualified, blacks have moved from 36.5% in 2006 to 69.5% in 2024; and blacks are now at about 84% of skilled technical posts. There has also been progress in relation to gender, though it is still woefully slow (CEE Annual Reports).

A careful analysis of BBBEE ownership points to the following facts, which debunk the fairy tale that only 100 people gained R1-trillion from the policy:

• The beneficiary pool in terms of black shareholding stands at around 3.4 million people.
• Between 2002 and 2019, the number of black-owned firms has doubled.
• In the past five years, the indication is that large and small firms are increasingly implementing Employee Share-ownership Programmes (Esops) and community ownership.
• Empowerment has resulted in the growth of the black middle strata, through savings, management positions and skills training from about 1.7 million in 2004 to 4.2 million in 2012 and much higher now – with the public sector playing a leading role.

Of course, these improvements conceal the fact that the asset scores of black people are disappointingly low compared with their white counterparts, with direct ownership on the JSE at 10%, and at 23% when institutional funds are taken into account (National Treasury: 2017).

But what is clear is that all this did not happen by accident. The equity laws and scorecards, and the incentives and disincentives attached to them, have all ensured some level of compliance.

Reference has been made to slow economic growth, unemployment, inequality, and poor outcomes in education, health and other basic services as a product of black economic empowerment.

These weaknesses do exist. But it would be the height of duplicity to posit a conceptual expectation that BEE is meant to address all the social ills that we have as a country. BEE, it should be underlined, does not constitute the totality of socioeconomic transformation.

Economic redress does improve assets, the skilled population and the consumer base. But it is not expected, on its own, to resolve binding constraints to growth such as infrastructure; poor skills; low fixed capital formation; and international demand for the goods we produce.

What about social inequality? Broad-based elements of empowerment, including Esops, community share-ownership, and focused gender interventions have raised millions of black people higher on the social ladder. Yes, inequality between the races has been reduced. But the Gini coefficient (measuring income inequality) has remained largely unchanged over the past thirty years; and asset inequality is even worse. Between the races, inequality has declined (in part reflecting the impact of BEE); but it has in fact increased within the racial groups, especially among Africans and coloureds.

It is also illogical to expect BEE to have resolved the challenge of slow rates of employment creation. Worse still, BBEE, as such, cannot be expected to resolve problems of water and other infrastructure, potholes, grass-cutting and public safety.

This then brings to the fore a frank discussion that some find uncomfortable. And this is that post-colonial class formation has to include, as a core element, the emergence – or creation – of a cohort of black capitalists, the so-called “black capitalist class”.

Otherwise, we cannot hope to have a stable capitalist system in which blacks are the country’s numerical majority and yet a tiny minority among the capitalist and elite social strata. Equitable representation across the hierarchy of the economy is an economic and political imperative.

This is even more critical in a system such as ours, in which monopolies hoard virtually all markets, making it difficult for local co-operatives and other small enterprises, even to provide school feeding. As such, opening up entry within established enterprises, through share ownership, has to be an important part of economic empowerment.

There of course are many genuine criticisms of BEE implementation, and it is in the context of addressing these specific weaknesses that the policy and its implementation can be improved.

At the core of this is the need for black economic empowerment to be underpinned by strategies that change the structure of the economy. This applies to industrial policy, the proportion of productive sectors and financial services, and between manufacturing and the primary sectors.

In the Mistra book that I referred to earlier, reference is made to developmental states in East Asia, which used their journeys of industrialisation, including foreign direct investments, as a platform to empower their entrepreneurs.

There are currently unique opportunities for the organic emergence of a “black capitalist class” in nascent industries, as partly happened with mobile networks some thirty years ago.

The green hydrogen economy is one such example. And, indeed, with some support from the state, companies such as Hive, Bambili, Isondo, and Mitochondria involved in fuel cell manufacturing and green ammonia are demonstrating that large and successful black-led industrial enterprises can emerge on this basis.

The same approach should apply to artificial intelligence and cloud computing, the digital platforms economy and other technologies.

Much effort has been placed in recent years on promoting the emergence of black industrialists; and some progress has been reported in this regard. Yet, in many instances, those who venture into these pursuits have identified many constraints that require deliberate attention.

These include procurement of their products being constrained by existing “old boys’ clubs” within both the public and private sectors; the requirement for full “last mile” funding even from development finance institutions; and problems of timely payment.

There has also been a deserved critique of the tendencies reflected in absentee shareholding, fronting and the offloading of shares by black beneficiaries – not so much to pursue other entrepreneurial activities, but to lead unproductive sedentary lives in exotic places across the world.

This, of course, cannot be legislated out of existence, especially given the rights enshrined in our Constitution; but encouraging a different culture which scoffs at such tendencies may help stem the tide.

In the overall scheme of things, the emergent black capitalist class should be the midwives of a reformed system of social relations in our economy. They should be at the forefront of successful employee and community shareholding schemes. They should be leaders in ensuring decent work and a living wage. They should be exemplars of reduced income differentials in their enterprises. They should lead in philanthropic activities that go beyond bricks and mortar and social services, to support a think industry that advances the progressive ideals enshrined in our Constitution. In other words, they can, and should, be paragons of excellence. And they should exercise thought leadership on all these matters.

Needless to say, there is an urgent need to confront the litany of illegal activities that some entrepreneurs – both black and white – engage in, which requires strengthened and sophisticated capacity in the law-enforcement agencies.

Exposés of corrupt practices in procurement and other activities confront us every day, involving both state employees and the private sector, with so-called “Bermuda (incomplete) projects” and poor outcomes dotting the landscape.

At the extreme end, the bureaucratic bourgeoisie or tenderpreneurs, and extortionists mesh with criminal networks in a system of primitive accumulation – at the pinnacle of which was state capture and the heartless malfeasance during the Covid-19 pandemic.

This raises fundamental questions about the historical evolution of capitalism as a system across the globe: from slavery to the gringos, the carpetbaggers and chaebols, as well as today’s plutocracy. How to manage these negative tendencies in South Africa’s post-colonial capitalist class formation is an issue that requires focused theorisation and practical action.

However, it would be deceitful in the extreme to clutch at these wayward tendencies, to try to discredit the necessary corrective action that Broad-Based Black Economic Empowerment represents.

To reiterate: BEE does not constitute the totality of economic transformation, and therefore, its contribution to social change will only have real meaning if it is combined with policies that address all generations of human rights enshrined in the Constitution.

This should encompass comprehensive strategies to reduce poverty, including the creation of jobs, especially for youth and women; supporting micro and informal enterprises; an affordable and sustainable social wage; improved basic services such as health, education and municipal services; and reducing the cost of living. Critically, it requires a capable and ethical developmental state.

In conclusion, let us return to the question: whence does the inversion of logic in the attempt to discredit black economic empowerment find its genesis?

In part, it is the psychosis of white victimhood: that white people are exceptional and face exceptional threats. But, at core, it is about material self-interest and a sense of entitlement to historical privilege. Undergirded by international white supremacist alliances, the battle to designate post-colonial South Africa as the DEI (diversity, equity and inclusion) incarnate should be expected to intensify.

But for those who question the contrived cost of black economic empowerment, it may be useful to weigh the cost of not having it. Besides betraying the constitutional imperative, failure to implement corrective action – and do it in a proper manner – would delegitimise the democratic polity and entire social system.

And so, those who prefer to shake the hornets’ nest and mock the marginalised for their patience, must beware. Because, even with the backing of the most powerful forces in the world, they will then not be able to prevent Iqbal’s words from coming to pass:

Rise and arouse the poverty-stricken
And shake the foundation of the palaces of the rich
Warm up the blood of slaves with the fire of faith
And make the sparrow dare to fight the eagle
The time of sovereignty of the masses has arrived.

In such an unmanaged and unmanageable clash of base instincts, no one – but no one – shall be the winner. DM

This Op-ed is an edited version of a speech the author made at the BBBEE Commission strategy session on 20 November 2025.