Minister Parks Tau must untangle the legislative knots of B-BBEE amendments

Business Leadership South Africa (BLSA) and top law firms have launched scathing but separate attacks on the government’s latest proposed broad-based black economic empowerment (B-BBEE) amendments and sector-­specific codes. To them, these codes have mutated from tools of empowerment into unworkable instruments of economic self-sabotage.

And the government seems to be listening. In his February summit in Pretoria with all 11 B-BBEE sector charter councils, Minister of Trade, Industry and Competition, Parks Tau, confronted the elephant in the room.

“These numbers reflect a policy that has made a significant impact in undoing the injustice of the apartheid economy. But transformation works when it is implemented. It fails when it is ignored or circumvented,” Tau conceded.

He didn’t shy away from the friction: “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 SA’s economic trajectory.”

Disconnect

Nowhere is the disconnect between legislative ambition and operational reality greater than in the manufacturing and automotive sector. BLSA’s Chief Executive, Busi Mavuso, has been relentless in pointing out the mathematical impossibility of the Department of Trade, Industry and Competition’s new B-BBEE requirements, which demand that original equipment manufacturers use 100% black-owned Tier 1 and Tier 2 suppliers.

“Automotive components for specific models cannot simply be swapped out when the B-BBEE rules change,” she wrote in her latest newsletter, published on 3 May. “Developing new suppliers takes years, requiring testing, certification, integration into production lines.”

Original equipment manufacturers rely heavily on the Automotive Production and Development Programme tax incentives to keep local assembly financially viable. Under the proposed amendments, those failing to meet the impossible 100% mandate would lose their B-BBEE status – and their Automotive Production and Development Programme lifeline – immediately.

The critique is grounded in undeniable fact because this directly contradicts the government’s own South African Automotive Master Plan to 2035, which set a strategic, agreed-upon target of 25% black-owned involvement at tier 2 and tier 3 levels. Moving the threshold from 25% to 100% is, to quote the character Pepper Brooks from the 2004 cult-­favourite comedy Dodgeball: A True Underdog Story, “a bold strategy”.

Mavuso argues that SA may have already seen the fallout. Nissan’s recent de­cision to sell its 60-year-old Rosslyn plant in Pretoria to Chery and inject $45-million into expanding its Egyptian footprint is an example of the push and pull of bad policy.

There is the consideration of Nissan’s existing plans to execute global cost-cutting measures, but SA’s B-BBEE regulatory instability and the threat to Automotive Production and Development Programme incentives acted as a push factor.

Egypt, offering up to 50% tax deductions on capital expenditures, heavily subsidised energy and proximity to Middle East supply chains, simply pulled the capital away.

Policy can dodge a wrench, but not a gavel

The legal fraternity – specifically a formidable team of heavyweights: Bowmans, Webber Wentzel, Werksmans and Denys – dragged the department to the Gauteng Division of the High Court in Pretoria this week over the newly promulgated Legal Sector Code. They argue the code is fundamentally unlawful and unworkable. The code demands a 50% black ownership target within five years (a 10% increase every two years).

This again ignores Tau’s own technical committee, which advised that a 5% increase every two years was the maximum reasonable threshold for the partnership models inherent to law firms.

More alarmingly, the code actively punishes foundational transformation by removing recognition points for vital pipelines like bursaries for black students, skills development for learners with disabilities, and socioeconomic de­­velopment such as pro bono work. This directly con­­tradicts the foundational B-BBEE Amendment Act of 2013, which legally mandates diverse “socioeconomic strategies”, including human resource development.

And it gets worse: the Legal Sector Code exempts more than 95% of legal practices from its requirements based on turnover thresholds. As the law firms rightly point out, a sector code that applies to less than 5% of the pro­fession is a facade. It cannot credibly transform the sector; it can only penalise the few at the top.

Looming over these sector-specific crises are the broader 2026 draft BEE codes, strongly opposed by the Free SA campaign. Its primary target is the new Transformation Fund, which aims to redirect corporate enterprise and supplier development spending directly into a state-managed structure.

The framework proposes that mid-sized firms can bypass complexity by simply paying “3% of their turnover in the form of a levy” for an automatic level 3 B-BBEE status. Free SA correctly identifies this for what it is: a compulsory quasi-tax that diverts capital from productive, private-sector investment to a centralised state pot.

Vital pivot

Tau’s recent engagement suggests a vital pivot. He voiced his frustration over the more than R100-billion that has reportedly been spent on skills development over three years across the economy, with little to show for it.

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

The way forward, agreed upon by the department and the charter councils, rests on a three-point action approach: addressing funding mechanisms, optimising implementation within the current legal framework, and reviewing the institutional architecture that is failing.

For the South African economy to survive, this means realigning arbitrary codes back to reality. It means reverting to the 25% supplier targets outlined in the Automotive Master Plan rather than chasing a fictional 100%; restoring recognition for genuine skills development and bursaries in the legal sector; and ensuring transformation funds do not become stealth taxes that drive multinationals elsewhere.

“Crossroads are not places of collapse; they are places of choice,” were Tau’s sage words.

For the sake of SA’s re­maining industrial base, the department needs to choose wisely. DM

This story first appeared in our weekly DM168 newspaper, available countrywide for R35.