Government to Launch Substantive Review of BBBEE

The South African government will undertake a review of Broad-Based Black Economic Empowerment (BBBEE) policies following staunch criticism and polls showing South Africans want amendments.

In Parliament yesterday, Minister of Trade, Industry, and Competition, Parks Tau, announced that the government would initiate a comprehensive review of the BBBEE Act.

The act is a centerpiece of the government's efforts to redress the economic consequences of apartheid, and its revising marks arguably the most significant policy review of South Africa's democratic era.

The act has come in for withering criticism in recent years. In as far as it taxes investor capital it is directly linked to South Africa's low gross fixed capital formation rate, which at below 15% of GDP, is just half the rate of the world's leading emerging markets.

The act has also increasingly been associated with corruption and has gained a reputation as vehicle used to facilitate state capture and loot taxpayer funds.

The Democratic Alliance (DA) last month published an alternative empowerment policy for South Africa which sought to replace race with disadvantage as the basis of a new national redress strategy. Earlier this week The Common Sense reported that the DA policy has polled well with voters and that majorities of both African National Congress (ANC) and DA voters support it.

Polling has also shown that South Africans do not believe that businesses that pay tax and create jobs should have to comply with further BEE requirements.

Because of its low fixed investment and growth rates South Africa faces one of the world's highest unemployment rates at over 30%. That rate was instrumental to the ANC's election defeat in 2024. Under current empowerment laws firms cannot win points for either creating jobs or paying tax, pointing to the misalignment between the current policy and the empowerment needs of the country.

The Common Sense understands that a number of senior ANC leaders believe the policy needs to be reformed if their party is to restore its national majority. The thinking of this reformist element is that without reform fixed investment levels will not lift sufficiently to address the unemployment rate whilst the exploitation of the policy by criminal actors who have penetrated the state will persist with severe negative consequences for service delivery and the public perception of the ANC.