BEE is bringing South Africa's economy to its knees

The Citizen

12-06-2025

BEE is bringing South Africa's economy to its knees – new report
A report released on June 12 by the Solidarity Research Institute (SRI) and the Free Market Foundation (FMF) has sent shockwaves through South Africa's political and economic landscape.
The report delivers a scathing critique of the country's Broad-Based Black Economic Empowerment (BEE) policy, asserting that it is causing substantial damage to the South African economy while enriching only a small, politically connected elite.
BEE was initially introduced as a transformative policy aimed at redressing the economic imbalances of apartheid by promoting greater inclusion of black South Africans in the economy.
However, the latest findings paint a different picture, highlighting a policy that is now burdening economic growth, exacerbating inequality, and stalling job creation.
According to the report, the annual compliance costs for BEE range from R145-billion to R290-billion, which represents between 2% and 4% of South Africa's Gross Domestic Product (GDP).
This enormous economic burden has resulted in an annual reduction of GDP growth by between 1.5% and 3%, with a concomitant loss of between 96 000 and 192 000 jobs each year.
Over the years, this has accumulated to about 3.8 million lost job opportunities for South Africans.
'This huge economic cost is not simply the result of negligence or the mere poor implementation of a plan. It is a deliberate government policy that causes it,' said Theuns du Buisson, economic researcher at the SRI and co-author of the report.
'It is irrelevant when someone then says the policy was introduced with good intentions. Today it serves as a mechanism to enrich the elite at the expense of our country's economy and especially at the expense of its poorest citizens.'
The report further outlines that while there has been some progress in terms of black ownership and skills development, these gains are heavily overshadowed by the adverse effects of BEE.
Among these are increased inequality, elite capture of policy benefits, and widespread economic stagnation.
'The policy places a particularly heavy burden on critical sectors such as mining and finance,' the report reads, 'and it deters foreign investment, encourages capital flight, and stifles technological progress.'
South Africa's economic position on the global stage has deteriorated markedly, falling behind other middle-income countries with which it was once comparable.
The report critiques the lack of focus and effectiveness in the implementation of BEE policies, which contrasts with more successful affirmative action or empowerment programmes abroad.
Du Buisson pointed to countries such as Brazil and the United States, which have begun to phase out similar race-based economic policies.
'Moreover, in other countries, affirmative action policies are precisely there to prevent discrimination, while in South Africa, they in fact make discrimination compulsory,' he noted.
'South Africa must now follow the path of other countries and get rid of it. BEE has become an instrument that benefits a small, politically connected elite and has long ago stopped being a policy that could empower a disadvantaged society.'
Connie Mulder, head of the SRI, emphasised the urgency of the situation: 'South Africa cannot afford to continue down this path. The data is clear. BEE, in its current form, is damaging the economy and hurting those it was meant to help. We need policies that promote real economic participation and growth without racial quotas that cripple progress.'
The call to action from the writers of the report is for policymakers to immediately abolish the current BEE framework and replace it with a policy that fosters inclusive growth without impeding the economy.
'We need an economic environment where all South Africans, regardless of race, have the opportunity to contribute and prosper,' Du Buisson said.
– Access the full report here: https://soli.online/5nn
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