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Mail & Guardian
7 days ago
- Business
- Mail & Guardian
We need to change – not reject
Skilled but no jobs: South Africa's history of dispossession and exclusion demands purposeful intervention to build a more just and inclusive economy. Photo: Delwyn Verasamy/M&G More than two decades since its inception, black economic empowerment (BEE) has not delivered on its promise of economic redress for the majority of South Africans. Recent developments have reignited public debate. The Democratic Alliance (DA) has launched a court challenge against the Employment Equity Amendment Act, specifically targeting section 15A. This section empowers the minister of employment and labour to set numerical targets for equitable representation of designated groups. The DA argues that these targets amount to unconstitutional, rigid racial quotas that harm economic growth and violate individual rights. BEE was introduced to correct the deep economic disparities of apartheid. While it has made some gains, most notably the growth of a black middle class, it has failed to catalyse broad-based economic participation or significantly reduce structural inequality. But this critique is not a rejection of the principle of economic redress. South Africa's history of dispossession and exclusion demands purposeful intervention to build a more just and inclusive economy. Redress remains essential, particularly in a society where inequality continues to follow racial lines. But the current model of BEE is not the vehicle that will take us there. To be considered middle class in South Africa, one must earn R15,000 and R50,000 a month. Today, the black middle class numbers about 3.4 million people, or 7%, of the black African population. With a spending power of R400 billion annually, this segment plays a vital role in the consumer economy, driving growth in sectors such as retail, real estate and banking. This progress, however, is far from sufficient. South Africa's population is about 60 million, and more than half still live in poverty. While the black middle class has grown by more than 30% in the past decade, 33 million South Africans remain impoverished. In contrast, 40% to 50% of the 4.4 million white South Africans are considered middle class, a stark reflection of persistent racial disparities rooted in historical advantage. Youth unemployment at crisis levels. BEE, despite its noble intent, has not significantly altered the economic trajectory of the country's youth. Youth unemployment in South Africa is the highest in the world. According to Statistics South Africa's 2024 data, more than 4.9 million young people aged 15 to 34 are not in employment, education or training (NEET). In the first quarter of 2025, the unemployment rate among youth aged 15 to 24 was 59.6%, for youth aged 15 to 34, the overall unemployment rate stood at 45.5%, nearly 1.9 million young people were classified as discouraged work-seekers, about 58.7% of unemployed youth had no previous work experience and the North West and Eastern Cape provinces recorded youth unemployment rates of 58.8% and 54.3%, respectively. The structural barriers that prevent young people from economic opportunities remain largely unaddressed. Poor-quality schooling, lack of access to capital and networks, delayed entry into the labour market and limited exposure to work experience continue to lock young people out of the economy. Although BEE includes youth-oriented components such as skills development and enterprise support, these efforts have been superficial and fragmented. They have not created sustainable pathways into employment or reshaped the labour market to enable long-term inclusion. Too often, the private sector's BEE initiatives are limited to box-ticking, offering bursaries or internships for compliance points rather than as part of a genuine strategy for transformation. These initiatives tend to be short-term, urban-centred and disconnected from labour market demands. The result is a cycle of unfulfilled promises. Skills programmes churn out graduates with little to no employment prospects. Enterprise development schemes favour established players with political ties, while young entrepreneurs, particularly those in rural or informal sectors struggle to access supply chains, funding and regulatory support. After three decades, BEE has not dismantled structural barriers to economic participation. What is needed is not the abandonment of redress, but a fundamental reimagining of how it is pursued, one that is rooted in equity, participation and structural transformation, rather than symbolic compliance and patronage. The broad-based BEE commission has reported a rise in fronting practices, where companies misrepresent ownership or employment statistics to qualify for empowerment status. This not only undermines the policy's credibility but also further excludes youth from opportunity. In practice, the system is designed to reward those already in the room, not those trying to get in. The 2022 National Human Development Report paints an even starker picture: the face of unemployment in South Africa is young, black and female. During the third quarter of 2021, the unemployment rate among black South Africans was 39%, nine percentage points higher than coloured South Africans and 30 percentage points higher than white people. Educational attainment also plays a role: 40% of unemployed youth had not completed matric, while only 13% of unemployed youth held a tertiary qualification. Despite frequent references to 'emerging enterprises,' the system does little to support genuine youth entrepreneurship. Without serious efforts to reduce red tape, promote youth-led innovation and align procurement with inclusive growth, economic empowerment through entrepreneurship will remain a hollow promise. BEE in its current form will not solve the youth unemployment crisis. It will not level the playing field for future generations. And it will not deliver the economic justice that has long been promised to South Africans. What is needed is a fundamental reimagining of economic inclusion. This requires moving beyond elite redistribution and towards broad-based economic renewal. South Africa must invest in quality basic education, expand public works and guaranteed jobs programmes for youth, radically reform procurement to favour township and rural businesses, and consider progressive policies such as a universal basic income. Most importantly, young people must be placed at the centre of policy design, not as passive recipients of aid, but as co-creators of the economic future. What is needed is real opportunity, rooted in justice, driven by equity, and delivered with urgency. Tara Roos is a policy writer, researcher and political analyst.
Mail & Guardian
03-06-2025
- Business
- Mail & Guardian
BEE is essential for economic growth
Analyses of racialised disparities in both labour and product markets illustrate the need for strengthened economic redress. Photo: Delwyn Verasamy/M&G The debate about racialised socio-economic redress is at the centre of South African public policy debates. It has even permeated trade relations with the United States, which ironically has its own version of economic redress for minority groups in certain states. Yet US President Donald Trump is challenging redress policies in a country that has systemic racialised class and gender socio-economic inequalities. His views are echoed in Professor William Gumede's intervention in this debate. His article, which appeared in the There is general consensus in society that the current black economic empowerment model has largely failed to produce the intended socio-economic outcomes. But this does not mean the constitutional and policy imperatives underpinning redress should be abandoned. Several researched analyses of racialised disparities in both labour and product markets illustrate the need for strengthened economic redress. Gumede's extreme position overlooks this empirical evidence and draws on the following flawed arguments. First, he uses the term 'political capitalists' to describe individuals or enterprises that obtain state contracts or private equity in firms without any knowledge of business operations. These political capitalists are described as inherently parasitic by Gumede and he further suggests that they all have connections to the ANC-led political alliance. This generalisation is problematic because it assumes that only black-owned businesses obtain state contracts and established white corporations do not rely on state procurement. Policy and basic market intelligence reports refute this claim and illustrate how large corporations equally benefit from government contracts. Additionally, the term 'political capitalists' is conceptually and theoretically flawed because it creates a superficial divide between political and economic actors in a society. Political economy studies highlight that business and state relations are inherently connected in economic history. In simple terms: there is no Chinese wall between political and economic developments in a society. The second problem with Gumede's view is that he says BEE is primarily responsible for structural issues such as deindustrialisation, poverty, inequality and unemployment. This proposition is not backed up by evidence and he does not explain how he arrived at this conclusion. Research literature on economic trends challenge Gumede's position. Deindustrialisation in South Africa has been caused by structural changes in the economy, especially since the early 1990s. Trade and financial liberalisation exposed our domestic manufacturers to competition in key sectors such as textiles. In addition, the country's financial sector has prioritised short-term investment returns and implemented investment risk strategies that make it difficult for enterprises interested in long-term economic activity associated with sustaining South Africa's industrial base. Furthermore, there are several studies on the causes of poverty and inequality. This research explores multidimensional causes and does not cite economic redress policy as an impediment for addressing systemic socio-economic exclusion. In other words: there is no factual basis for Gumede's proposition on the causal link between BEE and the economic structural fault lines cited above. Another flaw in Gumede's article is the erroneous and sweeping generalisation about corruption. He attributes corrupt or patronage-based networks in the economy to the creation of BEE. This narrow approach is not based on a holistic understanding of corruption in the economy. The Zondo Commission Report and other authoritative market behaviour investigative accounts elucidate illegal economic activities that go beyond the scope of BEE policy implementation. For example, practices such as price collusion, tax evasion and dividing product markets. Actually, some of the established multinationals that Gumede and others laud were cited as facilitators of corrupt dealings in these reports. Corruption is a significant impediment for inclusive growth in South Africa. But it is incorrect to suggest that it is solely caused by BEE. Economic rents such as incentives, subsidies and preferential procurement policy instruments are used across the world successfully. These measures are not abnormal or inherently corrupt if used for developmental purposes. Dr Khwezi Mabasa is a part-time sociology lecturer at the University of Pretoria and Economic and Social Policy lead at Friedrich-Ebert-Stiftung South Africa.
