The system has reportedly struggled to tackle the country’s deep-rooted inequality, widely regarded as the most severe in the world.
South Africa’s Black Economic Empowerment program is set for significant changes as its director unveils plans to introduce stricter measures, including fines, to meet the initiative’s goals. This policy, in place since the early 2000s, aims to confront the deep-seated inequalities left behind by apartheid.
Tshediso Matona, head of the Black Economic Empowerment Commission (B-BBEE), highlighted these changes in a report published by Reuters. The empowerment law, introduced in 2003, was designed to encourage companies to create more opportunities for black South Africans, offering incentives like tax breaks and access to public contracts to level the playing field.
Despite these efforts, over 20 years later, the unemployment rate for black South Africans stands at a staggering 37.6%, well above the national average and far higher than the 7.9% rate for white citizens, according to a recent report by the national statistics agency for the second quarter of this year. The World Bank still ranks South Africa as having the world’s most extreme levels of inequality.
These ongoing disparities have intensified calls for the African National Congress (ANC) to step up efforts to improve the lives of black South Africans. After governing for nearly three decades, the ANC lost its parliamentary majority in the most recent elections, securing just 159 out of 400 seats, a steep decline from its previous 230. Critics argue that the ANC’s inability to tackle persistent issues like crime, poverty, and unemployment is a key reason for this decline in support.
“There’s no society that can be viable with [this] level of inequality,” Matona told Reuters, emphasizing the urgency of addressing these challenges.
The B-BBEE program, currently voluntary, scores companies on aspects like black ownership, management control, and skills development. However, Matona acknowledged that some businesses manipulate their scores by falsely listing black individuals as managers— a deceptive practice known locally as “fronting,” which is a criminal offense in South Africa.
Since 2017, the commission has received 1,348 complaints related to fronting, yet no convictions have been made. Matona explained that this is due to the justice system still adapting to the B-BBEE regulations.
Looking ahead, Matona plans to boost incentives for companies that comply while publicly naming those that fail to submit their required annual reports. Although 400 companies are registered under the program, only 141 submitted their reports in 2022.
President Cyril Ramaphosa, who now leads South Africa’s multi-party government after the ANC lost its majority, has reaffirmed his commitment to black empowerment. He recently announced plans to showcase the benefits of the B-BBEE program to businesses and hinted at the possibility of imposing penalties for non-compliance.
However, the pro-business Democratic Alliance (DA), which is now the second-largest party in the coalition government, has pushed back against introducing punitive measures. “Businesses don’t exist for altruistic purposes; we must accept that,” said Michael Bagraim, the DA’s labor spokesperson.
As the B-BBEE program gears up for these potential changes, the question remains: Will these measures finally bridge South Africa’s long-standing inequality gap?
