There can be no free ride in the pursuit of transformation and
a truly inclusive and growing economy, writes Tshediso Matona
As Commissioner of the B-BBEE Commission, I have been keenly following the debate on B-BBEE, which has now reached fever-pitch level. I have previously acknowledged the need, 22 years since it was first enacted as legislation, for B-BBEE to be debated in public, because it has been an evolving policy with time, and as such, is amenable for adjustments to make it fit-for-purpose. However, it is important that the debate about a policy as fundamental as B-BBEE be undertaken with credibility in order to promote progress and avoid possible paralysis which will benefit no one.
There is a concern about the way some are biasing and polarising the BEE debate, which poses the risk of losing the social justice imperative and purpose of the policy.
There cannot be a diversion from the fundamental essence of B-BBEE as a policy born out of concern for justice and equality in the economy and society which were denied black people under apartheid. This would be a betrayal of the Constitution, which mandates the creation of a society based on equality, inclusion and social justice. It cannot be forgotten that black people entered democracy in 1994 burdened by the disadvantage of exclusion during the preceding decades of apartheid, and that the past still lives in the present. This is the problem that B-BBEE seeks to solve for, along with other transformation policies.
It is thus vital that the BEE debate strengthens and builds on what unites us about the policy as South Africans, while simultaneously helping to bridge what divides us about it.
There can also be no denying that present-day socio-economic ills in South Africa trace back to past economic exclusion of black people by apartheid, as much as a fair share of accountability lies with performance by the post-1994 democratic state and by interests and powers at the economy’s commanding heights, which continue to shape the present. As a country known for the highest inequality in the world, and with unyielding unemployment at record highs of 31.9% and much higher for youth, millions of fellow citizens live with the indignity of poverty, from which all of sorts of social maladies and crime feed. These realities highlight the urgent need to address intergenerational inequalities and enable broader economic participation as a foundation for shared prosperity, using B-BBEE as a tool.
However, the policy has been engulfed in all sorts of criticisms, not all of which have good faith and validity. An example is the recently released report by the Free Market Foundation (FMF) and Solidarity, which suggests that BEE imposes an unreasonable compliance cost on companies. Among its claims is a startling finding: that annual compliance costs amount to between R145 billion and R290 billion, which is the equivalent of 2% to 4% of South Africa’s GDP, valued at about R7 trillion. The report, therefore, portrays B-BBEE as a burden to local and multinational companies, alleging it deters investment.
To fabricate the so-called “BEE costs”, the authors ascribe financial values to companies’ implementation of BEE, while not factoring in the fact that many companies voluntarily comply out of goodwill and conscientiousness, which are not measurable in financial terms alone. It appears that the report seeks to fuel hostility around the policy, without delving into the economic logic of B-BBEE as well as the moral and constitutional imperative of transformation.
It is important to appreciate that the core of B-BBEE is a recognition that its objectives will be delivered through economic principles and mechanisms that support growth—for example from increased participation in the economy by citizens and entrepreneurs, as well as enhanced skills, among other objectives of B-BBEE Codes of Good Practice and scorecard. The intent is to redress racially skewed patterns of ownership in the economy in which inequality in South Africa is rooted, which requires promoting ownership of productive assets by black people, equipping them with skills and entrepreneurial capability.
B-BBEE was designed to allow for various pathways to contribute to transformation, whether through ownership, skills development, or supporting suppliers. This flexibility allows businesses to play to their strengths while still helping to grow a more inclusive economy.
It is therefore incorrect to evaluate initiatives undertaken by B-BBEE-compliant companies as “costs”, as misleadingly punted by FMF and Solidarity, and ignoring that these count as investments. B-BBEE policy also encourages investments wherein black people can acquire assets through transactions. These assets are not the forced release of ownership rights. Shares acquired by black shareholders are paid for, and returns are earned relative to business performance, just like any other investment. This aspect of BEE is about extending ownership to a broader base, opening networks, and giving black South Africans the chance to build generational assets and financial resilience long denied under apartheid.
Skills Development too is a vital mechanism: in a society where educational outcomes remain shaped by race and geography, it enables bursaries, learnerships, and training that build a more skilled and diverse workforce, which creates a pipeline of talent through which black people can ascend to top management echelons of companies.
Enterprise and Supplier Development (ESD) of B-BBEE is directed at growing the pool of small and medium enterprises (SMEs), a sector recognised globally as the engine for growth and job creation. It incentivises large businesses to include black-owned SMEs into their supply chains, through procurement, mentorship, finance, and market access. In a country where capital and networks remain skewed by privilege, ESD ensures competent black entrepreneurs have a fair chance.
Similarly, Socio-Economic Development links directly to social justice. When companies invest in education, healthcare, or infrastructure, they restore dignity to underdeveloped communities and lay the foundation for an inclusive economy. These are investments in productivity, in social sustainability which corporate Environment Social and Governance policies are elevating globally, and ultimately in peace.
Moreover, many firms comply because they expect to benefit from opportunities such as qualifying as government suppliers or being awarded commercial licenses in regulated sectors like telecommunications and mining. Multinational entities also have a special dispensation through the Equity Equivalent Investment Programme, which allows for a more flexible and investment-friendly framework under the Department of Trade, Industry and Competition.
It therefore follows that the social justice case for B-BBEE does not abandon economic logic, and that the policy is not in conflict with economic growth, nor is there a trade-off between the two. Global evidence shows that inclusive economies are more stable, innovative, and resilient. Concentrated wealth is inefficient, inequality depresses demand, and exclusion undermines social cohesion and solidarity. Properly implemented, B-BBEE promotes inclusion, a core part of building a fairer society while strengthening the foundations for long-term economic growth.
The monitoring that the B-BBEE Commission conducts shows that notable inroads are being made in promoting the inclusion of previously disadvantaged black people in the economy. This suggests that B-BBEE is still work in progress and there is scope to improve its implementation and impact. The Commission finds increasing case studies of South African corporates which implement B-BBEE, not because they are forced to, but because they recognise the value of contributing to a more equitable economy. Some go further with Employee Ownership Schemes, ensuring that workers directly share in the success of the companies they help to build. These initiatives embody the spirit of B-BBEE and show that transformation can be embraced in good faith.
For example, the B-BBEE Commission’s National Status and Trends Report, based on B-BBEE certificates and reports of private and public entities, shows black ownership rose from 27% to 33.9% between 2017 and 2022. Since 2021, the spend on ESD is R170 billion, and R118 billion for spend on Skills Development, which are indicative of the potential impact if more entities implement B-BBEE elements.
Also, since 2017, B-BBEE transactions registered with the Commission amount to R700 billion, facilitating ownership transfer to black South Africans.
Even then, the B-BBEE Commission concedes that implementation of the policy is not entirely optimal and that red tape and ‘gaming of the system’ have crept into its processes, suggesting the legislation needs a review to simplify and improve compliance.
It has also been the logic of B-BBEE that its success and the attainment of social justice is the joint leadership responsibility of the state and the private sector, with a role for various actors in society.
All things said, there is no escaping that to advance transformation requires effort as much as it requires partnerships, because the cost of inequality is far greater than the cost of inaction. There can be no free ride in the pursuit of transformation and a truly inclusive and growing economy.
Tshediso Matona is the B-BBEE Commissioner.