Opinion: BEE Reform Must Focus on Economic Growth, Not Just Ownership

Three decades after apartheid ended, the architecture of black economic empowerment in South Africa is being asked a question it has dodged for too long: has it grown the economy, or merely rearranged who sits on top of it? The answer, on the available evidence, is the latter more often than the former, and that distinction is the one a credible reform effort must now confront.

The Broad-Based Black Economic Empowerment framework, the policy machinery most South Africans know as B-BBEE, was conceived as a corrective to the wealth asymmetries baked in by decades of codified racial exclusion. It set out to widen ownership, diversify management, and pull black professionals into the upper ranks of corporate life. On the ownership and management metrics, it has arguably delivered. A black professional and managerial class exists today that did not exist in 1994, and the boards and executive suites of the country's largest listed firms look fundamentally different from the ones the apartheid era produced.

Yet the same period has produced a shadow economy of compliance, one in which the form of the deal has come to matter more than its substance. The scorecard's points system rewards transactions that auditors can tick: a slice of equity transferred to a qualifying partner, a board seat filled, a training spend booked. It rewards these things whether or not any productive capacity follows. The result is a market for empowerment transactions priced on structure rather than on what the business actually does, and a brisk trade in complex ownership vehicles designed to satisfy the scorecard while delivering limited real participation to ordinary South Africans.

The scorecard's incentive problem

Fronting, the practice of presenting a transaction as empowering when the economic substance is elsewhere, is the open secret of the current system. It has been prosecuted, periodically, with some success. The Department of Trade, Industry and Competition has pursued fronting cases and the Commissioner of the B-BBEE Commission has produced reports flagging irregularities. But the structure of the scorecard itself does most of the damage: when points are awarded for ownership transfers that can be reversed, financed in ways that leave the beneficiaries with debt rather than equity, or routed through vehicles the underlying black partners do not control, the framework invites the behaviour it claims to police.

The market has noticed. Advisers structure deals around the points table; transaction prices reflect the value of the certificate the deal will produce rather than the value of the underlying business. A stake that carries no real decision-making authority can still clear the ownership test if it is structured correctly. An equity contribution financed entirely by the very company selling the stake can still register as empowerment on paper.

That is not a fringe observation. It is the dominant texture of how empowerment deals get done at the larger end of the market, and it is what critics from across the political spectrum have been saying for years. The disagreement has never been about whether the gaming exists. It has been about what to do about it.

What a growth-oriented reform would actually do

A reform package that took growth seriously would do three things the current scorecard mostly does not. First, it would weight enterprise development and supplier development heavily, because that is where new productive capacity actually comes from. Second, it would measure skills transfer in a way that captures competence gained rather than training hours invoiced. Third, it would treat job creation, sustainable employment and tax contribution as first-order outcomes, not as secondary effects of a transaction whose primary purpose is to move paper.

The argument is not that ownership does not matter. It does. A society whose major firms remain unrepresentative at the equity level is a society whose economy continues to compound the exclusions of its past. But ownership without operational substance is a flag planted on territory nobody lives in, and a reform programme that confuses the two will continue to produce the perverse outcomes that have given the framework its current reputation.

Enterprise development, by contrast, is where the long-run returns live. A black-owned supplier that wins real contracts and pays real wages builds a balance sheet the scorecard cannot fake. A skills programme that produces a competent tradesperson does the same. A young company that grows into a mid-sized employer delivers transformation that ownership transfers, on their own, have rarely managed.

The political economy of who blocks change

Reform, however, runs into the constituencies that the current system has built. A framework that has produced a class of professional dealmakers, transaction advisers, and ownership-vehicle operators has also produced a class with a stake in preserving the status quo. The political resistance to a growth-oriented rewrite will come, predictably, from those whose income depends on the existing scorecard's architecture. It will not come from the small-business owner in Soweto or the emerging farmer in Limpopo who has never been able to access a meaningful empowerment transaction because the deals are structured for a different market.

There is also a defensible concern on the other side. A reform that drops ownership entirely would forfeit the legitimacy gains the framework has produced. The black professional class that exists today is, for many South Africans, the most tangible evidence that the post-apartheid settlement can deliver. Scrap the ownership dimension and you do not just lose points on a scorecard; you break a promise about what the end of apartheid was meant to make possible.

The way through is not to choose between ownership and growth. It is to subordinate ownership to growth: keep the ownership dimension, but rank it below enterprise and skills outcomes that cannot be manufactured on paper, and tighten the rules so that what counts as ownership is what counts in any ordinary commercial transaction: real equity, real control, real economic exposure.

What to watch next

The political moment matters. As South Africa marked Freedom Day in late April 2026, with the country 32 years past the first democratic vote and still searching for an economic settlement that matches the constitutional one, the BEE reform debate is one of the few policy conversations with the potential to materially shift the trajectory of growth. The Treasury, the Department of Trade, Industry and Competition, and the B-BBEE Commission itself are the institutional nodes to watch; any credible rewrite will surface through one of them first.

The harder metric to watch is the one no reform document will contain: whether, five years from now, the country has a larger cohort of genuinely productive black-owned businesses, more skilled workers in trades and technical fields, and a tax base that has visibly broadened. If those numbers move, the reform worked. If they do not, the next round of debate will sound exactly like this one, and the scorecard's critics will have been right for the right reasons.

Sources

• Daily Maverick via AllAfrica: "South Africa: In Celebration of Freedom – an A to Z of Why I Love South Africa"
• South African Department of Trade, Industry and Competition – B-BBEE Commission reports and fronting case records
• South African Treasury – B-BBEE discussion documents and budget reviews

Desk note

Monexus frames this as a structural growth question, not a racial-symbolism one. The wire coverage of South Africa's Freedom Day commemorations tends to celebrate the country's democratic transition without interrogating whether the empowerment machinery built on top of it has actually changed productive capacity; the gap between those two stories is where this piece sits.