Some criticisms of BEE – particularly those about its economic effects – are difficult to disentangle from broader criticisms of South Africa's broader employment equity or affirmative action programme. This is because BEE is closely tied with that broader programme, implying affirmative action both explicitly and insofar as it provides private-sector entities with strong incentives to pursue affirmative action internally. General
criticisms of affirmative action are therefore also relevant.
Extent of impact and the black elite advocated for the development of a South African black
bourgeoisie. The "narrow base of empowerment" effected by BEE – one of the central concerns leading to the reform of BEE as a "broad-based" programme in the early 2000s – remains one of the major criticisms levied against the policy. At the advent of the policy, and especially during the Mbeki presidency, the ANC was explicitly committed to promoting the development of a "patriotic black
bourgeoisie" whose rise could initiate broader transformation in the economy. The
50th National Conference of the ANC in 1997 agreed that:Though such instances may be an exception to the norm, experience in other countries has taught us that, without vigilance, elements of these new capitalist classes can become witting or unwitting tools of monopoly interests, or parasites who thrive on corruption in public office. However, in the overall, the rising black bourgeoisie and middle strata are objectively important motive forces of transformation whose interests coincide with at least the immediate interests of the majority. They are, in this sense and in this phase, part of the motive forces of fundamental change.However, critics contend that, over two decades later, the beneficiaries of BEE, and of most BEE transactions, still comprise only a very small elite of South African society, with the vast majority of black South Africans receiving few benefits from the policy, and indeed with little progress in reducing overall poverty and inequality levels in South Africa in general. Archbishop
Desmond Tutu expressed this view, asking, "What is black empowerment when it seems to benefit not the vast majority but an elite that tends to be recycled?" He also warned that, combined with widespread "dehumanising poverty," the system could build popular resentment against the ruling classes and between different sections of society.
Pieter Groenewald, leader of opposition party the
Freedom Front Plus, has called BEE an acronym for "black elite enrichment"; and
John Steenhuisen, the leader of the opposition
Democratic Alliance, has argued that BEE encourages the development of
oligarchy at the expense of economic equality. of the
FF+ is an outspoken opponent of BEE. A common accusation is that, despite the shift to BBBEE, BEE remains primarily geared towards ownership transactions, increasing black shareholding and directorships – and the wealth of their holders – without necessarily increasing the substantive control of black South Africans over the economy. The notion of a BEE elite adds to this the further accusation that BEE ownership transactions themselves disproportionately involve one small group of black businessmen, with insufficient opportunities afforded to the black population at large. Anthea Jeffrey of the
Institute of Race Relations has claimed that the group of beneficiaries amounts to about 15% of the black population. The shift to broad-based BEE has led to an increase in the number of BEE deals involving large black-owned
consortia, which some commentators have suggested may have increased the scope of beneficiaries under those deals. On other, non-ownership metrics, there has been positive transformation since 1994, Yet in 2021, the Commission for Employment Equity found that white people remained dramatically over-represented in the top levels of the private sector: they filled 67.8% of top management positions, 58% of senior management positions, and 43.2% of all professionally qualified positions. As of the second quarter of 2021, the
unemployment rate for white South Africans, at 8.6%, remained significantly lower than that for blacks (38.2%), coloureds (28.5%), and Indians and Asians (19.5%).
Corruption BEE fronting The government defines "BEE fronting" as occurring whenever entities
deliberately misrepresent facts about their BEE compliance. However, the phrase is most commonly used in reference to so-called "window-dressing," a form of
tokenism whereby entities improve their BEE status by appointing black directors, managers, employees, or suppliers, who are, in practice, discouraged or inhibited from substantially participating in or benefitting from the enterprise. Several large companies have been investigated for BEE fronting, including
Netcare and
MTN. The BBBEE Commission has increasingly raised concern about the extent of the practice. In 2021, Commissioner Zodwa Ntuli said that fronting was so widespread that improved measured performance against BEE objectives might not correlate with actual improvement in the economic situation of black people. She also called for a more stringent government response to those found guilty of fronting, which is punishable by fines, blacklisting, and up to ten years' imprisonment.
Political corruption A notable criticism of BBBEE is that the policy has been co-opted by members of South Africa's political elite, mostly within the governing ANC, for the purpose of self-enrichment. From an early stage of BEE, analysts, extrapolating from the concept of a "patriotic black bourgeoisie," noted the likely contribution of BEE to the growth of a black capitalist class with close links to the ANC. Perhaps most prominently, several politically connected ANC stalwarts – notably
Saki Macozoma,
Tokyo Sexwale,
Cyril Ramaphosa, and
Patrice Motsepe – gained substantial wealth and influence in key sectors such as mining and finance through BEE deals. More broadly, BEE has been thought to increase the importance or perceived importance of political connections to gaining state contracts and other business incentives, Critics also argue that BEE has thus become a major cause of
political corruption in South Africa, with government contracts improperly awarded, at inflated prices, to politically connected "
tenderpreneurs," sometimes to the detriment of quality and service delivery. These concerns have received increased attention following revelations of
state capture during
the presidency of
Jacob Zuma. There were, for example, allegations that BEE-related corruption had taken place at
Bosasa and in the controversial
Vrede Dairy Project. At the
Zondo Commission, former Bosasa executive
Angelo Agrizzi implicated BEE verification agency
Empowerdex in corruption, and it was later confirmed that
Gupta-owned companies, implicated in substantial corruption, had secured
Eskom contracts using fraudulent BEE certificates.
Minister of Finance Enoch Godongwana said in 2022 that increased corruption in government procurement was one of the most significant challenges facing BEE.
Racism Critics have questioned the appropriateness and fairness of the policy's use of
racial classifications, themselves inherited from the apartheid era. This broad family of criticisms encompasses a range of views, including that using race markers further entrenches their power; that race is a suboptimal proxy for economic disadvantage; and that BEE constitutes a form of unjust or unconstitutional
racial discrimination or
reverse racism against whites.
Economic effects Some critics argue that BEE deters investment in South Africa. Although BEE is not technically compulsory (unless the business wishes to seek certain contracts or benefits, or to be listed on the
JSE), critics argue that BEE compliance increases the
cost of doing business in South Africa, among other reasons because businesses may hire
consultants and lawyers to help them navigate the complexity of the codes and other regulations. In 2018, for example, as a condition for increasing investment in South Africa, the
European Union requested a relaxation of BEE ownership rules, calling the targets unfairly onerous. Critics of BEE have also said it contributes to a
brain drain of qualified workers from South Africa. Others argue that the emigration of some skilled workers "creates opportunity" for diversifying the relevant sectors while appointing their replacements. == See also ==