By Johnathan Paoli
A new report has sparked renewed national debate over Broad-Based Black Economic Empowerment (B-BBEE) policy, arguing that instead of reducing inequality and fostering inclusion, it is worsening economic inequality, weakening job creation, and enriching a politically connected elite.
The document, released jointly by Solidarity and the Free Market Foundation (FMF) on Thursday, claims that B-BBEE has created a “web of elite enrichment” while burdening ordinary workers and businesses with inflated costs and complex regulatory obligations.
“For a long time, black economic empowerment has been presented as the moral thing to do. But we now say what many are afraid to: the emperor has no clothes,” Solidarity CEO Dirk Hermann told reporters.
Hermann said that South Africa’s three central challenges of inequality, unemployment and poverty were real and pressing. However, the policy has become a harmful “medicine” that exacerbated these problems, rather than solving them.
“Criticising BEE is treated like a mortal sin. It’s seen as defending apartheid or white privilege. But under this uncritical acceptance, a silent injustice is committed under the guise of righteousness,” Hermann said.
Solidarity’s report claims that B-BBEE compliance has created distorted procurement systems, inflated prices and increased costs for state-owned entities like Eskom.
Hermann cited cases of ordinary workers paying the price for politically motivated decisions.
“We’re the ones paying R50 for a roll of single-ply toilet paper. We’re the ones seeing chocolate bars bought at R57 to meet ‘black supplier’ quotas, while the same chocolate costs R12 at a local Pick n Pay. These are not just anecdotes—they are symptoms of a policy failure,” he said.
Hermann argued that the policy’s scorecard system incentivised companies to choose B-BBEE points over cost-efficiency, with the result being higher electricity prices, retrenchments and stifled economic growth.
“Our members, who are not part of the elite, are being retrenched or placed on short time. Employers can’t afford inflated procurement anymore. The real injustice is being carried by workers, black and white alike,” he added.
FMF policy head Martin van Staden, echoed these concerns by contextualising B-BBEE within South Africa’s broader legal framework.
“Since 1994, we’ve passed 122 laws where race is a legally relevant factor. That’s 40% of all race-based legislation passed since 1910. Transformationism has become a new era of race law—like apartheid and segregation before it,” Van Staden said.
He pointed to the entrenchment of B-BBEE provisions not only in the original Act but in laws like the Public Procurement Act, the Mineral and Petroleum Resources Development Act and even legislation covering intellectual property.
Van Staden maintained that it was not a standalone policy, but embedded across the legislative landscape and that these “race-based” provisions were on the rise.
“President Ramaphosa says these laws will remain until we reach an undefined utopian equality. But such a standard is practically unachievable,” Van Staden warned.
He referenced his work compiling the “Index of Race Law”, which tracks race-based legal provisions in South African law since 1910.
According to him, 145 of 324 such Acts remain in force today.
“The intention behind these laws may be noble, but legally speaking, they still turn race into a determining factor for access and opportunity,” he said.
The report argues that B-BBEE has transformed from a mechanism for redress into a system of elite capture, enriching a small class of politically connected beneficiaries at the expense of the majority.
“We are not against transformation, but transformation should not mean centralising wealth among cadres while destroying jobs for everyone else,” Hermann stressed.
Theuns de Buisson, an economic researcher at the Solidarity Research Institute (SRI), emphasised that the report provided data-driven analysis of how inflated procurement costs and administrative burdens imposed by B-BBEE were suppressing productivity and deterring investment.
SRI head Connie Mulder said that B-BBEE’s failure was not only economic but moral.
“If the goal was to reduce inequality, then we must acknowledge that inequality has increased, especially among black South Africans. The policy is failing those it was meant to help. It’s time to start over,” Mulder said.
The organisations behind the report are urging the government to replace the current B-BBEE framework with an alternative strategy focused on inclusive economic growth, job creation and skills development.
“We’re not saying do nothing about poverty, but do something real. Something effective. Let South Africa grow again. End cadre enrichment. Begin people-centred progress,” Hermann said.
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