Economic empowerment receives a lot of attention in South Africa. It is described in different ways: as BEE or as broad-based BEE (BBBEE). The latter is regarded as more palatable than the former, but it is not immediately obvious why.
By its very nature, BBBEE is designed to be advantageous to certain groups in the South African economy. If the design was not to ensure benefits to the disadvantage of others, there would be no justification for BBBEE’s existence.
The whole empowerment drive has developed an industry based on its spinoffs. Preferential procurement is the best-known and most unfortunate of these spinoffs.
Under the guise of preferential procurement for the sake of BBBEE, tender and contract fraud and mafia-type activities became the name of the game for the politically connected. Funds are creamed off and paid to the tenderpreneurs and various mafias, who have amassed wealth beyond the wildest dreams of ordinary South Africans.
Three groups are the obvious victims of BBBEE gone wrong. First, the taxpayers who worked hard and diligently to generate the funds that have been stolen. Second, the ordinary South Africans who are begging for service delivery; the stolen funds should have been used for this purpose and not to enrich tenderpreneurs and mafia groupings. Third, the businesses and individuals who are suffering from extortion in various industries, ranging from construction to transport.
Empowerment regulations deter investment. A cursory glance at investment figures gives the impression that many South African businesses only do replacement investment and refrain from new investment. The opportunity cost of new investment amid BBBEE is simply too high.
The result is that economic growth has lagged the population growth rate for more than a decade. South Africa simply cannot escape its low-growth trap, so unemployment is exceptionally high. Unemployed South Africans are the fourth group of victims of the ANC’s empowerment policies.
How the hell did the ANC manage to break a functioning economy in less than three decades?
BBBEE is also the excuse for cadre deployment. The incompetence of many deployed cadres has done serious damage to service delivery in South Africa. The fifth group of victims are capable people who were not appointed, or not promoted, owing to cadre appointments.
Looking at South Africa since 1994, the devastation wreaked by successive ANC governments becomes obvious. I recently asked a question that I must repeat: how the hell did the ANC manage to break a functioning economy in less than three decades?
In its attempt to recover its lost glory, BBBEE is all the ANC has to offer. The sixth victim of empowerment is sound policy choices that could advance economic growth.
BBBEE also favours some people at the expense of others. The legislation describes the beneficiaries as “black people”, a generic term that includes Africans, coloureds and Indians. So the seventh group of victims of BBBEE is white people.
In the FM of March 26 2026, Rob Rose and Tim Cohen considered the future of BBBEE in South Africa. Both highlighted the high direct and opportunity cost and called for reconsideration or review. I agree — the sun should set on BBBEE.
Estimates of South Africa’s population numbers by 2050 are difficult, because the population census of 2022 has very little credibility. Nevertheless, an internet search estimates that the South African population in 2050 will be about 80-million.
Prof Flip Smit, the renowned demographer, estimates that South Africa will have a white population of about 2.5-million by 2050 — about 45% fewer than the 4.5-million in the country now. Smit calls demographic trends “the future that has already happened”. Low birth rates and high emigration numbers have already determined the demographic future of the white group.
This dramatic decline in the white population might look unrealistic at first glance. But think of Zimbabwe, where the white population dropped from about 300,000 in 1975 to just 25,000 or so 50 years later.
Smit’s estimates show that by 2050, group seven of the victims of BBBEE, white people, will comprise just 3% of the total population. Put differently, 24 years from now BBBEE will not be able to benefit blacks, coloureds and Indians at the expense of whites because there simply won’t be enough whites around.
The debate about the future of BBBEE should therefore move on, given South Africa’s demographic projections. The debate should be on a sunset clause, with BBBEE to be replaced by “black economic skills transfer (BEST)” to ensure future economic growth and service delivery.
Rossouw is honorary professor at Wits Business School and economist of Altitude Wealth
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