Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      MVNO boom is reshaping South Africa’s mobile market

      12 June 2025

      South African law is failing gig-economy workers

      12 June 2025

      MultiChoice’s TV empire shrinks – but its ‘side hustles’ are holding strong

      12 June 2025

      MultiChoice is bleeding subscribers

      11 June 2025
    • World

      Qualcomm shows off new chip for AI smart glasses

      11 June 2025

      Trump tariffs to dim 2025 smartphone shipments

      4 June 2025

      Shrimp Jesus and the AI ad invasion

      4 June 2025

      Apple slams EU rules as ‘flawed and costly’ in major legal pushback

      2 June 2025

      Mark Zuckerberg has finally found a use for his metaverse

      30 May 2025
    • In-depth

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025

      South Africa unveils big state digital reform programme

      12 May 2025

      Is this the end of Google Search as we know it?

      12 May 2025
    • TCS

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025

      TCS | Sentiv, and the story behind the buyout of Altron Nexus

      3 June 2025

      TCS | Signal restored: Unpacking the Blue Label and Cell C turnaround

      28 May 2025
    • Opinion

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025

      Digital giants boost South African news media – and get blamed for it

      29 May 2025

      Solar panic? The truth about SSEG, fines and municipal rules

      14 April 2025

      Data protection must be crypto industry’s top priority

      9 April 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Investment » South Africa seeks to reform faltering BEE system

    South Africa seeks to reform faltering BEE system

    The head of South Africa's flagship empowerment commission plans to introduce additional incentives and potential fines.
    By Agency Staff23 September 2024
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    South Africa seeks to reform faltering BEE systemThe head of South Africa’s flagship black economic empowerment commission plans to introduce additional incentives and potential fines to improve corporate participation and curb exploitation of the system meant to tackle the country’s inequality, he said.

    The ANC, which had governed unchallenged for 30 years until it lost its parliamentary majority in May elections, is under intense pressure to improve the lives of black people left disadvantaged by decades of white minority rule.

    The empowerment law enacted in 2003 created a scorecard system that encourages companies to hire and promote black people by offering them tax breaks and access to government contracts.

    Listed companies are required to disclose their BEE status in annual reports, but fewer and fewer are doing so

    Two decades later, unemployment is five times higher for black people than for white people and income inequality is the worst in the world, according to the World Bank, and critics say the empowerment policy has not worked.

    “There’s no society that can be viable with this level of inequality,” said Tshediso Matona, head of the Broad-based Black Economic Empowerment Commission, in an interview.

    Under the voluntary programme, companies earn points in categories such as black ownership, management control and skills development. However, Matona says some companies inflate their scores by falsely listing black people as managers, a practice commonly known in South Africa as “fronting”, a crime under the law.

    The commission, which refers cases of infringement to state prosecutors, has received 1 348 complaints of fronting since 2017, said Matona. He added, without saying how many cases had been sent to trial, that no one had yet been convicted of fronting largely because the criminal justice system was “still figuring out how to work with the B-BBEE regulation”.

    ‘Naming and shaming’

    Listed companies are required to disclose their black empowerment status in annual reports, but fewer and fewer are doing so. In 2022, only 141 of about 400 listed companies submitted a report. Matona said he hoped to enhance company incentives for compliance while “naming and shaming” and possibly fining those that fail to submit the reports.

    President Cyril Ramaphosa has said he wants to focus on showing companies the advantages of black empowerment, but that if they refuse to comply then penalties would be needed. “On this one, we are unequivocal,” Ramaphosa told reporters over a week ago, describing racial inequality as an “existential challenge” for South Africa. “It must be done, and it will be done.”

    Read: Coalition government triggers wave of investment

    Matona would not be drawn on the specifics of the proposals but said incentives could focus on increasing recognition for companies that invest in skills and enterprise development and should not be “too obsessed about ownership in existing businesses”. He said he hoped to have amendments to the law tabled in parliament within 12 months.

    Any inclusion of punitive measures could set the ANC on a collision course with its coalition partner, the pro-business Democratic Alliance, which has said it would resist them. “Businesses don’t exist for altruistic purposes, we must accept that,” said DA labour spokesman Michael Bagraim.

    President Cyril Ramaphosa. Image: GCIS

    A common criticism of the affirmative action system is that it made a small number of political insiders extremely wealthy through shareholding deals, especially in its early years.

    Economist Duma Gqubule said his research — based on an analysis of companies’ annual reports and shareholding plans — found black ownership of the 50 biggest firms listed on the JSE was barely 1%, far below the official average figure of about 30%.

    This was because legal loopholes allowed firms to count black shareholders even after they sold their stake, or to use shareholding structures that artificially increase black ownership, a practice Gqubule described as “blackwashing”.

    The whole thing should be repealed. The state should help entrepreneurs, irrespective of their race

    Matona blamed a lack of oversight of independent agencies which issue black empowerment scorecards and said the industry needed regulation. His attempt to shift the focus away from ownership to skills development and training also has loopholes, consultants and trainees Reuters spoke to said.

    To get skills points companies must pay for training courses for black people, but they don’t have to hire them. Some engage a consultancy to find them disabled people to train, because these earn more points, the head of one such consultancy said. This often leaves black job seekers in a cycle of training.

    “They keep on promising us that they will hire us but they’ve never done that,” said Nonhle Mnguni, a 22-year-old woman in Soweto who has done such courses in business administration, banking, freight forwarding and call centre work since leaving high school.

    ‘Not practical’

    Giles Von Broembsen, CEO of property management company Pretor Group, said his company ran training programmes for employees, more than half of whom are black, but that he could only earn points by sending them on a training course elsewhere. “The points and the scoring and the system is all very laudable, but it’s not practical,” he said.

    While some political and economic analysts agree with Matona’s approach to push for more compliance, others want the law repealed, saying it adds unnecessary bureaucracy which increases business costs and deters foreign investment.

    “I think the whole thing should be repealed,” said political analyst Moeletsi Mbeki. The state “should help entrepreneurs to develop new businesses, irrespective of their race”.  — Nellie Peyton and Olivia Kumwenda-Mtambo, (c) 2024 Reuters

    Don’t miss:

    ‘Please call me’ battle: YeboYethu warns of dire consequences for BEE



    Cyril Ramaphosa Giles Von Broembsen Michael Bagraim Moeletsi Mbeki Tshediso Matona
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleBookmarks | Huawei to dump Windows for PCs in favour of HarmonyOS 
    Next Article Nedbank restores services after brief Monday outage

    Related Posts

    Telecoms operators back BEE reforms – but warn against favouritism

    5 June 2025

    Starlink storm: BEE reforms fuel tensions in Ramaphosa’s GNU

    26 May 2025

    Sita says it welcomes SIU corruption probe

    26 May 2025
    Company News

    Building a cyber-resilient culture from the boardroom to the front lines

    12 June 2025

    How South Africa’s municipalities are finally getting smart

    12 June 2025

    Ransomware roulette: pay up or power through?

    11 June 2025
    Opinion

    Beyond the box: why IT distribution depends on real partnerships

    2 June 2025

    South Africa’s next crisis? Being offline in an AI-driven world

    2 June 2025

    Digital giants boost South African news media – and get blamed for it

    29 May 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.