BEE policy ‘crippling’ SA economy, new study finds

According to the research, the cost of BEE compliance is estimated to be between R145 billion and R290 billion annually, equivalent to 2% to 4% of South Africa’s GDP.

It has also led to the loss of nearly four million jobs, according to the two organisations. 

"This huge economic cost is not simply the result of negligence or the mere poor implementation of a plan. It is a deliberate government policy that causes it," said Theuns du Buisson, economic researcher at the SRI and co-author of the report.

"It is irrelevant when someone says BEE was introduced with good intentions. Today it serves as a mechanism to enrich the elite at the expense of our country’s economy and especially at the expense of its poorest citizens."

The report highlights the heavy toll BEE places on vital sectors like mining and finance, warning that it deters foreign investment, fuels capital flight, and obstructs technological progress.

Despite modest gains in black ownership and skills development, these are "completely overshadowed" by worsening inequality and systemic economic stagnation, the authors argue.

Du Buisson noted that other countries, such as Brazil and the United States, have started abandoning similar race-based empowerment strategies in favour of more inclusive economic policies.

"In other countries, affirmative action policies are precisely there to prevent discrimination, while in South Africa, they in fact make discrimination compulsory,” he said. 

"South Africa must now follow the path of the other countries and get rid of it. BEE has become an instrument that benefits a small, politically connected elite and has long ago stopped being a policy that could empower a disadvantaged society."

Among the conclusions in the report are:

-Annual BEE compliance costs: R145–R290 billion (2–4% of GDP);

-Estimated annual GDP growth loss: 1.5%–3%;

-Annual job losses: 96,000–192,000;

-Total jobs lost to date: ~3.8 million;

-Gini coefficient remains at 0.62—indicating high inequality;

-Unemployment might have been as low as 17% without race-based policies, instead of the current 31.9%;

-Estimated loss in economic potential since 2007: R5 trillion (69% of potential growth).

With South Africa hosting the G20 Summit this year, Solidarity says the country faces mounting pressure to address its failing economic policies.

The organisation has urged government leaders to abolish BEE and adopt an inclusive, merit-based economic framework that promotes participation and growth without racial preference.

"This is not just a domestic issue anymore. South Africa’s international credibility, investment climate, and economic survival are at stake,” warned Du Buisson.

President Cyril Ramaphosa defended BEE in his weekly newsletter on Monday, saying the government’s inclusive growth policy was vital for enterprise development and supply chain diversification.

Ramaphosa said South Africa should “pursue growth and transformation in concert” and must “dispense with the false notion that we must make a choice between growth and transformation”.

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