For nearly three decades, South Africa’s Black Economic Empowerment (BEE) policy has been anchored on the premise that transferring 30% equity stakes to black shareholders would, somewhat, redress apartheid’s race-skewed economic imbalances.
However, the results have been disastrous.
For example, between 2003-2008, as much as R361 billion in BEE deals were concluded, yet black ownership on the JSE remains below 5%, unemployment has soared to over 32%, and GDP stagnated below 2%.
This evidence shows that equity-based BEE has failed to redress apartheid’s economic ills, and South Africa must urgently rethink its approach.
The Surprising Origins of BEE
Contrary to popular belief in SA, BEE wasn’t an African National Congress (ANC) invention.
For more than 50 years, Malaysia has implemented a similar policy, the “Bumiputera Empowerment Regime”, associated with a 30% ownership target.
More recently, the Afrikaner Broederbond, a secret society dedicated to Afrikaner advancement, laid the groundwork in the 1990s for such a policy.
Their vision was pragmatic: create an empowerment partnership that would stimulate economic growth through black participation.
The first wave of deals tells this story.
In 1993, Sanlam sold 10% of Metropolitan Life to Dr. Nthato Motlana’s Methold consortium for R137 million, funded by the IDC.
This became NAIL or New Africa Investment Limited – South Africa’s pioneering black-owned JSE-listed company.
A year later, Anglo American sold 51% of African Life to Don Ncube’s Real Africa Investments for R162.8 million.
Cyril Ramaphosa’s National Empowerment Consortium (NEC) later bought 35% of Johnnic for R2.6 billion in 1996, while Mzi Khumalo’s African Mining Group acquired 34.9% of JCI for R2.9 billion in 1997.
These deals shared a common fate: they collapsed without creating sustainable black businesses or new industries. The problem wasn’t a lack of capital, but rather a lack of operational control and long-term vision.
When the ANC codified BEE into law in 2003, it inherited this flawed model and made it worse.
The elite enrichment scheme (2003-2008)
The second wave of BEE became a vehicle for elite enrichment rather than broad-based empowerment.
For example, Tokyo Sexwale’s Batho Bonke Capital bought 10% of Absa for R2.3 billion in 2004, only to exit in 2008 without creating any lasting black-owned financial institution.
Meanwhile, Capitec – founded by Afrikaner investors – became South Africa’s most successful bank by actually serving the black market.
Capitec was supposed to have been created by Sexwale from the windfall of Absa, but that is another story for another day.
The Mineworkers Investment Company (MIC) story is particularly telling. Funded with R100 million from Remgro, MIC bought 5% of Vodacom, sold it for R1.5 billion, and missed out on what would today be a multibillion-rand stake.
Similarly, while Kumba Iron Ore paid R20 billion in BEE dividends and Multichoice’s Phuthuma Nathi scheme paid R11.9 billion, no black-owned competitors emerged in mining or media.
The results speak for themselves: JSE black ownership remains below 5% (it should be 25%+ if BEE worked), GDP growth never materialised, and SOEs became feeding grounds for politically connected elites rather than engines of empowerment.
The lost decade (2009-2024)
Post-2008, BEE deals froze as liquidity dried up.
The politically connected simply shifted their focus to looting SOEs, with catastrophic results for entities like Prasa, Eskom and Transnet.
The government’s response?
Expand social grants to 30 million people while only 7.5 million taxpayers foot the bill – an unsustainable model that proves equity BEE has failed to create jobs and grow the economy.
The case for scrapping 30% equity
Evidence over three decades shows why the 30% model must go:
First, it enriches elites without empowering the masses. Patrice Motsepe succeeded by building TymeBank, not through BEE equity.
The Mophatlane twins built BCX by buying Comparex and through Telkom contracts, not share deals.
These examples prove real empowerment comes from operational involvement, not passive stakes.
Second, BEE has failed to create economic multipliers.
Where are the black-owned MultiChoices or mining giants, banking institutions, and insurers that should have emerged from equity deals?
Instead, we get “rent-a-darkie” deals where the same politically connected figures rotate between boardrooms, where these fat cats line their pockets. The rentier capitalists who are not creating new entities to empower black people.
Third, better alternatives exist.
It would be better to redirect BEE spending to youth employment, black SME support (like BCX received), or startup incubators, and full participation in the value chain by real entrepreneurs.
These investments would create real jobs and businesses, not paper-based empowerment.
The path forward
South Africa needs “grassroot empowerment”: breaking monopolies in telecoms, mining, and banking; supporting black entrepreneurs through procurement rather than equity and replacing ownership targets with job creation metrics plus training young people in relevant skills.
The 30% BEE empowerment model is a relic of failed trickle-down economics.
True empowerment means jobs, startups, and operational control – not boardroom tokens. It means building new companies from scratch and not be married to a 30% equity stake that has failed to change the dynamics of our economy.
After 30 years of stagnation, South Africa can’t afford another decade of clinging to a broken system that enriches a few while the majority wallow in poverty.
The choice is clear: keep feeding elites with equity handouts or finally build an economy that works for the millions.
The evidence is undeniable.
The solution is obvious.
The time for change is now.
