Black empowerment policy is broadly supported in principle by organised business but broadly failing in practice, a new study finds.
Research published in February by the Black Management Forum (BMF) and Henley Business School Africa found business managers are deeply sceptical of how broad-based BEE (BBBEE) is being implemented even as they accept the principle behind it.
Perceptions of the policy’s contribution to competitiveness, productivity and financial performance all fell below the neutral midpoint across every measure tracked in the survey, which drew on 527 responses and 10 in-depth interviews.
Nearly half of respondents came from small or micro enterprises. Most were based in Gauteng or the Western Cape.
The findings come as the department of trade, industry & competition has proposed amendments to BBBEE codes that would link incentives to contributions to the Transformation Fund aimed at mobilising capital for black enterprise development. The study warns that BEE incentives are unlikely to fix weak governance systems.
The data shows perceptions are significantly more positive in highly compliant firms and among historically disadvantaged managers, suggesting that people’s location in the economy strongly shapes how they see the policy, and that BBBEE works best where it has been successfully implemented, the BMF said in a statement.
Corruption, fronting and lax verification of tender eligibility were cited repeatedly as factors corroding confidence in the system. Companies are securing government contracts without the capability to deliver on them, respondents said, because due diligence is inadequate.
“The democratic dividend of 1994 was not a moment of complete transformation but only the beginning of real change, which was meant to be accompanied by clear commitment to creating a new economic landscape of which BBBEE was a core component,” says Monde Ndlovu, MD of the BMF.
“Nevertheless, it is clear that this vital policy may not be working as well as we need it to.”
The study found firms that genuinely embed transformation into corporate strategy report meaningfully better outcomes than those that treat BBBEE as a box-ticking exercise. Historically disadvantaged managers are also significantly more positive about the policy’s impact than their counterparts.
“BBBEE works best where it is implemented with genuine intent, rather than as a compliance burden,” said Jon Foster-Pedley, dean of Henley Business School Africa. “BBBEE legislation was established with a specific and critically important objective of economic transformation and redress in mind, and this research is offered to inform democratic debate as to whether it is still fit for purpose, and if so, how to improve it.”
The report urges a governance overhaul, including tighter internal controls, stronger reporting mechanisms and decisive enforcement against fronting alongside structured dialogue between business and government.
Smaller firms, the study note, need better access to training in finance and operations if empowerment is to produce durable enterprise growth rather than paper compliance.
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