The Broad-Based Black Economic Empowerment (B-BBEE) Strategy

Since the end of apartheid, South Africa has aimed to create an economy that meets the needs of all its citizens and businesses sustainably. Achieving this vision required tapping into the full potential of all communities across the country. The government set a goal to achieve economic growth, employment, and equity by 2014.?

Addressing these inequalities is also enshrined in the South African Constitution. To this end, the Government outlined broad economic strategies for transforming the economy by 2014, including the Microeconomic Reform Strategy, the Integrated Manufacturing Strategy, and the National Research and Development Strategy.?

Despite economic successes and broad policy interventions, inequalities persist, impacting growth, development, job creation, and poverty eradication. Racial and gender disparities in wealth, income, skills, and employment continue, keeping the economy from reaching its full potential.?

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Laying the Foundation for B-BBEE?

Since 1994, Government has implemented a comprehensive legislative framework for economic transformation. New laws have restored land rights, prohibited unfair discrimination, and introduced active measures to address labour market imbalances and provide opportunities for Black people.?

Key pieces of legislation include:?

• B-BBEE Act?
• Promotion of Equality and Prevention of Unfair Discrimination Act?
• Extension of Security of Tenure Act?
• Restitution of Land Rights Act?
• Employment Equity (EE) Act?
• National Empowerment Fund (NEF) Act?
• Competition Act?
• Telecommunications Act?
• Preferential Procurement Policy Framework Act?
• Minerals and Petroleum Development Act?

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Additionally, various policies, strategies, and programmes have been implemented to overcome economic inequalities and underdevelopment, such as the Integrated Human Resources Development Strategy, Urban Renewal Programme, Integrated Sustainable Rural Development Programme, Tourism Transformation Strategy, Strategic Sector Plan for Agriculture, and the National Small Business Development Promotion Programme.?

In 1995, a national strategy for developing and promoting small businesses was introduced, emphasising the creation of Black-Owned and Controlled businesses. This led to the National Small Business Act of 1996, which created an enabling environment for Small, Medium, Micro Enterprises (SMMES) and established institutions to support entrepreneurs.?

The EE Act of 1998 banned all forms of workplace discrimination and mandated affirmative action for businesses with over 50 employees to ensure a representative spread of designated groups across all occupational levels.?

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B-BBEE Strategy?

Defining Black Economic Empowerment (BEE) involves finding a balance between being overly broad and too narrow. A broad definition equates BEE with overall economic development, while a narrow definition limits it to asset transfers from White to Black ownership. The government defines BEE as “an integrated and coherent socio-economic process that directly contributes to the economic transformation of South Africa and brings about significant increases in the numbers of black people that manage, own, and control the country’s economy, as well as significant decreases in income inequalities.” - dtic, B-BBEE Strategy?

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The BEE process includes Human Resource Development, EE, Enterprise Development, Preferential Procurement, and investment, Ownership, and control of businesses and assets.?

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Objectives of B-BBEE?

The successful implementation of the B-BBEE strategy has been evaluated against the following objectives:?

• An increase in the number of Black People who own and control existing and new enterprises, especially in priority sectors.?
• Increasing the number of Black People who have Ownership and control of existing and new enterprises in the priority sectors that the government has identified in its Microeconomic Reform Strategy.?
• Boosting the number of new Black enterprises, Black-empowered enterprises, and Black-engendered enterprises.?
• Increasing the representation of Black People in Executive and Senior Management positions.?

• Enhancing community and broad-based Ownership and management of economic activities in communities and broad-based enterprises such as trade unions, employee trusts and other collective enterprises, and co-operatives.?
• Increasing the Ownership of land and other productive assets, improve access to infrastructure, and boost skill acquisition and economic participation in under-developed areas.?
• Achieving accelerated and shared economic growth.?
• Raising the income levels of Black People and reducing income inequalities within and between race groups.?

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Key Principles of B-BBEE?

The B-BBEE strategy is founded on four key principles:?

1. B-BBEE: Accelerate the deracialisation of the economy and re-integrate marginalised communities into the economic mainstream.?
2. Inclusivity: A more equitable economy benefits all South Africans. B-BBEE is inclusive, involving all enterprises in the economy.?
3. Good Governance: B-BBEE must be associated with high standards of corporate governance and transparency.?
4. Growth-Oriented: B-BBEE complements economic growth, emphasizing new investment, enterprise development, and inclusive wealth accumulation.?

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Effective B-BBEE implementation and economic growth are mutually reinforcing. The absence of shared growth will continue to limit economic expansion. The deracialisation of the economy aims to enhance growth by ensuring that proceeds from Ownership transfers are reinvested domestically.?

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To create economic growth, more enterprises are needed to produce value-added goods and services, attract investment, and employ more people in productive activities. A key component of the B-BBEE strategy is the creation and nurturing of new enterprises involved in new economic activities, bringing vitality to the economy by facilitating new entrants across all sectors.?

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