Director's Cut: BEE is breaking South Africa - Gerhard Papenfus v Gwede Mantashe

In this candid and hard-hitting interview, Alec Hogg speaks to Gerhard Papenfus, CEO of the National Employers’ Association of South Africa, about his open letter condemning Black Economic Empowerment. Papenfus argues that BEE has distorted markets, damaged entrepreneurship, and entrenched elitism rather than broad-based upliftment. He challenges prevailing political narratives, questions the sustainability of empowerment through ownership transfers, and calls for merit-based economic reform to restore growth, accountability, and genuine inclusion..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.Black Economic Empowerment (BEE) remains one of the most polarising policies in post-apartheid South Africa. Supporters argue it is essential for correcting historical injustice, while critics contend it has become economically destructive and socially corrosive. In a candid interview with Alec Hogg, Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA), sets out why he believes BEE has failed to deliver meaningful empowerment and is instead harming the country’s economic foundations.Papenfus recently drew national attention after publishing a strongly worded open letter to Mineral Resources and Energy Minister Gwede Mantashe. The letter was prompted by comments made by Mantashe suggesting opposition to BEE stemmed from white South Africans seeking to protect historical privilege. Papenfus rejects this characterisation outright, arguing that resistance to BEE is far broader and rooted in lived economic reality rather than race.According to Papenfus, BEE has created an “unnatural economy” in which access to opportunity is determined by political compliance rather than merit, price or quality. He describes the system as coercive, claiming businesses are effectively forced to participate if they wish to trade with government or large corporates. For many small and medium-sized enterprises, this pressure has led to costly ownership deals, weakened governance structures and, in some cases, business failure.A central theme of Papenfus’s critique is that BEE has entrenched elitism rather than broad-based empowerment. He argues that while a small, politically connected group has accumulated extraordinary wealth, the vast majority of South Africans - including those previously disadvantaged under apartheid - remain excluded from meaningful economic participation. In his view, this concentration of benefits undermines social cohesion and deepens public frustration.Papenfus also questions the psychological and cultural effects of empowerment through entitlement rather than enterprise. He draws a sharp distinction between entrepreneurs who build businesses through risk, sacrifice and perseverance, and beneficiaries who receive ownership or directorships without contributing capital, expertise or effort. The latter, he argues, often lack the incentive or commitment required to sustain a business, resulting in dysfunctional boardrooms and declining performance.Throughout the interview, Papenfus returns to the concept of entrepreneurship as the cornerstone of genuine empowerment. He speaks from personal experience, describing the early struggles of building a business from nothing and the enduring value of learning through failure. This process, he contends, creates not only financial returns but also skills, resilience and intergenerational value - outcomes he believes BEE largely fails to achieve.Another key concern raised is the economic cost of inflated procurement and poor service delivery. Papenfus cites examples from infrastructure, energy and state-owned enterprises, arguing that contracts awarded on the basis of compliance rather than competence have dramatically increased costs while reducing quality. These inefficiencies, he says, ultimately burden taxpayers and weaken the broader economy.When challenged on whether his position seeks to preserve white economic dominance, Papenfus insists the opposite is true. He points to the vibrancy of the township economy and the success of informal and small-scale entrepreneurs as evidence of untapped potential. His argument is not against transformation, but against a model that prioritises ownership transfer over skills development, competition and value creation.Looking ahead, Papenfus believes that abandoning BEE in favour of merit-based economic participation would deliver rapid improvements. He claims that awarding contracts transparently on price and quality would stimulate growth, restore confidence and expand opportunities far more effectively than the current system. While he acknowledges the political unlikelihood of such reform in the short term, he argues that rising public opposition may eventually force a reckoning.For Papenfus, the debate is no longer ideological but practical. South Africa, he warns, cannot afford policies that enrich a few while impoverishing the many. True empowerment, he concludes, comes not from entitlement, but from the freedom to compete, create and succeed on equal terms.

Director's Cut: BEE is breaking South Africa - Gerhard Papenfus v Gwede Mantashe

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