BEE: Time to rethink race-based economic policy - Patrick McLaughlin

Key topics:BEE fosters corruption and undermines value-for-moneyPolitical resistance stalls urgent reform of equity lawsProposal for Equal Economic Development gains traction.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..By Patrick McLaughlin*The government’s persistent failure to recognise that BEE is not working — and hasn’t worked for years — has shifted from economic misjudgement into a full-blown ideological crusade. Now, only political intervention at ministerial level will bring about change. Unfortunately, former U.S. President Donald Trump’s inflammatory remarks on black empowerment, though ill-judged, may have ironically added fuel to the fire by mischaracterising its intent — making any discussion of reform even harder.BEE has become entrenched — not just as law, but as a political totem. Any suggestion of scaling it back is met with hardened resistance. These laws are likely to outstay their welcome, even as pressure grows to repeal or radically rework them. With high-level corruption under increasing scrutiny, government attempts to smother dissent are becoming harder to sustain.Take the case involving R700,000 paid to Justice Minister Thembi Simelane, tied to a questionable consultancy tender. DA MP and former NPA prosecutor, Adv. Glynnis Breytenbach, has filed criminal charges — not just to expose the rot, but to make the point to President Ramaphosa: the Minister should have been fired weeks ago.Preferential Treatment — Not TransformationIt is deeply uncomfortable for a country with a supposedly respected legal system to have its Justice Minister caught in what appears to be an open-and-shut case of theft. But the case serves a broader purpose — it exemplifies what is wrong with BEE at its core.Each element of BEE’s application creates loopholes for misconduct. State procurement, in particular, has spiralled out of control. The key flaw is this: race trumps value-for-money in tender awards. Commercially, this is indefensible — for reasons so obvious it’s astonishing we’re still explaining them.Even in the policy absurdities of the Trump era, one principle stood out: no modern country should run on race-based laws. And on that point, Trump — for all his chaos — wasn’t wrong. To the outside world, South Africa’s equity legislation looks like reverse racism. Locally, we’ve long rationalised it under the banner of historical redress. But three decades post-apartheid, and fifteen years into BEE, we must be honest: the model has failed to deliver its promises, especially in the last five years.Corruption By DesignOver time, BEE has evolved into legislation that doesn’t just permit corruption — it often encourages it. The intended upliftment rarely materialises. For most businesses, BEE offers no real basis for hiring, no fair measure for capability, and no justification for awarding multi-million-rand tenders. The idea that “correction of past injustices” is being achieved through this policy is, frankly, naive.Read more:.Worldview: Starlink saga - Musk’s BEE clash exposes race, investment, and digital sovereignty divide.The media must also carry some responsibility. Too many bought into the fiction that BEE would be an economic equaliser. Instead, we’ve landed up with a racially coded system that contradicts the Constitution — a well-intentioned failure now hijacked by opportunism and poorly drafted law.The Politics of PolicySouth Africa’s next policy battle is already taking shape. BEE’s four laws, the NHI Bill, the Expropriation Act and the BELA Act have all hardened into ideological litmus tests. Rather than being debated on merit, they're defended or attacked based on party allegiance.This is the danger of political polarisation: we lose the ability to negotiate — even on issues of national interest. The ANC, under pressure, is digging in. Only recently, it seemed that questioning BEE’s economic logic might cause them to threaten collapse of the Government of National Unity (GNU), handing the reins to the MK Party and Jacob Zuma. That’s the tightrope Helen Zille is now walking: how to keep the GNU stable while defending South Africa’s economic viability.Don’t Leave the RoomWith support from other business leaders, Discovery CEO Adrian Gore recently appealed to DA leadership not to leave the GNU. “Stay in the room,” they urged — even if compromise is required. “Protect what has been gained and stay the course.”And they’re right. Ramaphosa’s last-minute legislative blitz may be paused as long as the GNU holds. But the ANC isn’t sitting still. Quietly, while the world was distracted by Trump’s trade tirades, Minister of Trade and Industry Parks Tau announced the next big idea: the Black Transformation Fund.Under this plan, the DTIC would collect all BEE-related proceeds — fines, interest, taxes — into a state-controlled equity pool. This money would then fund transformation projects… managed by the state. In essence, the DTIC becomes a centralised investment vehicle for racial equity enforcement — transformation by decree.It’s bad law. Worse, it’s creeping socialism. And it must be stopped before it becomes a formal Bill. The GNU must hold firm on this — because once entrenched, such power is rarely relinquished.Toward Equal Economic DevelopmentOne emerging alternative — already gaining traction — is Equal Economic Development (EED). This model prioritises merit, performance, and quality over skin colour. It’s not just theoretical: India has used a similar approach to lift millions from poverty, energise its business sector, and become a global trade player.South Africa needs a version of EED — not to erase our past, but to ensure we have a future..*Patrick McLaughlin: Editor, parlyreportsa

BEE: Time to rethink race-based economic policy - Patrick McLaughlin

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