BEE on borrowed time — why attacks on SA’s social engineering project won’t abate this time

BEE has become one of the certainties of business life in South Africa. It was, and is, a deliberate attempt to reduce our racialised inequality. This is one of the reasons it is so controversial – it is an attempt at (legitimate) social engineering.

Some of its critics claim that all social engineering is eventually rendered unworkable.

It is certainly true that there have been some absurd consequences.

For example, the owners of Burger King in South Africa were once told they could not sell their shares to a foreign investor, because if they did the company would no longer be BEE compliant.

This meant that black people could not sell their shares because they were black.

In the mining industry there have been intense legal battles over the concept of “once-empowered, always empowered”.

The Mineral Resources Ministry claimed that if black owners sold their shares to white people (or foreigners) the majority owners of the company would have to enter new BEE deals to get more black owners.

Mining companies obviously resisted this, saying they should not have to give up some shareholdings twice.

And of course there are huge problems with BEE.

It has resulted in some people benefiting from more than one BEE deal, thus growing their wealth while others received nothing.

President Cyril Ramaphosa and his brother-in-law, Patrice Motsepe, are good examples.

It seems difficult to prove that it has benefited the vast majority of black people in South Africa.

But, in all of this time, very few alternatives have been put forward.

To put it another way, while many people argue that BEE is “unworkable” or “unfair”, what other options are there?

While there are certainly many black people who have created their own wealth with no help from anyone, BEE must have played a role in reducing our racialised inequality.

At the same time, it has, generally, been broadly accepted across society.

Now this may be changing.

The main reason for this is that its biggest supporter, the ANC, is losing support so quickly.

It is now in an uneasy coalition that depends on support from the DA, which is famously opposed to BEE (the party said in its 2024 manifesto that it would replace BEE with the UN Development goals).

And the DA’s Andrew Whitfield is a deputy minister in the Department of Trade Industry and Competition, which is supposed to administer BEE.

Meanwhile, the third-biggest party in our politics, MK, says it believes that “the ownership element in BEE has reinforced oligopoly power”.

This means that, as the ANC declines, the only big party that still supports BEE is the EFF.

And BEE faces more opposition from outsiders to our politics who suddenly have immense power.

Elon Musk, when not ruining people’s lives with his chainsaw, has been attacking BEE on X.

He has consistently said BEE legislation was the only reason that his Starlink service is not operating in South Africa. At one point last week he said on X that “Starlink is not allowed to operate in South Africa, because I’m not black”.

Of course, this is not true.

But what is true is that Starlink cannot provide services here unless 30% of its shareholding is owned by black people. Or, if it complies with BEE through other means, through supporting and stimulating other black-owned businesses.

At the same time, his benefactor, US President Donald Trump, has made it clear that he will publicly oppose any form of race-based policy that benefits black people in South Africa.

In the past, a policy about race that was criticised by outsiders to our society would not move the needle in any particular way.

Certainly, those who would oppose the policy would use this international criticism to strengthen their arguments. Those who support it would use the moment to show their constituency this, and the entire fracas would be over in about a week.

The situation is different now.

Trump and Musk will continue to attack BEE, in particular because Musk stands to benefit from a change in our law. To be clear, this is a US billionaire using his proximity to a politician to try to change the law in another country.

This means that he and Trump will attack BEE consistently, thus provoking the issue here.

At the same time, there might well be a rational fear that the US could use its economic power to punish South Africa. Certainly Trump has shown that his decisions about economics are often not based on rationality, but his personal proclivities.

While no country should change policy simply because of the views of another, this could give the debate around BEE a rare intensity.

At the same time there is an entirely legitimate argument that Starlink could provide a very necessary service for many people who need high-speed internet in rural areas. And it could be claimed that as a “necessary service” it could be exempt from BEE.

All of this means that the arguments around BEE are not going to fade away this time around.

At the same time, this might provoke a much wider debate around economic policy.

It will not only be the DA that will argue that BEE must end, but also other actors who want to replace it with their policies.

MK for example will argue that more radical change is needed to reduce racialised inequality.

Meanwhile, this debate may be subsumed into a bigger debate about how to grow the economy and create jobs.

The argument is likely to be made that whether one agrees with BEE or not, the policy is hindering both international and domestic investment. And that if the primary, single objective is to increase the number of sustainable jobs, then BEE should be scrapped.

This might mean that an argument that has often been presented as a (false) tension between growth and equity is about to move more towards growth.

All of this means that BEE as we currently understand it might be on borrowed time, that it may start to change or even fade completely.

But, there appears to be no public discussion about what to replace it with, to work towards reducing racialised inequality. DM