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Diversity diverted — global headwinds force rethinking of BEE in SA

Diversity diverted — global headwinds force rethinking of BEE in SA
Yeshiel Panchia
By Yeshiel Panchia
24 Mar 2025
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South Africa’s economic and social stability hinges on genuine, not superficial, transformation.

With the ascent of Donald Trump into the US presidency, the removal of diversity, equity and inclusion (DEI) initiatives from the US federal government began in earnest, and soon many corporates began to follow suit.

Such reversals indicate a widely scoped retreat from diversity-driven agendas, with discussions about the promotion of racial redress exploding in South Africa with regard to our own diversity initiatives, notably broad-based black economic empowerment (B-BBEE), nearly three decades after apartheid’s end.

The shifting international landscape underscores the urgency of assessing South Africa’s DEI and BEE policies. Have these interventions achieved their intended purpose?

South Africa: a unique context


South Africa’s context is uniquely defined by its history of racial segregation and systematic discrimination. Our country’s diversity policies take the form of B-BBEE – legislation enacted specifically to rectify historical economic injustices caused by apartheid.

Unlike broader global DEI initiatives, B-BBEE explicitly targets economic redistribution through mechanisms such as ownership equity, management control, skills development, enterprise support, preferential procurement and socioeconomic development.

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

After the end of apartheid employment in South Africa rose significantly from about 8.9 million employed individuals in 1994 to about 15.1 million in 2024. Black South Africans accounted for the biggest increase, climbing from roughly 63% of total employment in 1994 to about 73% in 2014, according to Statistics South Africa data.

On the surface, this appears to be a clear policy success, yet the reality is complex and nuanced. Although more black South Africans entered employment, their movement into higher-skilled occupations has been frustratingly limited.

(Racially) mixed results


Skilled occupational representation among black South Africans increased only slightly from 15% in 1994 to 18% by 2014. In contrast, skilled employment among white and Indian/Asian groups significantly expanded during the same period.

This tension illustrates a fundamental question surrounding BEE’s success. On the one hand, BEE has undeniably facilitated the emergence of a significant black middle class. Academic Frank Horwitz, in a sweeping 2011 study, notes that affirmative action mandates effectively reshaped managerial roles, leading black representation in senior management to increase dramatically, reaching 42% by 2007, which would have been unthinkable under apartheid.

However, although this represented significant progress at the managerial level, the broader picture reveals systemic challenges that remain unresolved.

Chief among these issues is unemployment, particularly among young black South Africans. In early 2024, official youth unemployment in South Africa was staggeringly high at 60.8%, disproportionately affecting previously disadvantaged groups, particularly young black people.

Structural economic sluggishness, a failing education system and persistent inequality are key factors that sustain this bleak scenario. Economic stagnation has restricted overall job creation, disproportionately affecting those without skills or higher education – the majority of whom are black or coloured.

Moreover, the prevalence of “fronting” – a practice Lionel October, former director-general of the Department of Trade, Industry and Competition, explicitly identified as a major problem as early as 2013 – undermines genuine empowerment.

Such practices not only dilute policy effectiveness, but also foster cynicism and resentment, fuelling the narrative of elite capture, where only politically connected individuals benefit significantly.

South Africa’s BEE efforts now face additional headwinds as multinational corporations operating locally reassess their commitment to local DEI policies. In a paper published by Fairbridges Wertheim Becker, one of the oldest law firms in the country, Nadia Nassiep and Ali Sonday highlight the pressures corporations face amid shifting international trends, particularly in the context of the government of national unity.

“There’s growing corporate caution towards DEI initiatives globally. Companies are increasingly wary about appearing overly politicised or socially engineered, especially under mounting economic pressures. South African companies will have to navigate these international pressures carefully if they are to maintain commitments to genuine economic transformation.”

Clear but imperfect progress


Yet, the intrinsic value of diversity in workplaces remains undeniable. International research clearly demonstrates that diverse organisations enjoy improved innovation, creativity and financial performance.

Moreover, extensive research has been conducted on the efficacy of inclusive workplace hiring and practices. McKinsey, which has performed more than a decade of research on the matter, illustrates this clearly. In its 2023 report it states that, among other benefits, “companies in the top quartile for gender diversity on executive teams are 39% more likely to outperform financially compared to their less-diverse peers”.

Systemic and structural issues remain


However, despite BEE efforts, alarming racial disparities in income and wealth persist. Black South Africans continue to earn significantly less than their white counterparts, even when employed in similar roles.

Ownership of economic assets further underscores these inequalities. As of 2022, non-white ownership on the JSE was only 30%, whereas white South Africans and foreigners held about 70%.

This imbalance reveals persistent barriers to substantial wealth accumulation and underscores the necessity for stronger enforcement and broader policy refinement.

Public sector employment, however, demonstrates the potential effectiveness of aggressively enforced BEE. More than 80% of public sector employees, including senior management, are now black, signifying rapid demographic transformation made possible by strict regulatory compliance and deliberate hiring practices.

The private sector has lagged significantly, though, highlighting that without strong enforcement and clear incentives, transformation can remain superficial.

How change can be made


To achieve meaningful economic empowerment, policymakers must address critical underlying issues. Comprehensive educational reform linked directly to market requirements is essential for bridging persistent skill mismatches.

October emphasises the urgency of refining and integrating B-BBEE policy with broader economic strategies: “B-BBEE must enter a new phase, fostering entrepreneurship, diversifying value chains and aligning more closely with national economic strategies like the industrial policy and the New Growth Path.”

Only through such integrated and rigorous approaches can South Africa ensure its BEE policies deliver inclusive, broad-based economic growth.

Ultimately, although BEE and DEI policies have reshaped South Africa’s workforce, deeply entrenched structural inequalities remain stubbornly resistant.

Genuine diversity and economic empowerment are still elusive three decades after democracy’s dawn. For South Africa to realise the promise of a better life for all, policymakers, corporations and civil society must commit to true diversity, not merely as regulatory compliance, but as a fundamental pursuit of equity and inclusivity.

The resilience and stability of South Africa’s economic and social fabric depend on achieving this authentic transformation, fulfilling democracy’s initial promise made 30 years ago. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.

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