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Black Economic Empowerment
Black Economic Empowerment (BEE) is a policy of the South African government which aims to facilitate broader participation in the economy by black people. A form of affirmative action, it is intended especially to redress the inequalities created by apartheid. The policy provides incentives – especially preferential treatment in government procurement processes – to businesses which contribute to black economic empowerment according to several measurable criteria, including through partial or majority black ownership, hiring black employees, and contracting with black-owned suppliers. The preferential procurement aspect of BEE has been viewed as paradigmatic of a sustainable procurement approach, whereby government procurement is used to advance social policy objectives. So-called "BEE deals" – transactions aiming to increase black ownership of large businesses – have been conducted on a large scale, with BEE transactions concluded between 1994 and 2005 valued at between R150 billion and R285 billion.
The government has subscribed to an explicit policy of black economic empowerment since 1994, but BEE was relaunched as the more comprehensive, and less ownership-focused, Broad-Based Black Economic Empowerment (BBBEE) programme around the time of the passage of the BBBEE legislation in 2003. However, although earlier initiatives were governed by different legislation and sets of arrangements, the underlying principles and policy are very similar, and BBBEE is often still referred to as "BEE" in common parlance.
In June 2021, President Cyril Ramaphosa announced that South Africa's BEE strategy and legislation would be reviewed, especially to ensure that they are not exploited for corrupt purposes.
When the African National Congress (ANC) came to power in 1994, the new government's priorities included redressing apartheid's legacy of economic exclusion. Under apartheid, legislation and practice had restricted the access of non-whites to job opportunities, capital, business and property ownership, and other forms of economic advancement, leaving vast racial inequalities in wealth and income. The new Constitution, finalised in 1996, emphasised protections against unfair discrimination and against disadvantage arising from the same. This was complemented by a 1997 Green Paper on Public Procurement Reform, which called for affirmative action measures in government procurement processes.
The central socioeconomic policy framework of Nelson Mandela's government was the Reconstruction and Development Programme (RDP), which did not specifically refer to "black economic empowerment". However, the term was used in the earlier ANC RDP policy framework, on which the government policy was based. The ANC document viewed BEE initiatives as a means to "deracialise business ownership and control".
Early stages of BEE focused on promoting black ownership of large businesses. BEE transactions aimed to diversify the demographics of company shareholders. White-owned companies had to voluntarily enter into these transactions. In the absence of organised sources of capital, many of the black participants relied on highly-geared financing structures and special-purpose vehicles. Several BEE deals thus collapsed during the 1997 Asian financial crisis. According to estimates, black control of business had risen to about 10% of shares on the Johannesburg Stock Exchange by 1998, but, following the financial crisis, fell dramatically to between 1% and 3.8% by 2000. Meanwhile, the promotion of black empowerment in areas other than ownership was pursued piecemeal, especially through a series of laws including the Skills Development Act, 1998 and the 1998 Employment Equity Act.
Amid dissatisfaction with the progress of existing initiatives, in May 1998 the Black Business Council appointed future President Cyril Ramaphosa to chair a BEE Commission. The Commission proposed a broad definition of BEE:
It is an integrated and coherent socio-economic process. It is located within the context of the country's national transformation programme, namely the RDP. It is aimed at redressing the imbalances of the past by seeking to substantially and equitably transfer and confer the ownership, management and control of South Africa's financial and economic resources to the majority of its citizens. It seeks to ensure broader and meaningful participation in the economy by black people to achieve sustainable development and prosperity.
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Black Economic Empowerment
Black Economic Empowerment (BEE) is a policy of the South African government which aims to facilitate broader participation in the economy by black people. A form of affirmative action, it is intended especially to redress the inequalities created by apartheid. The policy provides incentives – especially preferential treatment in government procurement processes – to businesses which contribute to black economic empowerment according to several measurable criteria, including through partial or majority black ownership, hiring black employees, and contracting with black-owned suppliers. The preferential procurement aspect of BEE has been viewed as paradigmatic of a sustainable procurement approach, whereby government procurement is used to advance social policy objectives. So-called "BEE deals" – transactions aiming to increase black ownership of large businesses – have been conducted on a large scale, with BEE transactions concluded between 1994 and 2005 valued at between R150 billion and R285 billion.
The government has subscribed to an explicit policy of black economic empowerment since 1994, but BEE was relaunched as the more comprehensive, and less ownership-focused, Broad-Based Black Economic Empowerment (BBBEE) programme around the time of the passage of the BBBEE legislation in 2003. However, although earlier initiatives were governed by different legislation and sets of arrangements, the underlying principles and policy are very similar, and BBBEE is often still referred to as "BEE" in common parlance.
In June 2021, President Cyril Ramaphosa announced that South Africa's BEE strategy and legislation would be reviewed, especially to ensure that they are not exploited for corrupt purposes.
When the African National Congress (ANC) came to power in 1994, the new government's priorities included redressing apartheid's legacy of economic exclusion. Under apartheid, legislation and practice had restricted the access of non-whites to job opportunities, capital, business and property ownership, and other forms of economic advancement, leaving vast racial inequalities in wealth and income. The new Constitution, finalised in 1996, emphasised protections against unfair discrimination and against disadvantage arising from the same. This was complemented by a 1997 Green Paper on Public Procurement Reform, which called for affirmative action measures in government procurement processes.
The central socioeconomic policy framework of Nelson Mandela's government was the Reconstruction and Development Programme (RDP), which did not specifically refer to "black economic empowerment". However, the term was used in the earlier ANC RDP policy framework, on which the government policy was based. The ANC document viewed BEE initiatives as a means to "deracialise business ownership and control".
Early stages of BEE focused on promoting black ownership of large businesses. BEE transactions aimed to diversify the demographics of company shareholders. White-owned companies had to voluntarily enter into these transactions. In the absence of organised sources of capital, many of the black participants relied on highly-geared financing structures and special-purpose vehicles. Several BEE deals thus collapsed during the 1997 Asian financial crisis. According to estimates, black control of business had risen to about 10% of shares on the Johannesburg Stock Exchange by 1998, but, following the financial crisis, fell dramatically to between 1% and 3.8% by 2000. Meanwhile, the promotion of black empowerment in areas other than ownership was pursued piecemeal, especially through a series of laws including the Skills Development Act, 1998 and the 1998 Employment Equity Act.
Amid dissatisfaction with the progress of existing initiatives, in May 1998 the Black Business Council appointed future President Cyril Ramaphosa to chair a BEE Commission. The Commission proposed a broad definition of BEE:
It is an integrated and coherent socio-economic process. It is located within the context of the country's national transformation programme, namely the RDP. It is aimed at redressing the imbalances of the past by seeking to substantially and equitably transfer and confer the ownership, management and control of South Africa's financial and economic resources to the majority of its citizens. It seeks to ensure broader and meaningful participation in the economy by black people to achieve sustainable development and prosperity.