South Africa’s flagship black economic empowerment program is set to introduce measures including fines in order to achieve its goals, according to Tshediso Matona, head of the Black Economic Empowerment Commission (B-BBEE. The policy aims to address the widespread disparities left over from the apartheid era.
The South African government passed the empowerment law in 2003 to encourage companies to employ and promote black people by offering tax breaks and access to public contracts. Despite this, the unemployment rate of 37.6% among the black population remains higher than the national average and far exceeds the 7.9% reported among white South Africans. The World Bank states that the country continues to have the world’s highest levels of inequality.
The African National Congress (ANC) has faced widespread criticism for failing to deliver on its promises to end persistent crime, poverty, and high unemployment rates. In recent elections, the party won only 159 seats in the 400-seat parliament, down from 230 in the previous election.
The B-BBEE program is voluntary, with companies scoring points in categories such as black ownership, management control, and skills development. However, Matona claims that some companies have been inflating their scores by falsely listing black people as managers – a practice known as “fronting,” which is a criminal offense. The B-BBEE commission has received 1,348 complaints of fronting since 2017, but no one has yet been convicted.
Matona intends to increase company incentives for compliance while “naming and shaming” those who fail to submit their required annual reports. About 400 companies are listed under the program, but only 141 of them have submitted a report in 2022.
President Cyril Ramaphosa has threatened to impose penalties if companies refuse to comply with the B-BBEE program. However, the pro-business Democratic Alliance (DA) is reportedly opposed to including punitive measures under the policy.