BEE - R5 trillion and 4 million jobs lost

A new study by the Free Market Foundation (FMF) and the Solidarity Research Institute (SRI) estimates that BEE has cost South Africa R5 trillion and led to the loss of 4 million jobs.

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The study compares South Africa's model with global affirmative action policies in Malaysia, India, Brazil, the US and Namibia. It found that South Africa's version of black economic empowerment is the most intrusive and economically damaging.

It added that Broad-Based Black Economic Empowerment (B-BBEE) policies result in a loss of between 2% and 4% of the gross domestic product (GDP). This, in turn, translates into up to 192 000 lost job opportunities annually in South Africa due to slow economic growth.

"Over nearly two decades, the cumulative drag on growth amounts to more than R5 trillion in lost economic activity," Morné Malan, FMF Senior Associate and co-author of the report, said. He added that this leaves South Africa far behind its global peers, while destroying nearly 4 million jobs in the process.

"Our findings show that BEE, as currently designed, is enriching a small elite while throttling economic dynamism and deepening unemployment," he said.

"From the ordinary South African's perspective, we all are stuck in an enormous negative-sum game."

He explained that empowerment, in its current form, is not benefiting South Africans and that all citizens, apart from the small group of elite beneficiaries, are paying the price.

The report argues that current policies have become economically unsustainable and increasingly divorced from meaningful grassroots empowerment.