Contextualising the costs and benefits of B-BBEE

THE current media debate around Broad-Based Black Economic Empowerment (B-BBEE) has brought fresh attention to the policy’s impact on the economy — raising important questions about its effectiveness, costs and outcomes.

- SAFIYYA PATEL

As this conversation grows louder, it’s worth taking a closer look at some of the arguments being made.

This article engages critically with aspects of the debate, not to dismiss concerns, but to consider them alongside broader economic realities, the policy’s longer-term contributions and the context in which B-BBEE was designed to operate.

An example from the debate is a recent study released by Solidarity and the Free Market Foundation (FMF), which arguably overlooks certain key economic implications of B-BBEE. Titled The Costs of B-BBEE Compliance, the report estimates that B-BBEE may reduce South Africa’s gross domestic product (GDP) growth by as much as 1.5 to 3% annually, potentially resulting in 96 000 to 192 000 fewer jobs each year. It further contends that the policy disproportionately benefits a narrow elite while imposing undue compliance costs on the broader economy.

While such figures demand scrutiny, they also warrant a critical examination of the underlying assumptions, methodology, and, crucially, the broader socioeconomic context in which B-BBEE operates.

Causality and complexity: What the report overlooks

One of the most significant concerns with the FMF/Solidarity report is its presentation of correlation as causation. The paper attributes specific percentages of GDP loss and job losses directly to B-BBEE but does not demonstrate how these impacts were isolated from South Africa's myriad economic challenges.

South Africa’s macroeconomic environment remains deeply constrained by structural impediments such as:

chronic electricity and water shortages, including load shedding;

global economic headwinds;

*endemic corruption; and

policy uncertainty and governance deficits.

Attributing complex macroeconomic trends solely to B-BBEE risks simplifies a nuanced reality and underestimates the multifactorial nature of South Africa’s growth constraints.