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

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.

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:

•chronic electricity and water shortages, including load shedding

•global economic headwinds

•endemic corruption

•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.