A Guerrilla Warfare on the BEE Battlefields

The struggle to transform South Africa’s economy has become increasingly intense—at times resembling guerrilla warfare, complete with ambush tactics and strategic manoeuvres. I am referring, of course, to Broad-Based Black Economic Empowerment (B-BBEE).

The Revised Codes of Good Practice were gazetted on 2 October 2012. They were initially scheduled to take effect on 11 October 2013, but implementation was later postponed to 1 May 2015, effectively giving the market an extended period to prepare for compliance.

From late 2011 onward—when indications of significant adjustments to the BEE scorecard were already emerging—the media space was saturated with commentary, criticism, and speculation about the future direction of BEE. Stakeholders debated the tightening of targets, the elevation of priority elements, and the increasing emphasis on ownership and skills development.

Then, something unexpected happened!

Dead Silence

On 1 May 2015, the effective date of the Revised Codes, I searched for new commentary and market reactions. There was silence! On 2 May—still nothing. On 3 May—again, nothing. The atmosphere felt tense, as though two giants—the State and the Market—were sizing each other up.

Then, on 5 May 2015—BANG!

The Department of Trade and Industry (DTI) issued a statement concerning the Ownership element. The announcement effectively reduced the recognition of Broad-Based Ownership Schemes (BBOS) and Employee Share Ownership Programmes (ESOPs) to a maximum of three points on the ownership scorecard.

The market reacted immediately and forcefully. Businesses, advisors, and consultants expressed shock and alarm. Ownership is a priority element under the Codes—central to the BEE framework. Any adjustment to it reverberates across the entire compliance landscape.

Barely ten days later, on 15 May 2015, a second statement was issued—this time retracting the earlier amendment. The market exhaled.

A Closer Examination

The timeline raised important questions. The initial statement downgrading the ownership schemes was signed on 22 April 2015 by Ms Lindiwe Zulu in her capacity as Acting Minister of Trade and Industry but was only released on 5 May 2015—after the Revised Codes had already come into effect.

The retraction was signed by the Minister of Trade and Industry, Dr Rob Davies, and released on 15 May 2015.
The sequence invites several questions:

• Why was a statement signed on 22 April released only after implementation?
• Was there internal consensus within the Department?
• Was the amendment adequately consulted?
• Was this a strategic move, an administrative oversight, or an example of policy instability?

Policy uncertainty in a transformation framework as consequential as BEE can undermine confidence. Ownership remains the cornerstone of economic restructuring. It is not merely a compliance issue—it touches the fundamental question of who owns and controls productive assets in South Africa.

The Ownership Debate

Ownership is emotive because it goes to the heart of economic power. For that reason, changes to the ownership model must be deliberate, transparent, and methodical.

Ambush tactics will not win this war.

In my experience conducting BEE audits and verifications, I have formed a firm view on Broad-Based Ownership Schemes (BBOS) and Employee Share Ownership Programmes (ESOPs).

In their current form, many of these schemes do not function as meaningful ownership instruments. Instead, they often resemble socio-economic development initiatives packaged as ownership structures.
Consider the example of a former mineworker now living in a rural area, far removed from the corporate headquarters of the mining company in which he supposedly holds a stake through a BBOS. What practical influence does he exercise over strategic decisions? How does he participate meaningfully in governance? In many instances, beneficiaries are reduced to statistical representations—numbers used to secure compliance points.

Similarly, if ESOPs truly confer ownership, why do employees continue to engage in prolonged strikes against companies in which they supposedly hold equity? Ownership implies alignment of interests. Yet industrial conflict often suggests a disconnect between theoretical shareholding and lived economic reality.

In practice, ESOPs are frequently structured as trusts. Employees may serve as trustees, but they rarely participate in board-level strategic decision-making. Their influence is often symbolic rather than substantive.

Structural Concerns in Implementation

During verification work—particularly within the Qualifying Small Enterprise (QSE) band—I encountered structures presented as ownership schemes that were, in reality, employee benefit arrangements. Despite this, points were sometimes awarded.

Measured entities are often assisted by legal advisors, accountants, consultants, and, at times, even verification agencies in structuring quasi-ownership vehicles designed primarily for scorecard optimisation.

This undermines the transformative intent of the Codes.

A Path Forward

If ownership is to remain the central pillar of BEE, then the model requires reform.
Government should consult widely—but with a resolve to fix what is wrong. A phased approach could be adopted, perhaps over a three- to five-year horizon, gradually reducing reliance on BBOS and ESOP structures in their current form. A declining-balance methodology for points allocation could facilitate transition.

In their place, greater emphasis could be placed on cooperative ownership models or direct equity participation structures with clear voting rights and transparent economic interest flow-through mechanisms.

The argument that reforming ownership structures will increase fronting is not persuasive. It is akin to arguing that laws should not be strengthened because they may expose more wrongdoing. Effective legislation must be supported by robust enforcement.

And here lies the critical issue.

The Weakest Link

The verification and audit regime remains the weakest link in the BEE value chain. Regardless of oversight bodies such as SANAS or IRBA, structural conflicts of interest persist within a commercially driven verification model.

If South Africa aims to achieve meaningful transformation milestones by 2030, it requires a watertight, independent, and technically robust verification system capable of detecting and deterring circumvention.
Without this, policy reforms—no matter how well intentioned—risks will be diluted in practice with actors colluding to circumvent the Codes.

Conclusion

The transformation of South Africa’s economy is not a game of ambush and counter-ambush. It requires consistency, clarity, and courage.

Ownership reform must be handled strategically, not tactically. If BEE is to fulfil its purpose of broadening economic participation, it must move beyond symbolic compliance and toward genuine transfer of economic power.

The battlefield metaphor may be dramatic—but the stakes are real. The future structure of South Africa’s economy depends on getting this right.

This article was first penned in 2015 and updated on 02/03/2026.