Black Economic Empowerment: More Than a Social Contract — A Business Imperative

Black Economic Empowerment (BEE) cannot be viewed merely as a social contract; it is fundamentally a business case.

When I began studying basic statistics, I was intrigued by concepts such as the mean, median, mode, standard deviation, and outliers. However, the chapter on the normal distribution curve was particularly fascinating. The lecturer explained that the normal distribution measures variations across human variables. The relevance of that explanation was striking.

Viewed through a statistical lens, Black Economic Empowerment cannot escape analysis grounded in data and distribution patterns.

According to the 2011 Census, the African majority—who bore the brunt of colonialism and apartheid, including the period of the tricameral parliament (1984–1994)—constitutes just over 79% of South Africa’s population. When one considers the Codes of Good Practice and includes the Chinese community, who qualified as BEE beneficiaries following a 2008 court ruling, BEE-designated groups collectively represent over 90% of the population.

The exclusion of such a significant proportion of the country’s population from meaningful participation in the economy was not only politically unsustainable but economically irrational. No nation can thrive while sidelining the majority of its productive capacity.

The advent of democracy in 1994 marked a profound paradigm shift. Strategic choices were required to revive an economy constrained by decades of exclusion. Black Economic Empowerment emerged, among other reforms, as a deliberate intervention to broaden economic participation. How else could a nation that had effectively underutilised between 79% and over 90% of its human capital reposition itself for growth?

If we extend the analogy of “brain power,” South Africa was functioning as though it were using only a fraction of its cognitive capacity. Any system operating below its full potential is bound to underperform—politically and economically. The country’s limited growth during the late apartheid years reflects this reality.

Between 1985 and 1994, South Africa’s real economic growth averaged approximately 0.8%, with per capita growth declining by 1.3%. Between 1995 and 2004, the trajectory shifted: average GDP growth increased to 3.2%, and per capita growth improved to 1.1%. While not extraordinary, this represented a meaningful recovery and a clear upward trend.

Much of this growth was driven by a consumption-led economy, supported by improved disposable incomes and the expansion of what became known as the Black middle class. Through pillars of BEE—particularly Management Control, Employment Equity, and, to a lesser extent, Preferential Procurement—greater participation in the mainstream economy translated into increased household spending. Household consumption growth rose from 1.5% per annum (1985–1994) to 3.7% (1995–2004), supported by real disposable income growth averaging 4.4% per annum during the latter period (Du Plessis & Smit, 2006).

Both critics and advocates of BEE agree on one fundamental point: the historical exclusion of a substantial segment of the population was detrimental to political stability and economic performance. Where they differ is in the method of redress.

Some detractors imply that market forces alone should have corrected these distortions. However, markets are not infallible. Even in well-functioning economies, human intervention is often necessary to address systemic failures. In South Africa’s case, the exclusionary economic structure was not a natural market outcome—it was deliberately engineered through legislation and policy. It is therefore unrealistic to expect that the “invisible hand” alone could rectify such deeply embedded inequalities.

Political debates—particularly in the lead-up to the 2014 elections—revealed differing approaches to economic inclusion. While opinions varied across parties, economic redistribution and equitable access to opportunity remained central issues. The electorate appeared acutely aware that inclusive economic participation is inseparable from sustainable development.

BEE, therefore, cannot simply be dismissed or wished away. If apartheid-era policies excluded nearly 90% of the country’s human resource base from the mainstream economy, some form of corrective intervention was inevitable.

Is BEE the perfect empowerment model? Certainly not. It has flaws, inconsistencies, and areas requiring reform. These shortcomings warrant robust discussion and thoughtful refinement. However, the principle of inclusion remains sound.

I propose that South Africa’s population distribution is reflected in its income and wealth distribution. If plotted on a normal distribution curve, current economic realities would likely show significant skewness—evidence of persistent inequality. The national objective should be to correct this skewness, broadening participation and shifting the curve toward a more balanced distribution of opportunity and income.

Institutions such as the Ministry of Small Business Development—and broader economic policymakers—must approach this challenge with renewed focus. Sustainable growth and employment creation will depend on successfully integrating the full spectrum of South Africa’s human capital into productive economic activity.

BEE, therefore, should not be regarded solely as a moral or historical obligation. It is a strategic economic necessity.