South Africa proposes new way for firms to comply with Black empowerment policy

South Africa's government has proposed amending its flagship Black empowerment policy to allow white-owned companies to gain points by contributing to a new 100 billion rand ($6.37 billion) fund for Black businesses.

Broad-Based Black Economic Empowerment (B-BBEE) is the country's signature mechanism for addressing the economic inequality that has persisted since the end of the apartheid system over three decades ago.

But it has experienced resistance from some at home. And the United States President Donald Trump's disapproval of  South Africa's Black empowerment policies has helped fuel a diplomatic rift and may have contributed to Washington's decision to impose heavy tariffs on its exports.

The Minister of Trade, Industry and Competition announced the draft amendments on Thursday. They are open to public comment for 60 days before being finalised.

Scorecard system

"The amendments are a commencement of a process that we are embarking on, which is the review of Transformation and B-BBEE policy," said Minister Parks Tau.

B-BBEE functions as a scorecard system whereby companies can earn points if they hire and promote Black people, source from Black-owned enterprises, and more. A higher score gives firms access to tax breaks and government contracts.

The key change being proposed is the creation of a Transformation Fund, which businesses could pay into to earn points. This could allow them to improve their B-BBEE score without making changes to ownership or management, for example.

The Transformation Fund would then help finance businesses run by Black entrepreneurs.

Coalition partner opposes new law

President Cyril Ramaphosa and his African National Congress party maintain that the B-BBEE law is necessary to right the wrongs of white minority rule.

The latest report of the government's Commission for Employment Equity found that white people made up 61% of top management posts in 2024, while they are 7% of the population.

But the B-BBEE scheme has long been hotly contested in South Africa, with critics saying it has been misused to enrich a politically connected few and failed to reduce inequality.

The Transformation Fund has been rejected by the ANC's coalition partner, the Democratic Alliance, which opposes race-based interventions and has said it risks becoming a slush fund.