Beyond the B-BBEE scorecard: Employment equity requires real change, not just compliance
2025 feels like a watershed year for Broad-based Black Economic Empowerment (B-BBEE) in South Africa. No longer is the discussion around “if” B-BBEE will change, but rather “when”.
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Sensational news headlines such as: “Less than half of South Africans think govt should keep BEE going” are adding to robust debate around the recently announced Transformation Fund and the amendments to the legal sector codes by some of the top law firms in the country.
In our own business, we are seeing an increasing number of our clients questioning the ongoing investment and frictional costs involved in these investments.
As an advisory business, this gives us pause for thought.
Yes, transformation is critical, but is B-BBEE redundant? Or can it be reinvented?
Perhaps to answer this, we need to look at the so-called “priority elements” as individual contributors to understand the specific challenges.
Ownership
Done right, the ownership element can be transformative for many stakeholders, but many of the banks, insurers, asset managers and industrial businesses have concluded their deals with mixed results.
In 2024, the Department of Trade, Industry and Competition (DTIC) threw its weight behind employee share ownership programmes (ESOPs). The effectiveness of these initiatives remains to be seen in the face of a limited secondary market for these shares and lack of transparency around dividend flows.
Whether you are introducing a consortium of investors or hundreds of employees being given a minority stake, businesses now seek partners who bring capital and opportunities rather than simply seeking compliance.
If the narrative persists that entrepreneurs and business owners are “giving up equity” – rather than introducing strategic partners – they will be disinclined to support these deals.
Management control
Recently enacted Employment Equity (EE) legislation seeks to transform the demographic composition of businesses with more than 50 staff members.
These amendments are onerous and raise obvious questions around how businesses attempting to comply will navigate other legislation. While government has guided that a business cannot retrench to meet the proposed targets, how will they explain non-compliance with the Department of Labour?
We feel the questions not being asked is whether there is a master plan to drastically improve Basic Education to provide universities with an abundance of talent?
Are tertiary institutions going to ensure that graduates are going to be available to effectively contribute to the workforce with functional skills?
Are companies going to be incentivised to create leadership academies to flood the market with incredible talent or will there be a war for talent resulting in inflated salaries?
Skills development
Currently companies need to spend 2% and 6% of their annual payroll on the skills development element, but despite billions of rands invested annually, businesses continue to struggle for skilled people.
Where is the disconnect? Without going into the challenges faced by the Setas, consider being a retailer with a skills development budget. If you deploy your budget and train staff to achieve a shelf-packing or cashier certification approved by the QCTO, you get more recognition on your scorecard than if the same person did a certification from the likes of Google or Microsoft around artificial intelligence (AI).
We are incentivising and rewarding the wrong things if we want a knowledge-based economy.
Rather the model appears to create professional youth on learnership programmes who earn a living from stipends and progress from one learnership to another with little to no prospect of meaningful long-term employment.
Enterprise and supplier development (ESD)
With Minister Parks Tau inviting public comment on his proposed Transformation Fund, this element has been in the news a lot recently.
In a recent article for Daily Maverick, our colleague Raindren highlighted that despite companies having to invest between 1% and 2% of net profit after tax (NPAT) into the development of black-owned SMEs, there are fewer VAT registered businesses than in 2009.
We cannot keep doing the same thing over and over again and expect a different result, but similarly, we need to recognise that there are a variety of government institutions already established to support SMEs including the IDC, SEFA / SEDA, the National Empowerment Fund, Technology Innovation Agency (TIA) and the National Youth Development Agency.
Why will the outcome be different under the Transformation Fund structure?
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Is B-BBEE an outcome or a set of rules?
As an advisory business, we give a lot of thought to the future of B-BBEE. The future direction of this policy and the associated codes will impact how we strategically advise our clients.
According to research from the B-BBEE commission, over R100bn in B-BBEE ownership deals were done in the past five years and in the pre-Covid years, the three preceding years were averaging over R100bn annually. Over R15bn is spent annually on skills development while R26bn goes to ESD. There is plenty of work to go around.
What is clear is that the frictional cost of doing business in South Africa is becoming increasingly difficult to justify. Policymakers are driving a compliance mindset rather than one that is aimed at broad-based economic growth.
Growth and employment statistics don’t lie – the current policies are not achieving the desired outcomes and instead we are sitting in an environment where you get a better return leaving your money in the bank, than pursuing entrepreneurial ventures.
In its current form, B-BBEE has become less about genuine transformation and more about ticking compliance boxes to avoid penalties and unlock procurement opportunities. Instead of fostering meaningful participation in the economy, it often incentivises short-term structural adjustments that lack substance.
If we are serious about inclusive growth and sustainable empowerment, we must move beyond rigid scorecards and start measuring real outcomes - such as job creation, skills transfer, and entrepreneurial success - rather than just the optics of transformation.
Social engineering through policy can only go so far; economic inclusion must be built on merit, opportunity, and long-term investment in people by getting the basics, like education, right.
About the author
Suran Moodley and Boudine Henningse are executives at Ariston Global, a strategic advisory and consulting firm specialising in accounting, tax, human resources and payroll solutions. With expertise spanning governance, leadership, and organisational development, they are committed to helping organisations achieve sustainable growth and transformation.