Broad-based black economic empowerment

Identifying weaknesses

certain sectors, for example financial services. It acknowledges the need for financial inclusion and refers to access to capital, but lacks substance on how this should be implemented. Targets are also no longer attainable and need to be recalibrated.

Some other emerging economies have had substantial success with development plans that have a shorter timeframe than the long-term planning period of the NDP. Malaysia, for instance, practices a system of centralised economic development planning with five-yearly development plans (OECD, 2016). Policy plans should also be supported by effective participation of citizenship (OECD, 2017). The NDP has been ineffective in communicating its plans to the public and does not encourage a system of accountability.

In the past ten years, various sector-focused policies have also been developed and launched with much fanfare, but a few years down the line, not much has happened. One example is Eskom – despite government hiring financial adviser Lazard in 2018 to draft a plan to shore up the struggling utility’s balance sheet, it remains a real risk to the sovereign (Reuters, 2018).

This begs the question: Why should an investor, without an emotional attachment to South Africa, believe what the South African government is saying about implementing what they set out to do?

A failure to conduct economic-impact studies when a new policy is drafted or considered for implementation is seen as a negative. For example, the National Health Insurance Bill, which proposes a fund to achieve universal health care coverage, has been published without an accompanying financing paper (ISI, 2020). On the other hand, where policies have succeeded, they are not necessarily deployed more widely or scaled up.

Broad-based black economic empowerment

The broad-based black economic-empowerment (BBBEE) policy, which aims to increase the participation of black people in the management, ownership, and control of South Africa’s economy, is seen by many as a disincentive to foreign investors. Although investors express support for the BBBEE objectives, there is frustration with the way the policy has been implemented and with the codes through which compliance is measured. A study, funded by the European Union, has found that the policy, primarily effected through the BBBEE Codes of Good Practice, has become “convoluted and complex, often frustrating businesses rather than encouraging transformative practices”. The frustrations experienced in implementing BBBEE range from “too many ambiguous and often-changing rules (making reference to the Codes that have undergone multiple changes in recent years), to trying to stay focused on business imperatives while attending to the intricacies of BBBEE compliance” (Samaai-Abader, 2020).